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HARMONIC ELLIOTT WAVE

Wednesday, February 23, 2011

Not quite time to give up on a lower Dollar…

Yesterday was “one of those days” … pretty much a disaster. The easy thing to do is turn back to a bullish Dollar. Maybe that’ll prove correct but not everything went right for a bullish Dollar either. USDJPY has slipped further than I had expected … and USDCHF didn’t really flinch at the moves elsewhere to keep it more firmly on the bearish side.

Exploring the Dollar bearish side there are still some potential conflicts to resolve. There seems little room on the downside in this current move lower. However, in its European counterparts there’s a comparatively stronger rally required to the next pullback point. Considering the rather controlled decline in USDCHF that may not be a problem but we’ll need it to correct quite firmly once this decline is over and if the bear side is to occur this element will need close attention.

And what of the Dollar bullish side? Well, I could take a bullish USDJPY but it’s pretty tough to conceive a structure to support a bullish USDCHF. If anything it’s this element that keeps me in retaining a more Dollar bearish view. Well, that and the multi-year cycles…

On USDJPY I am pretty balanced. In the larger picture I am firmly bearish. However, a current bullish rally would make the structure fit more snugly. So on the one hand I prefer the Dollar bullish side but also aware of the larger bearish cycles. Perhaps much will depend on EURJPY which, if I adjust my perception could still be within a rally but I feel we may need to allow for a period of consolidation. This could still be a key element in identifying the underlying direction…

Having had my fingers burned badly yesterday I’ll be more cautious today. If I have any preference then it’s still Dollar bearish but perhaps one step at a time today…

Good luck
Ian Copsey

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