Tuesday, January 11, 2011

The Euro takes a breather

Yesterday’s EURUSD spike lower in thin Australasian trading appears to have provided a low that has potential to provide the deeper pullback I had been waiting for. It’s still a little difficult to identify the precise retracement targets but there does still seem further to go.

Add to that the risk of recycling or continued sideways consolidation in other currency pairs the outlook looks pretty bleak today in terms of either strong directional moves or the risk of further choppy price behavior that could see stops whipped out.

There also appears to be a certain disconnection between currency pairs, reduced correlation and a go-it-alone type attitude. The good news is at the end of these individual corrective structures we should see some more significant directional breaks and from what I see, all Dollar bullish. Patience does therefore seem to be the by-word for today but I feel there’s a good chance that by some time tomorrow we’ll begin to see the Dollar resume its move higher.

Even EURJPY has become a little stuck and faces what I see is more potential for choppy pullbacks before extending its losses which I still see coming from EURUSD. We do seem to be approaching a more significant period of correction for this cross but, again, more patience is required before that should be seen

So there’s not a lot to note today above and beyond the points I have mentioned. Certainly I feel it’s a day for caution and possibly to be safer a day to keep trading to a minimum unless some clear and obvious trades pokes its head up. Waiting for the limits of the expected corrections appears a better strategy.

Today’s free analysis is for EURJPY and can be found on along with yesterday’s Trader Package Review & Trade Set up report. (+35 pips)

Good luck
Ian Copsey

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