Monday, December 20, 2010

Friday destroyed any lingering thoughts of Dollar losses…

Please note The Daily Forecaster will take a break from the 24th December and return on the 3rd January

It seems I clung on the possibility of Dollar losses extending into this week just a bit too long… Friday put paid to those ideas very swiftly… The alternative does appear to be a strong potential for the gains seen towards the end of last week to extend and in a manner that appears to imply quite an aggressive follow-through over the next 2-3 days of some 150-200 points in the EURUSD and GBPUSD. I can’t see any reason for USDCHF not to follow suit but I do find this less clear with its structure…

However, before that follow-through there does appear to be a need for a pullback and that should dominate for the first half of today at least and may stretch into early NY trading. Once this correction has been seen the Dollar gains can emerge.

The collapse in EURUSD provoked the anticipated losses in EURJPY and equally this is going to be affected over the next few days also. It has a similar directional expectation as EURUSD has – a mild correction followed by losses. The initial losses should be limited but by tomorrow or Wednesday I suspect we’ll have seen a move closer to the 108.33 low. Ideally I’d prefer something a little more aggressive but this will probably require USDJPY to join in on the downside. I’m not entirely clear on USDJPY however, very much split between continuation of the upside and a recycling of the correction back to 82.83… The last few days of last week saw the rally begin to labor to leave it poised between the two scenarios. That’s something we’re going to have to watch and be aware of break levels.

With 4 ½ days of trading left the risk is that we essentially will probably have only 3 days of anything resembling normal trading conditions. It is just a resemblance but it is probably the illiquidity that could cause the anticipated sharp losses in EURUSD and GBPUSD.

Thin markets = more volatility so take care…

Today’s free analysis is for EURUSD and can be found on along with yesterday’s Trader Pack
age Review & Trade Set up report. (+105 pips)

Have a profitable week
Ian Copsey

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

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