Monday, January 10, 2011

Hey... why are you picking on me?

Cried the Euro as it waved goodbye to leave the other European currencies unscathed… A typical NFP reaction produced the normal mayhem as the market panicked one way, then the next but the market had its way… Down it went, even extending lower in early trading before most brokers had cleared the sleep from their eyes. However, both GBPUSD and USDCHF remained aloof, casting disparaging looks at the political union and even seeing GBPUSD actually rally after Friday’s release…

The apparent delinking between the Europeans continues therefore and somehow I have to make sense of the almost straight-line decline which began a week ago. There appears to be no return for it at this point though I do wait for some stronger pullback as must occur at some point. In fact its hourly chart reminds me of the daily USDCHF chart down from 1.1730… and I don’t think the latter has quite finished its larger decline yet though nor do I think it will continue directly at this point…

If I look at GBPUSD then there seems no doubt that it’s in a sideways consolidation, most likely a triangle of some sort and that will still take another day or two to work through with the ultimate result being losses. That tends to make me look for limited follow-through in all 4 majors and potentially providing a correction as we start the week.

However, the picture of Dollar strength is the more dominant influence right now and it’s more a matter of “when” rather than “if.”

I’d add that the picture in EURJPY is also beginning to show signs of some more persistent corrections. I Can see possible minor new lows as we start the day but a correction is due there also – but there’s still one more deeper decline required before a more sustainable correction develops. This pair is still very much in a downtrend.

USDJPY itself is at a stage where it can either extend the sideways consolidation but does seem to have more upward potential over time. AUDUSD… probably still a little lower to come but may consolidate ahead of that. USDCAD has also similar potential for a complicated correction before the downtrend resumes…

Today’s free analysis is for USDCAD and can be found on along with yesterday’s Trader Package Review & Trade Set up report. (+85 pips)

Have a profitable week
Ian Copsey

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