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HARMONIC ELLIOTT WAVE

Monday, November 22, 2010

Encouraging progress

It’s tempting fate but I feel the Dollar is beginning to show signs of what I have wanted to see. The recovery in EURUSD has continued while USDCHF has remained supported. It was the relationship between these two which had caused the confusion last week. What we do have now is an hourly bearish divergence in EURUSD while at the same time USDCHF remains above its recent corrective lows. GBPUSD has also seen a solid pullback from Friday’s high which I considered the end of a corrective rally.

This should provide at least 2 days of Dollar bullish pressure still within which I expect a pullback lower in EURUSD but not to new lows while gains against USDCHF and GBPUSD should see new corrective Dollar highs. It is the relative performance of these three which should be the prime focus of the analysis ahead of Thursday’s Thanksgiving holiday. Assuming all goes to expectations this should eventually result in resumption of the weekly Dollar downtrend.

I should point out EURJPY also which has pushed higher nicely. I’m not sure that it should get much further, if at all, before turning in a correction. However, we have to acknowledge that it is still in the recent range and until then some caution is necessary. However, the way things are developing it is beginning to show modestly positive signs of continued strength.

Indeed, caution is advised as the rally in USDJPY has slowed considerably and to areas where a corrective peak can develop. In the slightly larger picture (over the next 2-3 days) we need USDJPY to remain moving in a modest upward direction else any sharp losses would maintain the broad sideways consolidation in the cross.

AUDUSD – my preference is for more losses here but I feel we are nearing a more substantial corrective low that should spur price back into the weekly uptrend. USDCAD – lower for today I think, probably in the larger picture too, but this has been in a range for so many months it’ll be best to keep a balanced view on this one.

Therefore, the main message today is to look for Dollar buying levels…

Today’s free analysis is for USDJPY and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s Trader Package Review & Trade Set up report. (+105 pips)

Have a profitable week
Ian Copsey

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

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