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HARMONIC ELLIOTT WAVE

Monday, November 1, 2010

One step back, but one step forward again…

I made a misjudgment on Friday in EURUSD it seems… What I had thought should be a direct attack on the current targets proved incorrect and Friday saw the 1.3800-15 EURUSD support hold and generate follow-through to a new high this morning. So the cycle seems just a touch slower than I had thought and basically the outlook I described on Friday should remain intact today.

Indeed, as I went through the weekly review the underlying long term view, which had seemed at risk of seeing the Dollar bullish correction deepen the previous week, seems to have been foiled and brought the momentum picture this week to look as if the correction is complete – or just about complete. From what I can see the Dollar should resume its downtrend by the end of tomorrow at the earliest and more likely into Wednesday. Thus, be prepared for some further range trading in the meantime.

Where I have the greatest doubts and confusion is in USDJPY right now. The basic long term view is bearish. The short – medium term view is somewhat mixed. I can see daily & 4 hour bullish divergences developing though, of course, these mean nothing if a swing high is not breached. I have much lower targets but not really the structure that support follow-through right now. However, it would be hard to see the Dollar resume its decline against the Europeans but rally against the Yen at this point and therefore we must be prepared for a retest of the 79.70 historic low. There are supports just above and just below this level also so take care attempting any shorts expecting the JPY world to cave in.

This therefore should keep EURJPY in its current screwed up and messy consolidation. The cross has really developed in a mind-numbing series of erratic and whippy moves that only look like continuing right now…

AUDUSD looks like it’s setting it self up for a run higher but probably needs a pullback before it can push through more strongly. USDCAD … I’d rather watch but feel that a pullback higher is due…

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

Have a profitable week
Ian Copsey

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

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