Friday, November 12, 2010

I’m not 100% sure that I like what happened yesterday

Wednesday left me feeling the Dollar had performed basically as expected. The drop to 1.3627 EURUSD is pretty much in line with my targets. The direct recovery in GBPUSD from 1.5952 was not quite what was expected but could be seen as more in line with the bullish stance. The correction in USDCHF which extended to new highs was a possibility which I had tended to feel was unlikely. Moreover it has produced a potentially bullish structure.

What is a little more concerning is that bearish momentum in EURUSD has become stronger with the hourly bullish divergences breaking and even as I write I see that it has broken below my lower target at 1.3622… That doesn’t really fill me with confidence.

What is more, the rally in USDJPY has developed in a manner that also looks quite bullish… but EURJPY tends to provide me with a more bearish feel… I can’t see this dropping through the floor right now but does risk further losses while the bullish expectations in USDJPY do appear to face resistance not too much higher than current levels…

If the outcome develops against my original view then we are facing a completely alternative structure, one mildly Dollar bullish in the near to medium term but if this turns more significantly higher then the upside risk does rise considerably. By that I mean there is chance we could drop right back down to 1.1879 again… later below. I’ll take this step by step as we are in the twilight zone of the twist in structure but raising this now should warn us to take care until stronger signals are generated.

While I do take no notice of fundamental releases in terms of my forecasting it is folly not to be aware of the G20 meeting underway and as such could be a short term irritant or a more significant catalyst with the end result of lots of politicians bitching and positioning themselves to retain a weak currency. Thus, until the clash of handbags and scratching of eyes subsides it is clearly appropriate to take a neutral view given the potential breakdown of the short term structure…

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

Have a great weekend
Ian Copsey

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

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