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HARMONIC ELLIOTT WAVE

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 http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s Trader Package Review & Trade Set up report. (+50 pips)

Have a great weekend
Ian Copsey

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