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HARMONIC ELLIOTT WAVE

Monday, February 7, 2011

At this point I think we’re seeing a correction only…

While I have been able to work with the 1.3860 high and pullback in EURUSD, I had voiced concerns over the impact of any deeper retracement in USDCHF and USDJPY. These two appeared to suggest that if they broke the highs prior to the NFP that the upside would look a lot stronger. Well, they should move higher, and EURUSD lower but on looking back, for the other two, there is risk of a sideways consolidation and this could still fit into just a correction in EURUSD.

What this does present to us is a stronger identifiable band of Dollar resistance across all three currency pairs which will become a crucial pivotal point between Dollar bullish & bearish. These levels are likely to be reached either by late today or into tomorrow. So whatever happens, the rest of the week promises a stronger directional move.

Now, I have made mention of three out of the four majors… What of GBPUSD? Now there lies a slightly bigger puzzle. Ideally, unlike the other three, I wouldn’t want to see any further losses… The decline from 1.6277 does look more corrective to me but from the view of ratios it’s not that far away from being a start to a stronger bearish move… It’s this one that keeps me slightly on the sidelines and retaining a more “wait & see” attitude to assess the next moves before deciding – and at the end of the day will probably work in with the pivotal Dollar resistances in the other three.

If anything I still err on the side of Dollar bearish due to the just about perfect development in AUDUSD which still looks bullish while USDCAD looks bearish overall.

The only other pair to note is EURJPY… Now that has bounced well from the area I had expected. As long as Friday’s low now remains intact the implication remains bullish. Clearly that implies that either EURUSD or USDJPY will rally strongly… or of course both. I think we’ll be able to use the 110.77 low as a key indicator to something more directional happening elsewhere…

Today’s free analysis is for USDCHF and can be found on http://www.fx-forecaster.com/DailyForecast.html.

Have a profitable week
Ian Copsey

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