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HARMONIC ELLIOTT WAVE

Wednesday, October 27, 2010

This appears to be heading for a briefer correction that expected…

Apart from GBPUSD I was content with the way things developed yesterday. As long as I haven’t made any mistake the decline in EURUSD (and rally in USDCHF) developed close to expectations and keep the correction on track. I mentioned the possibility that EURUSD could remain in a sideways consolidation for a while longer and the route it has taken does raise the chances that this will occur. However, with USDCHF expected to make a new high and the runaway recovery in GBPUSD does mean the situation needs to be managed well.

For today this should mean that EURUSD makes a minor new low while USDCHF should not breach yesterday’s 0.9881 high. GBPUSD should extend its gains and probably after EURUSD has made its low and begins to correct higher. At the same time USDCHF should extend its own correction… The result should then be that once EURUSD and GBPUSD reach their highs, USDCHF its lows, then we have one last pullback in EURUSD, a correction in GBPUSD and a final rally to corrective targets in USDCHF.

Well, that does appear to be the logical and tidiest solution to cope with all the anticipated moves. The end result will complete the Dollar bullish correction and allow the larger downtrend to develop… The only possible alternative is that USDCHF has already seen its high and will decline a little more sharply today but not retrace above yesterday’s high… All these moves should require more than today to complete – probably into tomorrow - but keep this general pattern of moves in mind.

USDJPY… rallied nicely but does not appear to have reached an end yet. There does seem to be a little more to go and maybe into the mid-82’s. Beyond that I am mixed and have to see how the cross develops. EURJPY didn’t meet my downside target yesterday but lapsed into sideways to upwards consolidation. I still feel there’s some upside in this but the balance between EURUSD and USDJPY expectations still causes me some confusion in terms of whether it will revert to a larger decline or continue higher. However, any bearish move will apparently require USDJPY to be exceptionally bearish and while I feel this will eventually occur, I’m not sure that now is the right time.

AUDUSD is still a bit mixed and quite how it develops today should provide a guide to whether it continues its consolidation or resumes its uptrend… Given the expectation that EURUSD will begin to rally by end of tomorrow or Friday this may impact on AUDUSD also. USDCAD seems to be still in a correction…

Today’s free analysis is for EURJPY and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s Trader Package Review & Trade Set up report. (+75 pips)

Good luck
Ian Copsey

FX-forecaster Trader Package now available at €20.00 pm
For MT4 users

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