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HARMONIC ELLIOTT WAVE

Wednesday, December 15, 2010

Today looks like a return to the messy stage again…

The outlook for marginal new Dollar losses proved correct although failed to reach the target levels in general. Never-the-less the structure seems a little more straightforward but given we’re probably into a correction we’ll have to be aware of the type of market we saw last week. If I am to state a preference here I have a feeling that the correction may not last quite as long as last week which means we’ll have to be on the lookout for Dollar losses to resume at some point.

I mentioned yesterday the Dollar cycle lows by earliest next week – possibly stretching into the last week of the month. Well, it looks like the length of this correction may well dictate when the final low will come and for Dollar gains to resume. We must keep in mind that we only have 5-6 trading days left ahead of Xmas and effectively 3 days after Xmas. It is quite normal for the market to resume a more directional bias in the last week of the year so the rough timing of these cycles does appear appropriate.

After yesterday’s dip this should give USDJPY the opportunity to push above 85.00 over the coming days in what should be the final leg higher. In particular this implies quite a sustainable subsequent decline to new historic lows. Unless I am completely wrong about the Dollar making gains against the Europeans this will imply a removal of support from the JPY crosses… I am just finding the current pullback in EURJPY just a bit deep for comfort even if it stalled at the 112.20 resistance yesterday. It still looks bullish to me and it’s this anticipated extension of gains that concerns. This triangle is something to watch closely as should both USDJPY and EURUSD collapse the play has to be on the cross.

Otherwise, I feel today will see more sedate trading and the risk of some choppy moves again.

Today’s free analysis is for AUDUSD and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s Trader Package Review & Trade Set up report. (+85 pips)

Good luck
Ian Copsey

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

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