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HARMONIC ELLIOTT WAVE

Wednesday, November 17, 2010

Fog on the road ahead… but the wheels are still pushing the Dollar higher…

That’s settled then… 1.3557-70 EURUSD has broken, USDCHF has taken out (marginally) the 0.9970 high and GBPUSD has fallen below 1.5950… I can see bullish divergences in EURUSD but the picture is not the same in USDCHF and GBPUSD and therefore the stronger risk remains Dollar bullish.

Do I see this as a clear and definite signal for sustainable Dollar gains? Probably… However, while I took a long look at the daily charts and the structure of what we have seen so far I still cannot recognize the structure. From the 0.4281 high the decline in EURUSD has been too direct so far, corrections limited, and to an extent that suggests one of two things – either this is still a correction since corrections within corrections can be brief, or we need a deeper pullback at some point to balance out the structural development in a directional move.

However, that aside, momentum is Dollar bullish. It doesn’t rule out a correction but probably means they should be brief once again. For today I’ll concentrate on some areas which I feel have potential to generate a correction and then make a judgment from the reaction. At this point too I’m not going to totally abandon the Dollar bearishness I have preferred but admit it is more as a precaution than from any strong view.

If I have any relatively common view, then it is for a brief pullback to yesterday’s moves and then an extension. From these points I hope to be able to judge the structure and generate targets. However, I do feel over the next day or two we’ll be seeing a slightly deeper pullback.

I have found the wave development exceptionally complicated today and therefore please take care at all times. Today is one of those days where I don’t have enormous confidence in the support & resistance and therefore trade set ups should be utilized.

Underlying risk for today is therefore Dollar bullish and this is the side that should be preferred.

Today’s free analysis is for AUDUSD and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s Trader Package Review & Trade Set up report. (+0 pips)

Good luck
Ian Copsey

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

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