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HARMONIC ELLIOTT WAVE

Friday, December 23, 2011

The year-end should see Dollar gains extend…




It’s going to be difficult to really see much happening today, most likely some early consolidation given that Japan has public holiday and later I suspect a modicum of Dollar gains but without there being any excessive moves. Being the last update for the year I’ll concentrate mostly on the more medium term outlook through to the end of the year and beyond.

Very clearly I remain Dollar bullish, mostly in EURUSD and USDCHF, both of which should see some solid follow-through over next week This will probably rub-off on GBPUSD but I’m not so sure that it’ll make new lows. There is perhaps a mild chance of minors lows but even if there are I can’t see them being excessive. Once this next leg higher for the Dollar is complete it should allow a modest pullback before the next push higher – maybe into the 2nd or 3rd week in January to see a more major high that should generate a much stronger correction into Spring time.

It would appear that even USDJPY has finally succumbed to the upside and may well confirm that we saw the 16.5 year and 33 year cycle low at 75.57. However, it doesn’t look as if it’s going to go mad just yet but overall should make consistent gains now. The impact on the cross? To be honest it looks like the losses in EURUSD are going to outstrip USDJPY as the cross doesn’t look that bullish right now. I have been quite bearish on the cross and I’ll remain bearish but the prospect of a firmer USDJPY will mean more care is needed for the cross.

May I take this opportunity to wish you all a splendid holiday season and a truly happy, healthy, peaceful and of course prosperous 2012

Ian Copsey

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Thursday, December 22, 2011

There seems a good chance we can begin to see Dollar gains again


Yesterday surprised me somewhat. The market seemed to be doing rational things, or at least what I think is rational. Indeed, it reached the retracement areas I had looked for that would complete the correction. I can only now assume that the Dollar will resume its rally.

Assuming this occurs two key areas should be watched away from EURUSD and USDCHF, both of which should see the Dollar extend to new highs. This is where I’d rather see GBPUSD and AUDUSD remain above their recent lows. It wouldn’t be the end of the world if they did, but it can’t be by too much. Having said all that, this is effectively the last trading day before Xmas but even today will be one where traders really, really prefer to sit on their hands and dream of Santa. Thus, it’s quite possible that while we could see some movement the chance of lapsing into consolidation is high.

USDJPY is making full use of the 77.61 – 78.16 range… I can see arguments in both directions. However, retain composure until the final break is made. From the perspective of the cross it looks to me as if it found its retracement resistance – or soon will – and the downside still appears the more vulnerable.

Take care. Only take trades where you see a strong set up… but be aware that in such low liquidity these can fail more often than normal…

Good luck
Ian Copsey

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Wednesday, December 21, 2011

That’s probably the end of any sense before Xmas…


Yesterday epitomizes December for me. It’s actually one of the times in the year when I can just about guarantee that things turn crazy as liquidity drops in the final run into the holiday period. I obviously work extensively with ratios but these require a liquid market through mass psychology. Clearly these break down during the second half of December.

Of all yesterday’s sharp rally in GBPUSD has to be handed the prize. It’s certainly a move that has thrown open the outlook in this particular pair. I remain overall bearish but this rally has really knocked the medium structure for six and could actually still see some solid strength over the coming week or two. I don’t see it as a massive bullish rally but could envisage a longer period of sideways consolidation. However, this is one that needs more due diligence to confirm what it intends to do…

Otherwise EURUSD and USDCHF look more to be in the corrections I had anticipated would follow one last push higher in the Dollar. Very clearly in EURUSD the final dip was much, much shallower than normal. At this point it doesn’t change the overall picture at all. While it has potential to deepen just a little more I still feel the major risk is Dollar bullish.

As for USDJPY… it’s still in that area where it could move either way, hedging its bets, waiting for a more decisive punch to either confirm that the 33-year cycle low is in place or to see one last dip to the 70-73 area before it reverses. At this point it’s erring more to the downside but even if it does we have to wonder how long it will take. With the strong objection to such a move by the MOF it has to be in one of two ways – straight down in blind panic followed by a similar reversal or it can do it the slow way and grind away the pips one by one like a prisoner digging his way out of jail with a teaspoon.

Take even more care these next three days… There are some signs it could prove nasty and completely erratic.

Good luck
Ian Copsey

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Tuesday, December 20, 2011

STILL looking for that extra push higher…


Well, that wasn’t much fun was it? However, all it did was delay the next Dollar leg higher by forming a complex correction so frankly the outlook remains the same. The positive thing is that the correction is extremely unlikely (and I leave a small door open since we are in that weird time of year) that we’ll see the correction become any more complicated. Hence today, Santa Claus willing, we should see the Dollar gains that I have been sitting, twiddling thumbs and waiting for.

Yesterday I made a special mention of EURJPY. I’ll do so again but more from the USDJPY side of the cross. The sudden rush back up to 78.153 (and was that really 78.158 to make a new high?) was an interesting development that appears to raise the bullish scenario again. It has started the day on a firm note and as long as it can break above yesterday’s high I feel the potential for this to become much stronger holds far greater odds in its favor. I’d still wait for that break. After all, it is ‘that time of year’ when snafu’s are common. However, if it does I think it’s worth following.

It would, of course, have a potential impact on the cross although with EURUSD expected to be heading in the opposite direction the cross may well have another day buried in introspection. Otherwise any failure to make the upward break could keep USDJPY in a consolidation to allow the cross to dip to the target areas I indicated yesterday.

Therefore, the summary for today is – watch for Dollar gains but don’t get too carried away as we’re due a longer lasting pullback through to next week at the very least.

Good luck
Ian Copsey

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Monday, December 19, 2011

Still looking for that extra push higher…


Gee, the Dollar became pretty stubborn at the end of last week but perhaps that’s just a factor of the time of year. Guess what? I’m still looking for that additional rally… It’s this next push that should generate a longer lasting pullback that could even last until after Christmas.

That being said, there are some issues that need to be considered, the main one being the depth of the pullback seen in USDCHF which appears to be one step ahead of EURUSD. I had been anticipating these to occur together. However, it may well be that we’re going to see a longer consolidation in USDCHF over this coming week and perhaps in the form of a triangle. Pragmatically, the potential for currency pairs to develop at different stages must be considered given the weirdness that can occur at this time of the year.

The other area that should be highlighted is that of EURJPY which appears to be aligning itself with EURUSD. By this I mean that it, too, seems to require one more dip before a longer lasting correction. Now, that may not seem particularly surprising but the knock on impact is what happens to USDJPY and the answer seems to be very little. I have been sitting very much on the middle line between quite bullish and quite bearish for a while trying to spot the breaks that would upset the equilibrium to push it one way or the other. To be honest I’m still at that point… At this point all I can say is that USDJPY is the wild card that could impact on the cross in a larger way. Right now, the status quo is neutral but it is one to watch…

For today, while there is a mild risk of a minor new Dollar corrective low I still look for it to rally. However, as we move into the week before Xmas so be aware of the whips and weirdness that it brings. I am noticing projection ratios beginning to become more vague, shallower than normal pullbacks and also projections…

Have a profitable week
Ian Copsey

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Friday, December 16, 2011

What should have come yesterday … is likely today…


That was a weird old day… in some respects as I had expected but just took all day to complete the anticipated corrections in EURUSD and GBPUSD while both USDCHF and USDJPY saw stronger drops and EURJPY went nowhere at the speed of the Higgs Boson…

However, it does seem to have provided more meat to the bone and the follow-through in EURUSD and GBPUSD should occur today. Both should then see a more intermediate correction developing before the next extension lower. This does still seem to slot in comfortably in the overall Dollar rally and we’ll just need to handle how it develops around the Xmas break.

The pullback in USDCHF was also quite healthy – not that I expected it – but has generated a more robust structure. It will probably mess about for a couple of days, a recycling higher today but then lower again next week as EURUSD and GBPUSD start their corrections higher. At that point these should all revert back into a correlated move.

USDJPY… hmmm… the dominant sluggish reactions for some while have made this tough to follow (mainly because I keep falling asleep when I look at it…) but I do find yesterday’s losses slightly harder to fit into a bullish structure as I had begun to consider. I’m still a bit wary of this one as it hovers one way and then the other. Bottom line is that even if we see new lows I can’t see them being extensive. I think for today we’ll just have to see whether it extends losses or makes back what it lost yesterday…

As always in December… take care and be aware… The ratios are becoming a little stretched right now which is a common factor in December’s low liquidity markets so take levels as approximate

Have a great weekend
Ian Copsey

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Thursday, December 15, 2011

More still to come…


The Dollar uptrend resumed more directly than anticipated but overall it is on the right track and there’s still more to come. There are some Dollar bearish divergences developing across the board but unless they are confirmed by breaks of key lows there is no reason why the uptrend can’t continue – and possibly then just force the divergences to either break or become more entrenched.

On top of the fact Asia normally doesn’t see too much movement there is a little conflict as we start the day generated by EURJPY that met its target and is due a pullback higher. If EURUSD is to resume losses I’d rather not see too much upside here. However, that will imply that USDJPY has to take the responsibility of taking the cross higher. It’s certainly possible since, although it stalled right at the area where an alternative bearish structure would imply a top I feel there is quite a strong risk for this to push its way higher and back to previous highs. It’s still in slow-motion mode but if this does develop to allow the cross to meet its retracement target it will probably confirm another dip in EURUSD.

Indeed, while the structures are becoming a bit stretched and wonky my overall impression was that we should still see the market extend the Dollar’s gains. Then add the fact that any large trades will probably be executed before the weekend (because of even more rapidly deteriorating liquidity next week) there is every chance of a more extended move today and tomorrow.

Therefore watch what Asia does, in particular USDJPY and the cross as this should provide us with clues…

As always in December… take care and be aware… The ratios are becoming a little stretched right now which is a common factor in December’s low liquidity markets so take levels as approximate

Good luck
Ian Copsey

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Wednesday, December 14, 2011

Dollar gains have clearly resumed…


Yesterday’s break higher in the Dollar appears to be absolute. Just as yesterday’s analysis was lengthy, so too was today’s, having to go back and make sense of the prior structure. This month’s low-liquidity weirdness hasn’t helped but then the entire move lower from 1.4247 EURUSD and 1.6166 GBPUSD also proved rather whippy and containing highly unusual ratios and development. However, that said, the Dollar’s strength must now have further to go… and that does seem to imply gains for the rest of the year…

For now we have either seen, or will soon with marginal new highs, the limit of this part of the move so we should be prepared for a correction today before the next leg higher can develop. Given there’s quite some way to go position takers will benefit from buying into the dips. I am looking for the triangle targets in both EURUSD and GBPUSD to be met in this decline, an event that should then spark a deeper pullback higher in both. The same is true of USDCHF although in a different structure, but still bullish, that once the high is seen a deeper pullback will be expected. Therefore correlation does appear to be present through the Europeans.

EURJPY has also broken lower and that seems to have further to go, equally with a pullback higher due but an eventual move to sub-100 is anticipated. This begs a question over USDJPY. It seems like EURUSD will drive this decline and to achieve the levels I expect may well indicate continued sideways consolidation. If we saw the losses implied within a bearish scenario in USDJPY then the cross would fall through the trapdoor and I’m not sure that’s really implied. Therefore, while I’d prefer to be bullish USDJPY the risk is for some further consolidation.

As a point of interest the U.S. indices didn’t react too much. The same occurred the last time the Euro had a hissy fit and dropped like a stone. That is encouraging as I still have the indices pushing higher still and thus should then benefit once the Dollar corrects lower once these current moves are done with…

As always in December… take care and be aware…

Good luck
Ian Copsey

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Tuesday, December 13, 2011

All mixed up and muddled


Whew… The analysis normally takes around 2 hours… today was 4 hours… Clearly that implies there are a multitude of anomalies between not only the currency pairs but also the implications of yesterday’s breaks on the medium & long-term structures. In EURUSD and USDCHF there are possible recycling possibilities but even that would generate conflict in the longer-term structures. However, that is not an uncommon feature during December trading. What it does mean is that additional care and observation is required from this point forward when effectively we only have around 5-6 more trading days with any meaningful liquidity… and even that can be a stretch of the imagination…

The most obvious anomaly was the refusal for GBPUSD to extend losses below 1.5525 while the other two Europeans saw the Dollar push to new highs taking the Dollar Index very close to its recent high. Until 1.5525 GBPUSD breaks it can still reach 1.6019… although I have to say that is quite a task. However, if yesterday’s Dollar highs in the other two are not broken by any significant amount then a recycling may well develop. Of course the problem will then be working out how this fits into the daily structure…

AUDUSD and EURJPY have moved to the limits of their respective pullbacks and frankly in a manner that doesn’t raise the strongest confidence. For the cross, much will depend on USDJPY which is also tiptoeing along a fine line between bullish & bearish…

All in all, given the confusion raised by yesterday’s moves, I don’t have the greatest confidence in much at all. This tends to point to our need to tiptoe through the resultant debris generated by yesterday’s fracas until stronger confirmations of a return to normality return…

As always in December… take care and be aware…

Good luck
Ian Copsey

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Monday, December 12, 2011

Looks like a dull start to the week


It was all fun on Friday’s roller coaster, the Dollar initially pushing higher only to whip back lower but in a move that couldn’t be sustained. It has brought with it the probability of further consolidation until the market begins to settle on one direction, a decision that it found far too difficult to make during the entirety of last week. However, I do feel it will happen this week and from the moves I have seen I find it hard to be Dollar bullish…

I note that EURJPY appears to have shrugged off the losses it made and as long as it can maintain current levels for a while longer the next move should be higher. That should be reflected in USDJPY or EURUSD … or even both… The Dollar Index still looks bearish to me and it’s more a matter of whether it has seen its corrective high or has one more blip higher to come.

On USDJPY, it remains with a degree of ambiguity. I can repeat the statement about the impending 16.5 and 33 year cycle lows but I’m sure you’re aware of this by now and that we’re in the broad timing window for the Dollar to begin a long recovery. The current ambiguity is just stretching the potential for one more decline. It’s more a matter of “when” and not “if.”

So treat the first half of the day with care given the risk of continued whippy sideways consolidation but be prepared to start looking for a break lower in the Dollar to come either by the second half or just into tomorrow…

As always in December… take care and be aware…

Have a profitable week
Ian Copsey

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Friday, December 9, 2011

We could have taken the week off…


Just as I thought there was potential for the Dollar to resume its losses… that December moment hit yet again… Has it forced a change in the underlying expectation of seeing that weakness? I don’t think so. If you look at the charts for the past week the clear picture is one of confusion and lack of will in pushing the market in either direction a.k.a. a corrective market.

Indeed, broadly the sudden rush higher in the Dollar hit key resistance areas and adds weight to the basic underlying risk of further losses. The question then to be asked is whether the market has any intention to push outside the recent range given that liquidity will be lessening even more rapidly from this point into the end of the year. That factor is actually a double-edged sword. The reduction in liquidity will merely exaggerate moves and increase the reactions to relatively smaller trades and from what I can see this should extend the Dollar’s losses.

The Dollar upside is either complete or we’ll see just one more poke higher but only to marginal new highs but overall the risk does appear to be lower again though the chance of seeing a break of this week’s lows today seems unlikely…

USDJPY… Well, that was a weird move. It has left me just a bit mixed. EURJPY went lower also and could see another dip but the move lower from 105.69 does seem corrective also. Hence I feel this should be on its way higher. Of course it could be driven by EURUSD but if I’m right in what I’m seeing then it will require a double effort from both constituent parts to take this higher. Therefore, I am cautiously bullish on USDJPY also…

So the bad news is that we’ll probably end today still within range but the good news should be that next week has more potential for a directional move…

As always in December… take care and be aware…

Have a great weekend
Ian Copsey

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Thursday, December 8, 2011

Getting closer to the end…


Another typical December trading day… If there’s a more difficult way to get from A to B then the market will take it… and made that choice yesterday. There do seem to be some positives in all this and I sense we’re not too far away from a sharp breakout from the current consolidation but there’s still some risk of dull, boring, listless, lackluster, lethargic and comatose trading before it happens. It’s not particularly earth shattering information to say that the market appears to have little interest in pushing the extremes right now… However, it has to happen at some point and it’s not that far away – possibly even as close as later trading but if it’s going to happen then I reckon latest by tomorrow.

The two currency pairs to watch are GBPUSD and AUDUSD, both of which appear to have the strongest risk of follow-through higher. The risk is that the final legs will last just a bit longer and stretch the consolidation just a bit more. Thus, use these two as markers that could highlight a broader based move.

USDJPY needs a special mention. It’s really not doing very well is it? Each bounce in the 77.60-65 support area seems to get weaker and weaker… It’s stretching my patience and also the tentative bullish outlook I was beginning to build. We need to be aware here as there are a few alternatives – two bearish and one bullish – and it’ll be important to note what is expected of each alternative to confirm the correct one. Needless to say, this requires some attention to guide us through to the final outcome. Whichever occurs it’ll either be straight up or down a bit more and then up. There does seem to be a restricted downside risk now.

So for today, remain in observant mode and probably best to anticipate consolidation but with the awareness of what would constitute a break lower in the Dollar…

As always in December… take care and be aware…

Good luck
Ian Copsey

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Wednesday, December 7, 2011

The consolidation still doesn’t look complete…


It really gets very difficult to provide extensive constructive advice when in a consolidation… We saw some Dollar gains yesterday albeit not as deep as I thought it might go but even worse than just writing “the consolidation should continue” I feel that it has potential to last for much longer. In truth it could actually extend even longer and potentially to the end of this week.

I should try and describe that just in a bit more detail. For Elliotticians we have seen a 3-wave move and in the current position that could be a completed correction or, of course, it could form a complex correction and with the way things are going most likely a triangle, which will be really quite painful to sit and suffer. Certainly, if I look at the Dollar Index it does seem to have potential for another push higher in this correction and that’s the basis of my reasoning for the current consolidation to extend longer.

However, after the limited gains seen yesterday consolidation doesn’t really indicate Dollar strength… so it has to come from somewhere. Where I can see it developing still is in GBPUSD (slightly) and most likely in USDJPY. In contrast, if there is any stronger risk of Dollar losses it’s in AUDUSD but only after a little more consolidation. Therefore, the picture being painted is one of another dull day but with what could be a push higher in USDJPY and possibly lower in GBPUSD.

In the background of all this is the underlying risk that the Dollar will just lose out against the Europeans. It’s not something I favor but given the current position also not something we should forget since it could be one of those super-sharp moves that’s over & done in a flash…

As always in December… take care and be aware…

Good luck
Ian Copsey

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Tuesday, December 6, 2011

Dollar strength… or consolidation?


The day started well enough, the Dollar displaying the weakness I preferred but ended the day back towards Friday’s highs. I want to call this a pullback but I can’t say I’m filled with confidence… On the other hand I find Dollar strength conflicting when attempting to marry the individual currencies together… The conflict I see is that if USDCHF rallies to new highs then it would indicate a much larger reversal. I’m not sure that really fits with EURUSD and GBPUSD… probably AUDUSD also… I could take a lower consolidation in EURUSD but not in GBPUSD that would require a new low.

The other thing of note, not directly related with Forex but just another warning signal, is that the U.S. Indices need a pullback at this time which would indicate a firmer Dollar. I don’t really expect that correction to be too deep so is perhaps more indicative of either a consolidation or just a deeper pullback in the Dollar.

Therefore, rather cautiously I’m more in favor of a firmer Dollar today but the extent is just a little vague and what it does to the structure a lot more confusing. But then, this is December so perhaps it is what we should expect…

Just a note on USDJPY… yesterday’s pullback lower was healthy though I wouldn’t really want to see it dip much more than we’ve seen already if this is to push back higher again. EURJPY looks to be in a similar position to EURUSD so my feel is that we’ll probably see some sideways consolidation in USDJPY while EURUSD extends its losses to reduce the impact of the downside in the cross.

As always in December… take care and be aware…

Good luck
Ian Copsey

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Monday, December 5, 2011

Dollar testing the limits of its pullback


Silly season is well and truly upon us and what appears to be the potential for the next 2-3 weeks to be rather messy and unpleasant. The rule of thumb is… expect the unexpected but if you’re expecting messy consolidation followed by a break of 5 points and a total reversal… then expect the expected.

Friday was not quite like that although EURUSD made a new high and whipped back lower. The Dollar highs seen by the end of the day were pretty close to the limits of a retracement. In terms of USDCHF it can’t really get much higher without risking a stronger follow-through. The same can almost be said for EURUSD and GBPUSD but they still have a little more leeway before the Dollar bearish move I have been eying breaks down.

Thus, I remain cautiously bearish for the Dollar but would like to see this confirmed today by some solid losses. At the same time I’ll keep an eye on the limits of any corrections. I do suspect that the losses, assuming them come, will be either rather untidy or will make s sudden rush. I’m not sure there’s an “in between.”

Overall I look at EURJPY and see that having broken key retracement resistance that tends to suggest it goes higher. Well, there is the risk of sideways consolidation but once complete the implication is for additional gains. So what takes it higher? EURUSD or USDJPY… or even both maybe? The latter has made a rather ratcheting and confused rally over the past three days, breaking above resistance and, from what I perceive, to be a break higher. I would have preferred a more strongly defined rally but the combination of this and its cross moving above key resistance does look quite bullish. If that’s true of USDJPY then there is an argument for it to have found its 33 year cycle low at 75.57. Be aware of that risk…

As always in December… take care and be aware…

Have a profitable week
Ian Copsey

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Friday, December 2, 2011

More consolidation or further losses?


It seems Wednesday’s Dollar losses were a bit too much of a shock for the market that it stopped dead in its tracks in fear. I made a small perusal of a few Elliott Wave sites and even saw some predictions for GBPUSD to rally to at least 1.78. There, or even a bit higher, has been my alternate target but it is way too early to begin to contemplate after just a few days of recovery.

At this point, yesterday’s subdued reaction is slightly disappointing but considering the sort of daily structure I think we’re seeing, perhaps it shouldn’t be too much of a surprise. There’s even risk of continued sideways consolidation today. However, I do feel that overall we’ll see the Dollar lose out whether it resumes today or early next week. It’s more a case of patience and observation. Should here be a deeper pullback then I don’t see it being much beyond yesterday’s Dollar highs.

A word on USDJPY… It did what it has become accustomed to doing… pretty much nothing… I can’t say it has broken its downtrend but I don’t see much upside left before we seriously have to consider the potential for another rush higher. I have the same doubts over EURJPY also which has turned its nose up against the downside it seems. Of course, it could be EURUSD that takes it higher but do note that if USDJPY rallies too far it would appear to have quite bullish implications…

So the message is basically the same as yesterday… note break levels… Until they break there is still risk of a dull day. Otherwise the outlook remains Dollar bearish to me…

Have a great weekend
Ian Copsey

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Thursday, December 1, 2011

Over the edge…


Well, that’s it… Today is the official start of the silly season… Not only is that due to the fact it is now December which will mean that the market will rapidly lose interest in doing anything, but also yesterday’s losses in the Dollar have implied we are now (almost certainly) in a daily triangle in GBPUSD and EURUSD. What do triangles mean? S&M… in the form of false breaks, whips and getting caned.

I pointed out in the U.S. Indices report that there was a risk of direct resumption of the uptrend. Perhaps the central banks got wind of my comments…

Right. Overall I reckon AUDUSD is probably a good buy & hold. That’s due to make a new high over the month whereas I can’t see this happening in the Europeans.

We should see follow-through lower in the Dollar today as more of the market will likely give up on their long positions… This first move will probably be the easiest of the month. Once we get to those lows the month will probably go downhill quickly.

This development may well complicate EURJPY also and much will depend on whether USDJPY maintains its current consolidation structure. I have occasionally mentioned that USDJPY has achieved the minimum projection from the 1982 high around 277.00. Currently it is reacting well within a bearish structure that would keep it within the recent range. However, EURJPY really needs to go lower now to maintain its own bearish structure. This could be a tough thing if EURUSD rallies too high or even if the bearish structure in USDJPY breaks down.

I suggest a lot of care at this point as it wouldn’t take too much to take this off-course. For the moment I’m bearish Dollars all round so it implied a mostly stable cross – but that isn’t what I feel the structure is implying right now. Be aware of what constitutes a break and the implications particularly in USDJPY and the cross…

Good luck
Ian Copsey

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Wednesday, November 30, 2011

Teetering on the edge


Have you ever been looking to cross the road, look left – no cars, look right – no cars, look left again and there’s a car coming, look right again and there’s a car coming that side too? The market feels a bit like that right now.

The larger Dollar bullish picture remains intact. However, with the current structures only GBPUSD could possibly reach its target. The Euro seems to have been caught a step too short. USDCHF has a few alternatives and is not really in the same situation though still with finely balanced intermediate bullish/bearish options. Metals have been rather directionless recently and in particular silver has seen a dead cat bounce. However, they’re both in that in-between stage within an overall bearish structure. The losses seen in the Dollar have pushed U.S. indices higher to break the last minor swing high and suggesting a potential reversal.

This last correlation is the interesting one. I am still bullish U.S. equities and have been calling the decline recently in a deep correction. I do see these moving to new highs but once the top is seen it does suggest a much larger decline. I mean a really, really deep correction lower… Therefore, on a broad basis, there is a correlation there. All that’s in question, to me at least, is whether the Dollar extends its gains directly and reverses for a deep pullback or whether it has an intermediate bearish correction. The trouble is that there’s little room in U.S. Indices to see much more of a decline…

This tends to push the bias in favor of the direct Dollar correction lower… This week, and maybe even today, is therefore critical for the next month or so. Given we’re moving into silly season where FX liquidity tends to disappear into black holes, the uncertain political and financial backdrop, there is a risk that the market takes the safe option and returns into neutral mode.

Today, be aware of what constitutes breaks in either direction.

Good luck
Ian Copsey

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Tuesday, November 29, 2011

Either the Dollar continues its rally or we’ll see a big consolidation


My Dollar supports held until Europe came in … and then they broke. It wasn’t what I wanted to see but those supports certainly provided the break levels well. So the analysis this morning was tough. Yes, I had to go back over the structures to work out what could be happening but the problem that then raised its head was how all the Europeans correlate with each other.

Problem number one was the fact that EURUSD has not broken the 1.3145 low. That would imply a potential consolidation if it goes much higher. Problem number two was that a consolidation doesn’t look appropriate due to the structure of the bounce from 1.3145… Problem number three is that, while not totally impossible the other alternative would be for the Dollar to be weak enough to rally above 1.5143… (I laughed when I thought of that one too…)

So what are the clues? While not perfect, GBPUSD is actually still on target in its decline. A small adjustment was necessary but it looks solid. At the same time USDCHF is poised between two scenarios – extending higher for one last push or… it goes back down to 0.8567. As far as I can see both indicate continued Dollar weakness but just one last bash before a deeper correction/reversal.

Reworking through EURUSD I can generate a bearish structure here also but I’m not quite so confident that it’ll reach the perfect target but if it continues to decline directly then it could get reasonable close and certainly good enough considering the fact we’re talking about a weekly target.

I also note that the U.S. indices are very close to breaking their downtrend and the correction there. There is one last chance that we could see marginal new Dollar lows in this correction but while these aren’t too deep the upside should resume… and must do so quickly to maintain the current Dollar rally…

Good luck
Ian Copsey

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Monday, November 28, 2011

I can’t see that we’ve seen the end of the Dollar upside


The Dollar continued to make solid gains on Friday and in a manner that still seems to suggest further gains to come. I had prepared the analysis just before open and thought there was room for another push higher before a correction. The gap lower on open was somewhat of a surprise therefore and needs a little more care. In most currency pairs it has occurred at a point where corrections can be shallow or deep. The exception, to a certain extent, was EURUSD which does raise a degree of risk that Friday’s low was not quite what I had thought. However, it is in a type of twilight zone where unusually deep corrections can occur but always cause some uncertainties.

It does therefore impose some risk over the situation which will require monitoring of levels across the Europeans in particular to determine whether this gap lower is telling us something more, or is just a deep pullback. My preference is for the latter. For the Dollar to stall at this point would leave it in no-man’s land, difficult to incorporate into a Dollar bearish scenario including one which implies a deeper correction.

I’m therefore still inclined to look for the Dollar to resume its uptrend though would prefer to make sure that we don’t see any further significant losses. Assuming I’m right then we should see another push higher but not to significant new highs to satisfy the targets that seemed to correlate across the board.

A couple of other notes: USDJPY still has one last rally to go before that resumes its losses. AUDUSD may well have found a low but with the Dollar still expected to be firm the Aussie may find the initial gains tough to hold on to. Likewise, EURJPY needs a pullback higher but does still look on an overall downward path.

Have a profitable week
Ian Copsey

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Friday, November 25, 2011

European revulsion spurs the Dollar…


My call for continued consolidation on Wednesday was obviously wayward with the market extending its rejection of the European situation with more immediacy. Clearly the two currencies hit most were EURUSD and GBPUSD that left the Swiss Franc looking down on them with scorn. It does rather make a total farce of Clause Trichet’s comments some 4 years or so ago in which he declared that global recession was a thing of the past. No wonder I prefer to focus on technicals…

Of course there is further to go but I’m not in the camp that calls for direct losses down to the 1.1879 low… yet… That event will take a little longer though I do see it happening next year along following the overall Dollar cycle low. Having said that, the rally in the Dollar Index appears to staved off the low I had been looking for soon and from the Index point of view it implies the cycle low was actually seen in March 2008… All that’s left, it seems, is to confirm a major cycle low in USDJPY and we’ll have a unanimous decision… When will that happen? Well, it’s not impossible that we have seen the final low as it reached its bare minimum target at 76.57 (well, 10 points away.) There could still be downside risk here and potentially driven by EURJPY.

Talking of the European situation – more EURUSD and GBPUSD – I still maintain we are in a major multi-month consolidation that is not yet complete. We are in the penultimate leg now that has some little way to go before we get a modest pullback – from a daily perspective. If USDJPY is to make further losses as I suspect then this is when it will probably occur to match with the European recovery. We could be talking some time around the end of quarter one next year.

For now we have to be more vigilant in looking for the current European trend to continue.

Have a great weekend
Ian Copsey

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Wednesday, November 23, 2011

More of the same… kinda…


With tomorrow being Thanksgiving the next report will be on Friday


The expectation of consolidation proved correct yesterday. There appeared little interest from the market to push the boat in either direction and to be honest I can’t see there being any change today, amplified by the fact that tomorrow is Thanksgiving and the potential for some to take long weekends.

However, I would just raise one potential risk, not that it takes us out of consolidation but instead widening the range. Yesterday I highlighted the chance for GBPUSD and AUDUSD to make minor new lows. The Aussie couldn’t manage to correct to the area I would expect to generate another leg lower. However, in contrast GBPUSD slightly exceeded its expected pullback and did make target… well, it stalled 2 points short. Now, that target implies a deeper pullback and therefore I feel there may be a mild risk that we could see the overall consolidation range widen, even for EURUSD and USDCHF. Therefore, bear this in mind for the day…

USDJPY rallied as expected but it was always going to be tough to know where it would stall. It did so a little under the last spike high and has turned down. Here we have to take care. It has corrected enough to see the next leg lower but at the same time there’s nothing to stop it extending its correction… Therefore I suggest leaving well alone until range break.

Take it easy today…

Happy Thanksgiving
Ian Copsey

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Tuesday, November 22, 2011

It’s not a time to go headlong into the Dollar…


The Dollar bearishness that marked the tail end of last week met a brick wall yesterday with gains seen across the board and more noticeably against the Pound and Aussie Dollar compared to the Euro and Swiss Franc. Taking off the binoculars and looking at the larger picture it does bring more focus on what still appears to be a rather messy near term outlook for the Dollar and what I feel may well be continued sideways consolidation overall. I’m pretty certain that it has taken away any potential for a larger recycling but I’m not sure it’s going to head in either direction with any heartfelt conviction.

One thing to note is that there does still remain a possibility of marginal new lows in both GBPUSD and AUDUSD. Perhaps there may be some friskiness elsewhere, but I can’t see the Dollar managing new highs against the Euro or Swiss Franc. These two in particular look as if they’re hitting a period of modest Dollar weakness but within range. Within this pair, if I see the Dollar weaker it’ll be against the Swiss Franc. USDCHF seems to have some slightly stronger downside risk but probably not until the second half of the day – which is when I see the Dollar being at its most vulnerable.

Elsewhere USDJPY has a quiet day and does still seem to be within a correction higher. I remain bearish overall but this remains in a very large sideways consolidation and I don’t really see and near-term potential for a break out of the 75.57-79.53 range and probably much together than that. Therefore the EURJPY cross will move in line with EURUSD overall and I can’t see that moving too far lower right now and more likely shifting its trading range a notch lower only.

Being what appears to be a consolidating market best take profits when you can.

Good luck
Ian Copsey

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Monday, November 21, 2011

Continuation higher or recycling?


The second half of last week witnessed a big tussle between Dollar bulls & bears. On Friday it looked as if the bears had won. However, it has been a scrappy time which caused a lot of head scratching, hair pulling and an eventual headache when trying to tie in wave ratios to individual currency pairs and also structures that seem to correlate across not only the majors but in equities also. I can’t say I’ve come out of the analysis process with clear and definite views with equities drawing me one way and currencies another.

The Dollar strength still appears to provide the underlying influence but we can’t totally rule out what looks as if there could be a deeper pullback and even recycling in EURUSD. In some ways I don’t have a problem with that except in terms of how this will slot in with what I still feel is a predominantly (U.S.) bullish equity market. Not that I don’t feel that equities cannot fall - I think they can – it’s more matching the degree of the moves in each market as the Dollar does appear to have quite firm higher targets.

So there’s a few factors to watch for this week and that even includes the probability that we may only have a 3 day week with Thursday being Thanksgiving which could generate quieter trading.

Of the opposing scenarios I have to say the recycling appears to have the better ratios and if so we should soon see the Dollar ease off through today and tomorrow at least. However, given the ambiguity it’ll probably be best to sit and watch the first part of the day to judge the market’s mood and look for a commitment to one direction.

Have a profitable week
Ian Copsey

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Friday, November 18, 2011

What’s the difference between a flag and a banana skin?


One is a continuation pattern and the other is a pain in the backside…

As far as I can see, that’s what our choice is today… On the one hand we have what could be a case for the Dollar to just keep on going higher while on the other we are seeing a reversal being set up. With Dollar bearish divergences building up we have to be aware of this reversal. What’s more, there’s even a risk of minor follow-through to make the flag look like a winner only for a marginal new Dollar high and reversal. I see that potential specifically in GBPUSD and AUDUSD. It wouldn’t surprise me to see EURUSD and USDCHF to fall for the same gag.

Having said that, there could be several variations of the same slip-ups in terms of how far any corrections can develop so we shall have to maintain concentration and awareness of key support & resistance. I had still been considering the potential for a deep recycling but I can’t see that this is implied across the board. Again, it’s something to consider but at the moment the idea of EURUSD moving back to 1.3806 doesn’t seem compatible with USDCHF. However, a modestly deep pullback could be possible though the underlying direction does look predominantly Dollar bullish, a factor we should not forget.

I would add one more clue – and that’s EURJPY. I have been looking for a slightly deeper pullback but it’s been struggling and the next projection is not excessively lower so the potential for a “not so excessive” lower low in the cross and pullback in EURUSD is definitely possible, especially when USDJPY remains in a coma.

So for today, look out for bananas… they’re not very ap-peel-ing…

Have a great weekend
Ian Copsey

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Thursday, November 17, 2011

Looks like the market has a bit between its teeth…


Yesterday provided several opportunities for the market to choose to double check, perhaps ease back on the gas, take a small breather, take a pit stop or allow for a deeper correction but each time the Dollar buyers came along and kept banging on those resistance levels until they, without too much effort, they just fell away. I had the same feeling this morning – perhaps we could just see a pullback now with Dollar bearish divergences beginning to develop – but no the market has stripped the poor daisy of all its petals and the collective decision appears to have been made.

There are still some possible banana skins to be avoided although, at this point, they seem more to be fairly temporary setbacks rather than any larger reversal. The biggest problem I had this morning was matching them up across the affected currency pairs in areas that would be correlated with respective structures. The second biggest problem was just the sheer noise of the moves that tend to make identification of major wave endings rather tough to identify. Thus, there’s still reason to be cautious, but for the moment the main risk is Dollar bullish and that’s something we shouldn’t really fight.

Perhaps the exception is USDJPY but since it’s moving in a semi-coma, broken only by short periods where it wakes after a nightmare and decides to have a panic attack, it’s one pair that seems pretty much unaffected by the developments in Europe. I still feel this has further losses to come, not as bearish as I once felt, but do note that it has met its minimum final projection in the decline from 277 in 1982 (only 10 points variance), is right on the month where a “perfect” cycle low is due so we should be aware that at some point it too is going to wake up and begin a very strong recovery.

Good luck
Ian Copsey

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Wednesday, November 16, 2011

Resistance creaking… but not quite broken…


Somehow, while GBPUSD broke support and USDCHF extended higher the Dollar Index somehow managed not to penetrate last week’s high. Technically it can still be counted as being in a bearish structure. Can it continue? Well, possibly but it will take some losses to get this back on track. Currently there are even some indications of Dollar bearish divergences in the hourly charts. That’s fine but they’ll need price to actually confirm those divergences – so again, any potential for the overall downtrend to remain intact is going to require some constructive losses soon else key resistances are going to crack…

Whichever way this goes I see quite a solid move through to the end of the year, and if history often repeats itself, then into the early part of January. Up? Down? I don’t really mind. However, I do see next year as a very positive one for the Dollar but that’s another story for another day… or 5 years.

Today… well, it looks like we shall get a pullback first. This, I suspect, will be the litmus test for what is to come – a correction or a total reversal – although the latter will obviously require someone in Europe to say or do something positive which does seem a very remote possibility to be honest.

Thus, take note of the areas that will generate the required break… and be aware that once the break occurs the subsequent move, in the medium term, should be pretty much one way…

Good luck
Ian Copsey

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Tuesday, November 15, 2011

Pulling petals off Miss Daisy


It feels like that sometimes… The Dollar goes up… the Dollar goes down… the Dollar goes up… the Dollar goes down… That would be fine if we knew how many petals were left over from all the currency pairs. There’s even the complication that quite possibly some currency pairs have seen their Dollar lows, but not all…

So here we are, back in that “in-between” moment peering over the cliff edge on one side and relative security the other. The cliff edge is slowly crumbling so that some daisies are now in mid air, some are perilously close to the edge but some with the potential to scramble further away from the edge only to be caught in the not-so-distant future…

What can be done? Well, first of all, keep your eye on the cliff edge. The very best break level I can see that could engulf all currencies is at – or marginally above – last week’s high in the Dollar Index.

Otherwise there still remains some chance that we could see some Dollar losses and the main drivers I see are EURUSD, AUDUSD, USDJPY and to a lesser extent USDCHF and GBPUSD. I can’t see any significant drop in either now. I have held that view in USDCHF for a while but yesterday’s drop in GBPUSD just doesn’t look good. This is the one that’s in danger of the crumbling cliff edge and desperately needs to see some strong, strong gains to clamber away to safety. It’s not impossible but boy, it’s making really hard work of it.

As mentioned, the Dollar Index also key as it really doesn’t have any (or not much) upside available before it becomes engulfed. Ideally this really needs to start pushing lower to re-approach the old 74.72 low and below.

For today, it’s another day to be flexible and be prepared to move with the flow. At this point, with a high level of ambiguity, it’s not really worth holding too fixed a view but more to be aware of the options and what evidence is required to narrow down those options to be able to take advantage of the next larger move.

Good luck
Ian Copsey

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Monday, November 14, 2011

Swings? May be not … roller coaster more like…


And…. the minor new Dollar highs were the winners… However, they didn’t last for long…

The solid reversal is encouraging for my Dollar bearish preference though clearly we’re still in the early stages of building a foundation for additional losses. During that process there’s still plenty of room for some deep pullbacks and I even fancy a new Dollar high in USDCHF before that finally turns.

The other factors that have contributed to the overall Dollar bearish view are the holding of the key resistance in the Dollar Index and the continued ability for U.S. equities to refuse to yield to the downside. I’d even point out precious metals that have obviously benefited from the recent market insecurity but are towards the end of a bullish correction. That silver has lagged so far behind does imply quite a bearish subsequent reaction.

So what does that bode for us today? Well, the first part of the day should see follow-through on the gap lower in the Dollar. I can’t see it getting too far at this stage and a correction due. Beyond that are some mixed signals – overall Dollar bearish but there appears to be a slight disconnect between the currencies in terms of their position within the Dollar bearish structure. Therefore, don’t be too surprised if there is a period of general consolidation, some pairs extending losses and then correcting while others consolidate. Once this is over we should see losses resume for the rest of the week.

Underlying message: Take care today but don’t get bearish too quickly – unless the Dollar breaks key supports…

Have a profitable week
Ian Copsey

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Thursday, November 10, 2011

Swings, roundabouts and seesaws…



With tomorrow being Veteran's Day holiday in the States the next report will be on Monday


The fresh green shoots of spring were quickly destroyed with a sharp frost and the swing between bullish and bearish continues. Indeed, it has taken on a potentially distinctly nasty structure with momentum looking quite firm for the Dollar. However, has it confirmed the Dollar upside? Not yet… certainly not enough to be able to hang your hat on it.

Perhaps curiously it is EURJPY that really grabbed my attention having swooped back down to just above the 104.74 corrective low. What’s more, just in any absorbing tale, it doesn’t look like breaking that low which would really lay on the bearish pressure for a drop below 100. Of course it could be USDJPY that thrusts the final killer blow but it hasn’t really shown that ruthless streak… Of course that implies EURUSD as the more likely aggressor.

Looking at GBPUSD and EURUSD – which both have these very clear opposing structural alternatives – momentum looks exceedingly weak and both seem to be salivating wildly with the opportunity of extending the losses seen yesterday. I have to admit that it does look inviting but it would be useful just to keep in mind the last gasp supports.

Today, while there are risks of minor new Dollar highs there is also suggestion that we need a pullback. Just where those stall will be crucial and could end this bickering between bulls & bears. I have stated my preference for a weaker Dollar but I’d extremely open to either side right now. Both suit my longer term (several year) view that we’re going to see a very strong Dollar.

Have a great long weekend
Ian Copsey

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Wednesday, November 9, 2011

Some signs of life…


We may be getting somewhere... maybe… It’s still a bit early to open the windows and shout out loud but a small whisper could be acceptable more for the mere fact we should be aware that yesterday’s Dollar losses do seem to have identified a small weakness in the Dollar bull’s armor.

For a start, USDCHF topped out perfectly at 0.9061-67, hit its initial target and is not that far away from the secondary target. Even USDJPY was rudely woken from hibernation to be pushed out of bed and down below support. GBPUSD did remarkably well despite its ragged, jagged and haggard performance so far this week…

Yet, in spite of these promises of an early spring neither EURUSD and AUDUSD could summon enough strength to break away from their tight range trading and the rugged structures that have developed. I can see potential for the Dollar downside to continue but from what I can see these two must take advantage of that small crack in the window soon else … err… it won’t…

So what if it they don’t? Well, I don’t think it’ll be the end of the world. I was looking at the medium term structures yesterday afternoon and I could still accept a new marginal Dollar high before the downtrend resumes. However, the picture I saw was more convincing for the Dollar bears whether it be direct or after a blip higher. There were too many correlations across markets – in particular equities and gold – that still point to Dollar losses into the turn of the year. Indeed, both equities and gold also held potential for another dip/rally respectively (to correlate with a potential spike higher in the Dollar) before all reverse.

So, to summarize, be aware of the Dollar extending losses but don’t forget the potential for a final twist in the tale and marginal new Dollar highs before the downtrend resumes…

Good luck
Ian Copsey

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Tuesday, November 8, 2011

Busy going nowhere…


The market spurned the chance to take more decisive action to allow the Dollar to subside into messy range trading. Indeed the structure it took overall provides it with the excuse to do very little at all again today – or for part of the day at least. This is a picture that seems to be valid just about across the board. Heaven help us if this is a show of solidarity with USDJPY to allow the all currency pairs to remain in 25-30 point ranges for the day…

It does therefore look like today will be a repeat of yesterday, though probably more Dollar downside risk than upside. At some point it’s obviously going to break and even if the Dollar has set up a structure that is totally ambiguous the break can occur very quickly. With the background being as it is the sharper move would probably be Dollar bullish as its hard to see the market shedding its fears at this point, and it’s fear that will drive price more aggressively.

Therefore it’s difficult to provide any stronger and robust view until the current status quo is broken. From my point of view the Dollar downside still appears to be the more convincing when taking equity markets into consideration and that is my favored outcome but at this moment it’s hard to argue the case or feel 100% confident.

Thus, for today we should be prepared for a day similar to yesterday but at the same time being aware of key breaks that will provoke a more directional move…

Good luck
Ian Copsey

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Monday, November 7, 2011

Is this the beginning of the end?


The market just didn’t have enough confidence to extend Dollar losses aggressively, concocting a rather complex structure that had some ambiguity in it and perhaps suggesting a subconscious back door route to extricate itself from being bearish. The Dollar gapped lower on open for the most part this morning and this is adding to the weight of argument in favor of Dollar losses. This remains my preferred outlook although I should re-iterate the delicate high-wire balancing act the Dollar is performing right now. Whatever the Dollar decides to do through to the end of the year, the outlook for next year is a much, much stronger Dollar.

For now I feel the stronger argument is still Dollar bearish into the New Year and that being the case it will need to demonstrate this today – at latest tomorrow – by extending losses in a constructive manner. If there are to be any currency pairs that take more benefit from this then I’d go with GBPUSD and AUDUSD which, in this position, both need to make substantial new highs. By contrast I feel that EURUSD and USDCHF will probably demonstrate weaker momentum. For GBPUSD a break above its 1.6166 high would be very beneficial and should then make constructive progress towards the 1.6618 high.

So for today, watch the short term projections to get a sense of whether the Dollar weakness is developing in line with expectations. Confirmation will provide a much stronger base for attacking pullbacks for potential selling opportunities.

Any break back above last week’s highs would be a bit of a dampener although there are deeper corrective resistance levels. However, it will run the risk of the alternate structure of Dollar gains within the larger daily consolidation into the end of the year – but still end with strength next year…

Have a profitable week
Ian Copsey

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Friday, November 4, 2011

Not quite out of the woods yet… but close…


If you go down to the woods today… you’ll still see the bears but may also be able to hear the bulls in the adjacent field snorting and not that far away…

There is still a sense of a delicate balance between the two opposing daily structures but yesterday’s developments certainly saw a sense of waning fear and a more nervous calmness begin to pervade the markets. Still, the short term structures seen since the Dollar highs have not been sufficient to totally rule out removing twitchy fingers hovering above the ”HELL, I’VE GOT TO BUY QUICK!” button, but I do see a greater potential now for Dollar losses to resume. One pair I have been watching closely has been USDCHF that I felt had completed its pullback at 0.8960 which implied the next move must be back down below the 0.8567 low… The fact that EURUSD and GBPUSD stabilized does seem to be a positive factor.

Still, there’s a way to go to confirm those latter two but the structures from yesterday’s lows in both have been constructive. It’s now a matter of the rest of the structure working its way through in a similar positive manner. We could find that today, while extending that positive structure may still not quite break the potential bearishness but as long as it’s made further ground I’ll feel a little more comfortable with the Dollar bearish outcome.

Until then we still have to be on our guard. Other than USDCHF there is still room for another bout of Dollar buying without breaking the larger Dollar bearish structure and if anything that is the factor that should warn us to retain that eye looking back over our shoulders so that we don’t get caught out. All being well, though, the weekend could calm the nerves more and see the Dollar extend its losses – and with some acceleration next week…

Have a great weekend
Ian Copsey

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Thursday, November 3, 2011

A delicate status quo…


No beams of light shining yet but there may be a slight opening in the clouds allowing slim sliver of silver slipping through. However, it’s much too early to start making claims of a reversal lower in the Dollar. If this reversal is to happen there seems to be limited room in the Dollar Index, but it wouldn’t surprise me to see marginal new highs first. In fact, I’d actually feel a little more comfortable if this final push higher did occur. In GBPUSD and EURUSD there is even a potential risk of sideways consolidation – although this doesn’t appear to be an option in USDCHF which probably heightens the potential for those new Dollar highs elsewhere…

Right now the market appears to be playing a waiting game, the structures developing providing several avenues that could be followed, both bullish and bearish in the near term, without committing to a more sustained directional move. With the fundamental background being what it is, that seems to be pretty obvious. It does, however, raise the risk of some messy, choppy trading ranges and thus the need to be rather cautious with positions today.

My preference remains for the Dollar to come out of this weaker. However, I’d not fight a stronger Dollar since as I mentioned yesterday there are still two very clear alternative structures that could develop through to the New Year. Beyond, through 2012 I still see the Dollar a very clear winner and with what should be a solid uptrend emerging over the early months.

Still, today we have to face the potential complexities, corrections that cloud collective considerations and cautiously cope with care…

Good luck
Ian Copsey

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Wednesday, November 2, 2011

Signs that the worst may be over?


The Dollar made some further solid gains yesterday and is certainly stretching the upside boundaries that provide that hazy, misty cloud that separates the beam of bright white light that leads to the heavens and a return to heavy mortality.

Can the Dollar still make new highs? Yes… and still not enter the white light? Just about… I feel that should be seen as a minimum. Momentum hasn’t really taken too much of a breather nor provided any definitive signal of a potential reversal at this point. Therefore we should still be very attentive to how things now develop. I do have two strong alternatives for how the final stages of a base for the Dollar to form a multi year low and I am quite happy to follow either.

I have a slight preference for the Dollar to weaken first but this scenario is going to need a solid and quite direct follow-through soon to be able to retain the sort of targets I have in mind – both in terms of price extent and time. The time frame appears to be around the turn of the year and is one that has a history of seeing major price reversals. Thus we have just 8-9 weeks to see the Dollar losses move above 1.5143 EURUSD, above 1.7042 GBPUSD (and probably closer to 1.80) and down to a minimum of 69.00 USDJPY…

If that scenario fails then the Dollar will rally within the larger weekly consolidation, possibly in the same time frame before a temporary pullback before stronger gains are seen next year.

So watch carefully today. I can’t see much room left on the Dollar upside that would absorb any further strength in one or two currency pairs without tipping the scales. Keep an eye over your shoulder for that bright white beam of light…

Good luck
Ian Copsey

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Tuesday, November 1, 2011

Cats & pigeons, mice & women… chaos…


Yesterday certainly threw a spanner in the works… Just about all the structures I have been looking at were tossed casually in a big black cauldron and thoroughly stirred, mixed and pummeled until all resemblance to their prior identity had been stripped away.

Probably the only thing I got right was the low in USDJPY… that it decided to seek succor from the heavens was not an alternative I had considered. Let’s start there. Does yesterday’s 500 point rally mean it is has met its 16.5 year cycle low? Well, I wouldn’t rule it out – it’s certainly in the overall window for a cycle low - but it’s not confirmed yet… A move above (around) 81.00-50 is going to be needed for that. However, I would now prefer it to reach the 80.23 corrective high before dropping to retain a stronger bearish structure….

Ironically, just as I had been considering a slightly weaker route for GBPUSD compared to EURUSD the roles switched. The latter collapsed and the former actually reached marginal new highs. It has pushed me towards a scenario calling for Dollar gains but probably unevenly across the pairs that heightens the potential for more choppy & erratic moves rather than the directional move seen yesterday. That should help momentum generate divergences.

For confirmation I took a quick look at the Dollar Index also just to check how things are there. There’s an argument for us to be pretty close to a normal retracement but there’s an equally valid one a little higher also and of the two I’d suspect the higher. However, from this point onwards I doubt we’ll see such direct moves but more a more choppy extension and that’s probably reflected in the individual currency pairs. The more medium term outlook is still bearish for now.

So today is going to be tough to be exact on support/resistance levels but I’ll try and identify the sort of areas that should see the Dollar top out for another round of losses…


Good luck
Ian Copsey

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Monday, October 31, 2011

More Dollar losses to come…


While I had looked for a pullback first on Friday I hadn’t reckoned on it taking ALL day… Whew… what a grind… Bottom line is: the Dollar still has further losses to come and the first few days this week look like being predominantly bearish. Today should provide a lot more information about the final stalling point in this decline depending on how deep the current correction stalls. Deeper gains in the Dollar, however minor, will reduce the final upside target. Direct losses will retain quite a bearish outlook for the first few days of the week.

This deeper pullback versus direct follow-through today is very critical. Direct losses would see a dip, correction and stronger dip before a deeper pullback. Any earlier deeper pullback and extension would imply lower projection targets and then a deeper pullback… Thus, watch how this develops today as it will tell us a lot about the final downside target.

A note on GBPUSD. I have been particularly bullish on this one but last week just didn’t generate the strength I had been looking for. In fact, when relating this to the position within the daily structure it appears to have been forcing itself into a corner. Therefore, there chances of this getting above 1.7042 appear to be waning every day. It does still have further to rally and broadly similar to the Euro but the manner of the rally from 1.5271 just hasn’t been what is needed to avoid losses below that low. Thus, be aware of when this current round of Dollar losses comes to completion.

Finally, USDJPY… dipping again on open today but still above crucial support… I remain bearish overall and actually still feel there is some way to go – but not directly. The move lower from 76.48 has been typically corrective in nature so expect this to recycle higher before it can make a more sustained effort on the downside.

Have a profitable week
Ian Copsey

HARMONIC ELLIOTT WAVE FORECASTS NOW AVAILABLE FOR U.S. & ASIAN INDICES

Friday, October 28, 2011

I guess you can call that move an extension lower…


It now seems strange that I was so cautious yesterday. Even U.S. equities were gagging to rally. Well, it came and there does seem much more to come. I am just bit surprised at how deep these losses have developed as the eventual target of this move seems to be around 1.47-48 EURUSD while the eventual final target around 1.5185. That does appear to suggest quite a steep pullback in between. That may not be such a surprise as GBPUSD found it difficult to hitch a lift and display more robust gains. This is a situation to watch with care as while it has broken above 1.6082 the impact of the anticipated (later) deeper pullback in EURUSD needs to be observed in case we revert to a alternative picture for the Pound.

Anyway, that’s a consideration for later. For now we’re due a correction higher in the Dollar. I don’t see it being exceptionally deep. There are a couple of scenarios I’m considering so quite where the pullback stalls today should provide a stronger clue. The other clue comes from the U.S. equities and they’re much in the same boat – potentially a mini follow-through higher today but then a pullback – but that’s expected to be shallow too. That tends to smack of a potential consolidation in Forex and therefore the possibility of a relatively quiet end to the week…

One pair to watch today is USDJPY. It may have found its low yesterday but there is still a mild risk of marginal new lows but I’m more in favor of this moving back to 76.48-60 again before it can make a greater impact on the downside. This clearly has an impact on the cross but having seen yesterday’s rally we are approaching a cloud of resistance and I’m not convinced that it will continue to remain strong.

Have a great weekend
Ian Copsey

HARMONIC ELLIOTT WAVE FORECASTS NOW AVAILABLE FOR U.S. & ASIAN INDICES

Thursday, October 27, 2011

We really need Dollar losses to extend now… else suffer a deeper correction


The general messy & chaotic range trading continued yesterday although extended its boundaries with some Dollar gains into the end of European trading. From that point onwards it renewed a more bearish Dollar losses over the North American afternoon. It wasn’t quite how I had envisioned things but in retrospect it does seem to have merely seen a larger recycling that points to the Dollar downside again.

Well, that’s the plan. I’ll feel a lot more comfortable when yesterday’s lows are taken out and assuming this occurs then I’d fancy quite a solid follow-through lower with a mild step up in acceleration. In addition, moves above the 1.4060-1.4100 area would also make a stronger statement of intent. The same is true of GBPUSD that now needs to break above the 1.6082 corrective high to provide a more significant break of the last corrective high on the way down. Once these breaks are seen the Dollar downside becomes a firmer structure. Until that point there still remains the risk of a deeper pullback in this overall Dollar bearish move…

USDJPY also played us around a bit and this now looks like it will recycle back to the 76.60-70 area which is a key retracement and pivot resistance area. Equally, this needs to hold to retain a direct – and probably stronger losses into the end of the year when the 16.5 year cycle should find a major low point.

EURJPY – still messing around and now needs a little more care having seen a reversal higher from a minor new low… This could resurrect another limited rally unless USDJPY sees a more direct fall from favor…

Good luck
Ian Copsey

HARMONIC ELLIOTT WAVE FORECASTS NOW AVAILABLE FOR U.S. & ASIAN INDICES

Wednesday, October 26, 2011

Momentum slowing and risks a pullback from a new low…


It was a bit of a weird day yesterday. The market seemed totally freaked out, not knowing what to do. So they bought and sold – not necessarily in that order – and probably hit the wrong ends of the range. Perhaps the more accurate forecasts came in AUDUSD and EURJPY which are not really known for obeying my subliminal influence. (Editor: takes tongue out of cheek.) However, both now seemed destined to rally although I can’t see these moving too far. AUDUSD should move to new highs in this move but EURJPY seems set to fall short.

Indeed, this general slowing in the Dollar’s decline does seem to indicate a modestly pullback after this next decline so I feel it’s a day to look for buying levels to take advantage of the pullback. USDJPY may already be in this mode having failed to extend losses by very much and actually looks like recycling higher. Overall, though, I still remain bearish on this one for the next intermediate targets below 75.00…

GBPUSD and EURUSD seem to be suffering from tripping over their own feet with limited follow-through and messy pullbacks. I still fancy these two to extend higher later today but we’ll have to see how robust that is – and for that keep watching momentum. It’s still Dollar negative but not really displaying a keenness to accelerate lower.

So overall it’s probably a day to take care and I feel the stronger pictures are being shown in AUDUSD and EURJPY which should be the better bet…

Good luck
Ian Copsey

HARMONIC ELLIOTT WAVE FORECASTS NOW AVAILABLE FOR U.S. & ASIAN INDICES

Tuesday, October 25, 2011

A bit of a pullback first but Dollar losses continue…


There were a few options open yesterday, the final developments providing more information though in some currencies the larger structure still has one or two ambiguities. However, overall the additional Dollar losses were constructive and we should see more developing.

The initial risk today does seem much like yesterday with the Dollar expected to generate a correction higher and possibly modestly deep – back to yesterday’s corrective highs potentially – before the next larger leg lower develops. Momentum still has a nice curving decline that should provide resistance to allow the decline to extend to new lows by tomorrow although in many currency pairs the next anticipated correction appears very brief so the decline could take on an acceleration lower through to Thursday or even Friday.

All straight Dollar pairs appear to be in accordance with each other, as do the U.S. equity indices that also made new highs yesterday. However, they too are due a pullback so the prospect for the Dollar to recycle higher over the European day should allow the indices to open lower.

EURJPY has been as sensible as expected. By that I mean it was all over the place… which was the expectation… However, I am getting the impression that it should end the consolidation today and my preference is for it to rally higher but not reach the 107.67 high. I still feel this has begun a larger correction lower but needs this additional push higher before it reverses lower.

Thus, today should provide some good Dollar peaks which look good for some pretty directional losses over the rest of the week so be aware of the sort of levels which should cap the Dollar and look for bearish set up entries.

Good luck
Ian Copsey

HARMONIC ELLIOTT WAVE FORECASTS NOW AVAILABLE FOR U.S. & ASIAN INDICES

Monday, October 24, 2011

Dollar weakness expected with shallow corrections


Friday saw new Dollar lows against the Yen, Pound and Swiss Franc – even marginally against the Aussie – but try as it might could not surpass the EURUSD 1.3914-36 highs… Looking at the daily charts there’s no real confirmation of a break of Dollar strength but neither are there any strong indications that we’ve seen the Dollar’s lows in this move. Indeed, Friday’s extensions do seem to indicate that the recent bearish momentum remains intact with the short-term charts displaying the potential early foundations of acceleration lower. Overall there’s more suggestion that not only will any immediate corrections should be limited but also a potential acceleration in the Dollar’s weakness.

Perhaps rather surprisingly this seemed to be portrayed best by the rush lower in USDJPY. This break is in line with the 16.5 year cycle low which is due over the next 2-3 months. I was particularly struck by USDJPY finally joining the general Dollar decline as it now correlates through all the majors and AUDUSD in the expectation of a final blow-off before a multi-year reversal. Not only that, but there also seems to be a correlated and fairly imminent acceleration in the Dollar’s decline.

So, the short term appears to provide the most uncertainty in terms of any bullish correction, a possible recycling of corrections. It looks very much as if we need to be prepared to identify bearish set ups…

Have a profitable week
Ian Copsey

HARMONIC ELLIOTT WAVE FORECASTS NOW AVAILABLE FOR U.S. & ASIAN INDICES