Tuesday, January 18, 2011

The Dollar Index appears to show the larger picture

I had a quick look at the Dollar Index over the weekend… My impression was that in the much bigger picture that it looks bearish. However, more likely it hasn’t actually finished the consolidation from the low back in March 2008… It certainly looks like a triangle, though we have to remember that these can easily morph into other patterns. However, at this point it looks quite convincing. However, it does seem to require one more rally after this current decline.

So this morning I set about looking for what would drive the Index back higher. On Friday USDJPY was one of my favorites but it has sure slipped below my supports. I wouldn’t want this to slip any further else it would imply a much stronger decline…

EURUSD… Yup… I can see that reversing lower after this current rally…
USDCHF… Yup… I still prefer this higher but it needs to get its socks on…
GBPUSD… … … I’m surprised but I felt the rally seen has made this look quite bullish but with a risk of a minor pullback. In the bigger picture this is still a strange one as it really appears to be under the influence of a multi-year bearish cycle, though probably in a sideways consolidation at this point.
AUDUSD… always a law unto itself and at this point wouldn’t want to suggest too much though this current decline hasn’t really damaged the larger monthly uptrend.
USDCAD … I still view the break down from last year’s long sideways consolidation as bearish, the question being how long it can hang around before it finally heads lower more aggressively.

The overall multi-year cyclic expectation I have been working with does still suggest another 12 months (approximately) of a larger bearish Dollar influence and that seems to work with the Dollar Index. I’ll keep this loosely in the back of my mind. I do feel that over the course of the next few days we shall see the Dollar end this current downward move to resume the recent strength. The key will be how each of the currency pairs develop.

Today’s free analysis is for USDCHF and can be found on along with Friday’s Trader Package Review & Trade Set up report. (-15 pips)

Have a profitable week
Ian Copsey

Early birds’ discount available for the first Harmonic Elliott Wave webinars available

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