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HARMONIC ELLIOTT WAVE

Tuesday, February 1, 2011

So far… not so good…

No, no no… that wasn’t meant to happen… bad market… BAD market… Sit! Beg! Actually, those last two words were aimed at me… Well, yesterday’s moves have forced me to sit back and think again. What do we have?

Bearish Dollar: The strength in EURUSD and GBPUSD, failure for any meaningful strength in USDJPY & USDCHF, a strong AUDUSD, multi-year bearish cycles

Bullish Dollar: EURUSD & GBPUSD haven’t penetrated their highs, USDJPY & USDCHF holding support levels, Dollar Index not quite breaking the 77.47 support

In particular it seems too early for both USDJPY and USDCHF to continue its long term decline, though that’s a wholly subjective viewpoint but it’s one that does keep me sitting on the fence somewhat. Having said that, I’m not going to sit in the way of any further Dollar weakness should this develop further today given we should be in the final leg lower in a multi-decade Dollar bearish cycle. Anything that happens in between is merely cosmetic as far as I am concerned, making a structure fit more snugly.

Obviously, sitting on the fence also means there are limits to how far I can sway either way and identifying those limits is the core task I had in the analysis this morning. I’ll highlight those within the report so be aware of the impact of the breaks – whichever way they go. If this does extend the Dollar weakness then at this point I can’t see there’s any going back… In other words, the rest of the year will have a dominant bearish theme…

The only other point that may have an impact is that I feel we are very close to a major high in the Dow Jones Industrial Average. My favored target is between 12,285-12,335 with the anticipated correction lower expected to be around a full 20% price drop – so back close to 10,000… I estimate this should occur sometime next week and suggests some major change in sentiment. Quite what the market will make up as the excuse I don’t know… but I do feel quite strongly about this having called for this area in the middle of last year.

Today’s free analysis is for EURJPY and can be found on http://www.fx-forecaster.com/DailyForecast.html along with yesterday’s Trader Package Review & Trade Set up report. (+40 pips)

Good luck
Ian Copsey

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