Monday, November 8, 2010

Off track…

Friday wasn’t meant to happen… It has cast a lot of doubts in my mind and also a lot of conflicting structures. The break of support in EURUSD and the depth of the decline really made the bullish structure look exceptionally doubtful. The immediate implication implies a decline all the way back to the 1.3696 low and a bit beyond… Cripes…

But before I went too far it should also be noted that the 61.8% pullback of the 1.3863-1.4281 rally falls exactly at Friday’s low at 1.4023. Therefore to confirm the structure the immediate thought was to check against USDCHF and GBPUSD… I mentioned last week that I found it hard to identify a decent structure in USDCHF… and a corrective one appears a better bet. However, conversely it is tougher to achieve a bearish GBPUSD structure.

So I ended in a Catch 22 situation… Next stop in the checks was the overall momentum position. Here I found it hard to see any Dollar bullish divergences that would suggest that a total recycling is imminent. Well, they don’t always occur so it’s not a conclusive solution…

So the end result of these checks remain inconclusive but until the broader Dollar swing highs are broken I have to assume we are still on course for losses… but keep the doubts in the back of my mind to try and identify just where the bearish move breaks down. Therefore, take the early stages of the day with care and note the key areas that would sway price one way or the other…

Even USDJPY proved slightly stronger than expected. In some ways I am less averse to some Dollar strength here but this entire structure has been so erratic that the structure here is not straight forward either. It won’t take too much to bring it back into the recent range which is probably the safer assumption. However, do be aware that any break above 81.47-57 would push it higher.

That’s not such a wayward possibility as EURJPY also deviated from expectations on Friday. However, this could well provide a more bullish outlook that would suit both higher EURUSD and USDJPY… Again, break levels for a move back lower are not that far away but until Friday’s low breaks the upside does still seem to hold sway…

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

Have a profitable week
Ian Copsey

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

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