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HARMONIC ELLIOTT WAVE

Wednesday, January 5, 2011

The solar eclipse appears to have caused the market to go crazy…

Well, that’s the only explanation I can think of to explain why EURJPY has gone totally wild… The move higher appears too high to be counted as a correction and the pullback from that high appears to low to also be counted as a pullback… So which is it? Clearly we’re going to have to look at the straight Dollar-currency pairs to get any idea…

Let’s start with USDJPY… The high there at 82.27 was right in line with a retracement level I had as a reserve. Will it go down? I think so… However, there is a mild risk of a marginal new high before it does so… Whether it’s direct or from a marginal new high I do still feel this has to go down or risk further extreme confusion…

Then what about the Europeans? These three seemed to move totally independently of each other. EURUSD made a marginal new high but has dipped back down. GBPUSD moved sideways for most of the day and then shot higher then appears more to be seeing a correction rather than reversal. USDCHF on the other hand decided it was time to flex its muscles and try and compete with GBPUSD…

For the latter I feel that it’s hard to make a bearish case out of this move. It could easily still see a correction lower but I am rather reluctant to see this extend losses too far. The minor new high and reversal in EURUSD actually presents a very interesting conundrum. Unless it breaks the 1.3249 low by a large margin I feel the structure could well be a significantly bullish one…

If there is unwinding of positions to be seen from the moves towards the tail end of last year then a combination of all Europeans rallying is something that may not be too surprising… It’s not something on which I want to hang my hat but I feel it’s certainly something to watch out for but should be confirmed maybe today – more likely by tomorrow… Keep your eyes open for this.

AUDUSD seems close to an intermediate low and should be due a correction higher. I don’t think it has quite completed an entire correction but the level it has reached is one where I wouldn’t rule it out 100%. USDCAD looks pretty much set to test those lows again – just a matter of whether the correction recycles before it does…

Today’s free analysis is for USDCHF and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s Trader Package Review & Trade Set up report. (+45 pips)

Good luck.
Ian Copsey

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