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HARMONIC ELLIOTT WAVE

Sunday, October 17, 2010

This doesn’t look like a recycling…

No recycling means we are still in a Dollar downtrend… It seems quite inconceivable in some ways given the virtual straight lines we are seeing on charts. These are being accompanied by a clear weekly trend, weekly & daily swing highs and lows all being retained in a trending sequence and daily momentum displaying only very minor signs of divergence.

In turn this suggests that the only margin of uncertainty lies in the shorter times frames where hourly/4-hour corrections can produce temporary morphing of patterns and complications but still within the underlying trend. However, while these shorter time frames are displaying some signs of Dollar bullish divergences, many are rather mature and have been developing for long enough for them to break down.

The clear message is: while I do see some risk of a pullback to Friday’s losses the overall impression I get is that the correction I was anticipating appears to have been seen. Frankly it was hardly much of a correction… I can’t help feel we’re going to be ending the coming week with the Dollar much lower again…

If there is any currency that has any stronger risk of bucking that trend technically then it appears to be AUDUSD. However, this pair has a long history of breaking divergences and maintaining the most direct trends so I’ll wait for stronger evidence of a stronger pullback before getting too excited about that one…

Now, if there is any uncertainty for me then it is derived from EURJPY. This one remains on the “to watch” list as it hasn’t really made a clear signal as to what it wants to do. I can see short term signs of breaking down and an ideal target around 100. However, it was also a hair’s breadth from breaking the bearish structure with the move to 115.67. There has been a daily bearish divergence but has not really made much of a dent on the downside.

However, if this does go down there has to be a driver – and unless I’ve got EURUSD messed up and that we’re due a larger decline, it’ll mean that USDJPY has to drop like a politician’s ratings… even more so if EURUSD is to continue its rally. While I am very bearish for the Dollar over a 2-year term I do feel we are at a point where we need a correction in USDJPY, not quite yet, but before too long. Therefore the cross should somehow find its way back higher but the short term does hold some uncertainty until it makes its break…

So for today there seems some early risk of the pullback extending but we should see the Dollar resume its losses later…

Today’s free analysis is for USDJPY and can be found on http://www.fx-forecaster.com/DailyForecast.html along with Friday’s Trader Package Review & Trade Set up report. (+95 pips)

Have a profitable week
Ian Copsey

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

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