Friday, January 21, 2011

Partial clues

Yesterday had some success in a few areas. What really let me down was the limited bearish action in EURUSD and rush higher in USDJPY – with the consequent impact on the cross. I had to look hard at both EURUSD and USDJPY today. In many ways I’m rather happier with the recovery in EURJPY as it tends to suit the original view I had. What’s more, I wasn’t entirely satisfied with bearish USDJPY view as it made life tough matching potential downside targets across the timeframes. Happily, all that appears to have been solved.

I took a look at the Dollar Index also and this has focused my approach once again. Its pullback higher was actually in line with my expectations – that this is a correction and there’s one more low to come. When I look at the individual currency pairs this does still seem to be confirmed all round – with some doubts over GBPUSD… So… it should be a Dollar bearish day today… However, once this decline is complete be prepared for a reversal that should see quite solid strength as the Dollar Index does need to move back above 81.31. I suspect much of this will be fueled more by USDCHF, USDJPY and probably AUDUSD… and by EURUSD but I suspect to a lesser extent.

Right, now for some possible complications. GBPUSD seems to require a new low before it can rally… I also have USDCAD looking to be the contrarian also – a new high expected later today but that would appear to suggest subsequent losses…

Even EURUSD has a rather ambiguous short term look about it and I wouldn’t argue to ferociously if someone argued that should see a marginal new pullback low also. There we may need to balance with the EURJPY cross which itself needs a minor correction – but not too far – before that follow-through higher. Once this has reached its ultimate target it will imply a deeper correction lower.

So I suspect the first half of the day may well be a bit ragged and choppy but by the end the Dollar should begin to lose out…

Today’s free analysis is for EURJPY and can be found on along with yesterday’s Trader Package Review & Trade Set up report. (+50 pips)

Have a great weekend
Ian Copsey

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