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HARMONIC ELLIOTT WAVE

Monday, January 31, 2011

So far… so good…

The status quo stretched far into the end of the week and finally, it seems, we have our reversal. I say reversal but the only clean break was in EURUSD. The lack of enthusiasm shown by the other 3 majors is somewhat of a concern and that’ll require a little further monitoring to ensure they pick up their socks and decide to succumb to the Dollar’s strength. This could even imply minor new lows in USDJPY – the drop there defying what I had thought to be the start of its own rally.

Let’s not get too carried away with the drop in EURUSD also. I do prefer an overall Dollar view but on this late Friday showing the only thing it has done is break below a wedge support and reacted at the first target at 1.3572. The Dollar Index has also not managed to break above the key prior swing highs at 78.40-50. So there’s still work to be done and until it’s complete we cannot totally take our eye off the ball.

The big clue for me still lies in EURUSD – a completed wedge pattern which tends to reverse to meet its target relatively swiftly. It began at 1.3243 and therefore it should imply a drop close to that corrective low in quite a persistent manner. Thus, any deviation from a “persistent manner” will raise the attention we need to pay on key Dollar support levels. At this stage I would not expect any deep correction and certainly nowhere close to the broken wedge support line.

A note on USDJPY… The drop was clearly note expected but I find it hard to see how it can rally directly at this point but probably require just one more low. This could be between 81.84-97. At a stretch I could see a dip below but not by too much. If my Dollar bullish view is correct then USDJPY should be one of the drivers along with USDCHF… The lack of follow-through after EURUSD does bug me a bit.

Thus, today’s a day for watch for key Dollar resistance levels to be broken to confirm further strength that should last for a few weeks at least…

Today’s free analysis is for USDCAD and can be found on http://www.fx-forecaster.com/DailyForecast.html along with Friday’s Trader Package Review & Trade Set up report. (+15 pips)

Have a profitable week
Ian Copsey

VIEW VIDEOS INTRODUCING HARMONIC ELLIOTT WAVE

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