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HARMONIC ELLIOTT WAVE

Wednesday, December 22, 2010

If the Dollar is going to rally this side of Xmas then today’s the day … else wait till next week

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


Yesterday was a strange day, but that’s saying very little given the time of year. Maybe too many traders were more interested in first lunar eclipse on the winter solstice in 456 years… I could accept that if 456 had been a Fibonacci number... but it’s not… More likely they were more interested in a quiet period ahead of a few days of merriment.

The Dollar neither made minor early gains nor retraced as far as I had expected, but ended the day with GBPUSD, EURUSD and EURJPY sitting close to the more aggressive break lower I had been anticipating. Will the market have the energy to commit to the stronger follow-through today? Maybe… maybe not. Most probably they’d prefer not to have the hassle of being caught in the game of pass-the-parcel where the person left holding the parcel incurs a loss.

However, the risk is there and with just today and tomorrow left offering a semblance of almost normal trading conditions if the right levels are broken then those three currency pairs will be sent tumbling. If those levels hold – and there are signs that they will – then all we’re going to see is a total recycling of the correction that could take us into the long weekend. However, once the weekend is over the Dollar should extend its gains then.

Just a word on USDJPY… It’s struggling but just about clinging onto a push back higher after failing at the 83.50 support I pointed out yesterday. It needs to make further gains today to keep on that bullish track but I doubt we’ll see any fireworks … or red moon… today. Certainly USDCAD looks like it will extend its consolidation today but that does seem to be due a subsequent push higher. AUDUSD looks as if it will subside into a sideways consolidation also.

Thus the stronger risk is for continued subdued trading – but just watch out for the key Dollar resistance levels.

Today’s free analysis is for GBPUSD and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s Trader Package Review & Trade Set up report. (+40 pips)

Good luck
Ian Copsey

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

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