Thursday, February 10, 2011

It ain’t over till the fat lady sings… but keep your ears open today

The Dollar lost out yesterday, the rally in EURUSD modestly impressive, the drop in USDCHF expected. But the pattern of Dollar weakness wasn’t totally uniform with USDJPY rallying while GBPUSD and AUDUSD really failing to take advantage.

When I look at EURUSD I can make out a bullish structure but it stretches the imagination rather – a bit like standard Elliott Wave fantasy guesses you see splattered around the internet – so I’m not really getting too excited about seeing the Dollar downtrend resume. I can’t 100% rule it out but I’ll wait for it to confirm a little more. The problem here is the hourly bearish divergence in EURUSD that takes away the gloss of my imaginative count, as much as it has some fairly decent wave relationships…

So what of the Dollar upside? Well, there are some inconsistencies here too. It wouldn’t take much for EURUSD to extend its losses. I tend to prefer seeing USDCHF rally also. Now, what does concern is that both GBPUSD and AUDUSD are sitting right on top of key supports. These two have virtually no wriggle room for losses now. In other words, much below their recent respective lows would appear to suggest a total reversal.

The reverse argument is that perhaps these two on their supports are suggesting the Dollar losses will continue… Well, they have to do so promptly otherwise that wriggle room will slip behind them in a brief whisper of breeze… One more harbinger of EURUSD gloom is EURJPY. It rallied quite consistently yesterday but not in a manner that points to immediate follow-through higher. Instead it looks like remaining in the recent range and that probably reflects a lower EURUSD…

So if I’m to plump for anything today then it’s a higher Dollar but in spite of the warnings being flagged by GBPUSD and AUDUSD I’ll refrain from total breakdown of the Dollar downside and note there are still key Dollar resistance levels to break and until they do I’ll be watching closely…

Today’s free analysis is for EURJPY and can be found on

Good luck
Ian Copsey


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