Tuesday, January 25, 2011

Well, has the Dollar bottomed out?

The general script I wrote yesterday appears to have gone to plan which begs the question whether the Dollar has bottomed as promised. Answer… eeerrrrr… maybe…

The EURUSD script couldn’t have been much better, the right support holding and a strong rally but which fell just short of target… only by 16 points. Bearish divergences are pretty mature and perhaps I can be forgiven for the shortfall. I have to admit though, the rally from the 1.3539 low is not as crisp and clean as I would like… That has left one or two doubts in my mind. The Dollar Index fell short of its target by 13 points and there are some decent bullish divergences there also.

However, we need to check across the board. Actually, I’d like to think that USDJPY has found its low. It seems to have a sound argument for that. USDCHF? Maybe… I’m not quite so convinced and actually prefer one more dip… GBPUSD? This was a pet bull a week ago. Yesterday’s moves could even be considered constructive … but it will take a break above the 1.6015 high followed by 1.6059 to really cement that structure.

What about the EURJPY cross? Well, a good chance that has topped. There are good bearish divergences but hourly momentum is beginning to creep higher threatening a break… but if that occurs will it be USDJPY of EURUSD that drags it higher?

AUDUSD is within a whisker of a more bullish structure. I wouldn’t want any higher else this could turn, like GBPUSD holds the same risk, strongly higher… Momentum doesn’t provide any clues here.

So, let’s just say I feel there are modestly firm indications of the Dollar turning higher. I do see some risk of minor follow-through in some cases – even EURUSD could surprise to reach just a bit higher but as long as the momentum conditions deepen the Dollar bullish divergences my preference remains for the Dollar to begin making gains…

Today’s free analysis is for USDJPY and can be found on along with yesterday’s Trader Package Review & Trade Set up report. (+55 pips)

Good luck
Ian Copsey

Harmonic Elliott Wave- fully fractal and measurable

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