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HARMONIC ELLIOTT WAVE

Thursday, January 20, 2011

It would be nice to have a day that was simple… today is not one of those…

Sometimes the structures develop like a dream, projections work and currency pairs correlate… From that perspective yesterday was a nightmare. It leaves me trying to pick out individual structures and uttering a deep sigh as no one currency seems to fit in with the others. That is a reflection of this morning’s analysis…

If we take EURUSD the initial cap at 1.3507 and then at 1.3537 were pretty much pin point. Now, these levels were implied within a scenario that would imply a recycling back to 1.3209-43. However, the bearish momentum divergences broke down. Never-the-less that would be my preferred view – so see a recycling…

The consolidation in GBPUSD, while not making a new high actually fits in with a deeper correction also. However, quite where we are in that pullback is unclear but certainly still at an early stage. USDCHF made a new low but seems totally tizzy-headed, flittering around like a drunkard looking for his next tipple… However, I remain with the basic view that a deeper pullback is required even in a larger bullish recovery.

USDJPY just declined but the structure there looks like a 1 year old learning to draw… However, I do feel there should be quite definable levels to maintain the downward move or see a break back higher. At this point the structure, if I have it correct, appears to imply a move just below the 79.70 low before a correction. That should put downward pressure on EURJPY. However, if I look at the cross individually I’d still prefer a move back to around the 112.18 high before the move lower develops. Therefore this requires some close attention.

USDCAD still points higher but I remain bearish in the longer run. AUDUSD… probably saw its high yesterday and now we need judge whether the decline will make new lows or just completes a correction.

Finally, the Dollar Index seems to have completed the penultimate low but requires a pullback before it can attack the final low for a reversal higher. This in itself tends to point more to weakness in EURUSD and GBPUSD followed by a final move higher. Thus, that’s where I’m going to be pointing today but just be aware of the background confusion.

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. (+60 pips)


Good luck
Ian Copsey

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