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HARMONIC ELLIOTT WAVE

Tuesday, November 16, 2010

Monday blues…

I wish I could start the week again… Yesterday didn’t see much that went to plan – just USDJPY really and maybe USDCHF. The Europeans were lethargic and mainly driven by a modestly bullish Dollar that caused a deeper correction in GBPUSD, saw USDCHF advance into the resistance area expected but EURUSD… a drop below Friday’s low… exactly what I had not wanted to see occur…

So, as I wrote yesterday, does this mean the Dollar downtrend has completely reversed? Well, it has to be seriously considered… From a structural point of view the decline from 1.4281 EURUSD is now looking strained in terms of what I would expect. However, what has occurred this morning is a slowing in momentum that has allowed hourly momentum to develop a bullish divergence while the 4-hour divergence remains intact… Equally, USDCHF is now seeing bearish divergences as does USDJPY…

The additional confusion is that USDCHF has developed these divergences at levels that suggest it to be in a potential sideways consolidation. GBPUSD has gone into a neutral pattern. Therefore, I would rather allow for myself to have made a possible error in the structure in EURUSD but take a more neutral view until the mess is sorted out. Indeed, in terms of the correction in EURUSD it is still above a Fibonacci support level at 1.3557… It will also therefore mean that we are going to have to look for break levels which always add a larger risk of being caught on pullbacks.

Thus, today the analysis will be rather defensive but given the circumstances it is probably the best option. I don’t think we’re going to get a sharp resumption of Dollar losses today but hopefully we should get more clues from the developments seen.

Today’s free analysis is for USDCAD and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s Trader Package Review & Trade Set up report. (+90 pips)

Good luck
Ian Copsey

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

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