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HARMONIC ELLIOTT WAVE

Friday, January 7, 2011

I really want to be Dollar bullish… but it’s still tough…

Well, EURUSD broke lower. The other 3 majors remained in their trading range… AUDUSD moved a bit lower, USDCAD retraced as expected and EURJPY dropped…

There’s nothing conclusive in all that. It does seem to demonstrate a certain disconnect between EURUSD and the rest but hardly with any real spirit. If you look at the decline in EURUSD from the 1.3433 high there has hardly been much of a correction. That isn’t normally a sign of a true directional wave. It may just develop but will need a deeper pullback at some point… Indeed, unless 1.2960 breaks (yes, not the 1.2968 low – and which has been retested over the past few minutes) and followed by 1.2928 & 1.2909 without any deep correction I’ll still have a reluctance to call this any lower for the moment…

Even the structure in GBPUSD doesn’t appear to be that bearish. It’s possible to see it develop – but almost certainly need a pullback of come kind first. USDCHF is in a situation where it just needs to get on with the rally and pretty quick if it is to avoid a deeper correction. I’m open either way in this, the still thin New Year markets continue to generate rather extreme projections, shallow corrections and sometime extra-deep ones. It’s easy to bite at the Dollar bullish bit with the eye for robust gains but price needs to demonstrate this all round. Right now there are just too many inconsistencies to make me feel that comfortable.

Even if we consider EURJPY… fine, it declined yesterday and ostensibly in line with the general bearish trend that had been developing well until the pullback to 110.23… The problem is fitting this into a structure with correct ratios that would suggest that it is going to extend to the 100-101 target area. It has stalled just too high for this to occur…

Thus, even here I feel a pullback is due – and potentially a lengthy sideways consolidation before it can extend losses. The risk is that it will not and just head above 110.23 again – an event that would make the long term picture quite bullish. That doesn’t quite sit well within my expectations which raise the risk of consolidation.

Thus, I still feel patience and care is still required…

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. (+0 pips)

Have a great weekend
Ian Copsey

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

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