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HARMONIC ELLIOTT WAVE

Monday, December 6, 2010

Beginning of the reversal or the beginning of the end?

Friday provided yet another surprise. The break higher in EURUSD and lower in USDCHF was not on my agenda. At first I looked at it and wondered whether this mean the Dollar will begin to lose out again. Maybe the multi-year down trend was back in place. Well never say never, but the USDCHF high just doesn’t appear to fit into my prior assumptions. The fact that GBPUSD failed to play tag with the move also provided another misplaced piece in the puzzle.

The glaring alternative is that we are seeing a pullback in EURUSD and USDCHF to the Dollar’s gains thus far. In fact, this scenario does appear to be very convincing. Even pullbacks in GBPUSD and AUDUSD look possible. What about USDJPY? Well, it’s less convincing but also just a little ambiguous but if I have any stronger wave structure and relationships then they’re on the upside and not down…

In general from the weekly review: http://www.fx-forecaster.com/files/Weekly_Review_Support_Resistance_3rd_December_2010.pdf the overriding impression from the longer term charts is that we have merely seen a pullback to the Dollar strength so far with several currencies retesting respective daily Clouds which are still basically Dollar bullish. These should be enough to generate a reversal of the losses thus far at the very least and will keep the underlying risk Dollar bullish – at least for the short term and if this develops as I think, then for the longer term also.

Indeed, I feel we have either seen the full extent of the correction in most cases or we are very close to the end.

Just a word on EURJPY. I remain looking for stronger losses although the very short term does have a continuing mild risk of the pullback higher deepening. I’m tending to err on the side of direct losses but feel we do need to keep a close eye on the near term. Most likely this will be driven more by a falling EURUSD along with a less aggressive move higher in USDJPY.

Thus, today look like a day for identifying the Dollar lows…

Today’s free analysis is for USDCAD and can be found on http://www.fx-forecaster.com/DailyForecast.html along with Friday’s Trader Package Review & Trade Set up report. (+20 pips)

Have a profitable week
Ian Copsey

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

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