Wednesday, November 10, 2010

We should see the end of this Dollar pullback today

Please note that tomorrow is Veteran’s Day Holiday in the U.S. so the next report will be on Friday

Yesterday’s price movement provided some good clues that should provide us with a conclusion to the Dollar bullish correction which started last Friday. I can’t say in the longer term picture I’m brimming with confidence since the Dollar bearish targets do not appear to be particularly synchronized, at least at this stage. However, there is a long way to go still and at this point the resumption of the larger downtrend some appear imminent.

However, focus today must be short term initially but with the prospect of being able to establish some Dollar short positions that could prove to be quite healthy.

The very start of today, around the NY twilight zone before Asia had fully opened their eyes saw some Dollar losses. This should generate a correction in Asia but probably by early European time the final Dollar highs seem likely. Perhaps this can be delayed a little this outlook does look basically like being the general development. Certainly, the Europeans appear to be in concert. GBPUSD concerns a little as the correction has been modestly deep and momentum not looking exactly ready for a bounce so we have to play that one a bit more carefully.

Perhaps the bigger surprise was USDJPY which stormed higher at the end of the day to retest the 81.97 corrective high. This one has obviously been a difficult one to follow due to the general movements divided into minutia which makes wave relationships tough. However, while I can see a pullback in Asia this actually looks bullish also… Given the propensity to move sharply and then subside into narrow ranges I don’t want to get too ahead of myself, but this does appear to have the potential for further gains.

Again, where the move may come once again is in the cross. This too has come to a critical juncture but one where the downside looks limited – for now at least – and a correction due from new lows that should be seen today. It seems logical that a pullback lower in USDJPY and the anticipated extension in EURUSD could provoke this follow-through but a combination of them both rallying could generate a solid pullback – so take care.

The Aussie looks like being close to a corrective target and ready for a push back higher. USDCAD…maybe this can rally too… I’d still play this one with caution though…

Today’s free analysis is for USDCHF and can be found on along with yesterday’s Trader Package Review & Trade Set up report. (+205 pips)

Good luck
Ian Copsey

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

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