Wednesday, November 3, 2010

Done and dusted…

It seems I needn’t have been concerned about the rally in USDCHF… Yesterday’s Dollar peaks came early in the day while I was writing the report with the final pullback in the EURUSD triangle being even shallower than I had anticipated. The rest of the day was Dollar negative with EURUSD penetrating the triangle high while USDCHF dipped below the channel low to confirm resumption of the Dollar downtrend. The only European currency pair that lagged was GBPUSD which hasn’t yet made a new high.

So, that should set the Dollar back on a downward path which leaves us to fathom out its path in this decline that is likely to take the market by surprise again. However, we’re still in the early stages of this move and there’s still room for a few wriggles so I have doubts that we’ll see an immediately firm rally. During this time there should probably be room for retests of the EUR triangle high and CHF (broken) channel low. Therefore care is still to be exercised before this turns into a clean Dollar decline. I should add that over the next week or two as we approach the triangle target in EURUSD and the 0.9462 USDCHF low there is a risk of a moderately strong reaction/correction. This suggests we’ll not quite see the runaway move as was seen in the approach to 1.4157 and 0.9462 respectively.

Just a word on GBPUSD… I was a little disappointed this didn’t join in with the overall Dollar weakness and this does leave open the risk of a slightly deeper correction today. However, overall I remain bullish here but probably not to the extent of the Euro.

USDJPY… still no break lower. I’m sure it’ll come but for the moment we’re going to have to play a waiting game to see how this correction pans out. There’s still risk of a slightly longer sideways consolidation while swing lows keep rising. However, any early drop would open up a test of the 79.70 historic low. I was encouraged by the strength in EURJPY also and feel there is probably a little more to go on the upside before a correction. However, if we do see a higher high today then the ball may well be switching to the bullish court. It won’t occur without a decent pullback but the potential is there which implies we could still see limited losses in USDJPY.

AUDUSD… very much in a similar position to the Europeans. USDCAD looks pretty bearish to me…

Today’s free analysis is for USDCAD and can be found on along with yesterday’s Trader Package Review & Trade Set up report. (+40 pips)

Good luck
Ian Copsey

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

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