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HARMONIC ELLIOTT WAVE

Tuesday, November 9, 2010

More of the same… or resumption of Dollar losses?

Yesterday provided a few more clues. At least we can almost certainly put the Euro triangle to rest as a probable figment of our imagination. I say probable since while the triangle high was penetrated it is not impossible for a retracement to mildly penetrate the boundaries. It is probably this which is the source of any uncertainty today. There is an hourly bullish divergence so the potential for the pullback to be complete is most definitely present.

The key is more in what the rest of the Dollar currency pairs are suggesting… To be honest there is no definite answer here. Very clearly the Euro outstripped all other currency pairs to leave them looking more as if they have suffered a mild correction. There is even some potential for this correction to deepen just a little more and this is more my preference. The other issue to face is that EURUSD has a lot farther to move to reach its target compared to the other two Europeans… I have to admit this is something that remains nagging in the back of my head…

So we’ll have to start today with continued caution and try and recognize the flow, where the market has more weakness. It has started with the Euro seeing some losses and where this next stalls will be critical.

Another clue to look for is how EURJPY develops. It saw quite a solid pullback on the tail of the bearish Euro yesterday and has retraced a fair part of the rally from the 111.51 low. This really does appear to be at a critical juncture with conflicting daily & weekly indications. I have struggled with this for some time, seeing the potential for a move to 100.40 but finding the underlying Dollar weakness against the Euro to be a dampening factor for such an outcome.

Thus, while there are a few alternative structures here, unless USDJPY resumes a more aggressive decline, I’m not yet convinced that the cross is going to die at this point…

The Aussie looks a little range bound. USDCAD is beginning to display a resistance to the recent losses…

Today’s free analysis is for EURUSD and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s Trader Package Review & Trade Set up report. (+45 pips)

Good luck
Ian Copsey

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

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