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HARMONIC ELLIOTT WAVE

Tuesday, February 22, 2011

Signs seem to be pointing to a lower Dollar

Friday saw Dollar weakness which, while stretching the Dollar bullish scenario in the majority of currency pairs, has really begun to firm up more of a bearish outlook. USDCHF has dipped just too low now and GBPUSD almost back to the 1.6277 high… EURUSD, in terms of a possible retracement could still be argued to be remaining in a bearish structure but the overwhelming evidence suggests to the contrary.

I took a while over the weekend taking a look at the longer term charts. I have always been Dollar bearish and see no change. The only question mark that remained was whether we in the final descent or whether there could be an intermediate pullback. It seems more likely that the bearish cycles are pressing their influence already.

Now, in saying this I’ll point out that we’re in a position where this decline should extend towards the 1.4281 high – or thereabouts – and then imply a much deeper correction. This is also reflected in USDCHF also though it should extend some way below 0.9300. GBPUSD is in an upward mode but still apparently some way from its final peak and may just become more complex as time goes by – but basically expecting a rally still.

There is one exception, I feel among all tis – USDJPY. Well, at this point, let’s just say “potentially.” I still feel this is showing more bullish tendencies but within what may be a rather choppy rally. We’ll have to see whether the balance works but it’s not impossible for this pair to consolidate while the others see Dollar losses and this tends to be borne out, to a certain degree, in EURJPY. However, we’ll have to watch supports in USDJPY closely as in the longer picture this does also look very bearish.

For today I feel we’ll probably be seeing Dollar losses extend, not excessively but overall with a bearish bias and probably needing until Thursday or maybe even Friday before we achieve the 1.3860 high again.

Have a profitable week
Ian Copsey

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