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HARMONIC ELLIOTT WAVE

Friday, February 11, 2011

It looks like another critical day today…

What a mixed bag yesterday was… EURUSD gave up… slipped through the 1.3667-76 lows and extended losses. On the face of it that should send the Dollar higher. However, always in the back of my mind I also had the upside barriers in USDCHF at 0.9696-0.9739, in USDJPY at 83.30-67 and EURJPY at 113.23-53. Well, bingo… that’s where they are now roughly.

At the same time, I can’t really find a particularly constructive set of wave relationships in the Euro’s decline. Theoretically this should imply losses below 1.3507 but we’re getting hourly bullish divergences to match the bearish in USDCHF. To cap all that GBPUSD refused to jump on the bandwagon. I had almost given up on the 1.6010 support but clearly there was an aversion to additional losses right at that level…

So is the Dollar bearish or bullish? Good question…

Well, confining myself to USDJPY only at this point, the hourly bearish divergence is not that strong and 4-hour momentum is looking pretty determinedly bullish. There are still the 83.67 and 84.50 highs to surpass but it actually looks as if it wants to have a good try…

Elsewhere, the Europeans are determinedly confused… Momentum is tending to suggest Dollar weakness and if that’s the case EURJPY should find the 113.53 resistance a breeze. That’ll be one clue though of course its fate may well be decided by USDJPY. Another key level for me is yesterday’s 1.6009 GBPUSD low. That will need to break to put a final end to the upside – or on the other side of the coin a break above 1.6140 & 1.6184 would risk sending it skyward again.

As for EURUSD and USDCHF… well, given the Dollar bearish divergences I’ll await breaks… However, if USDCHF manages to surpass the resistance levels I’ve laid down it could hang on to USDJPY’s coattails and thus also send EURUSD lower also…

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

Have a great weekend
Ian Copsey

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