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HARMONIC ELLIOTT WAVE

Friday, February 4, 2011

Time for a rethink…

The past two day’s have blunted my Dollar bearish argument considerably. The only two currency pairs that moved close to forecast are GBPUSD and AUDUSD. Those alone provide me with stronger reasons to retain the view. However, EURUSD failed miserably while USDJPY and USDCHF made gains they are left in a tantalizing area of indecision. To be honest, even with EURUSD the rally hasn’t totally broken down and I can still see wave relationships that would imply a target at 1.3940-45 but the drop has been sufficient to take the warmness from the call.

Well, it is one of those days today… you know, the “hold on tight as the market rips out your guts and puts them back again – but not necessarily in the same position” day… aka Non Farm Payrolls release day… These are days to expect the unexpected… but I’m now not sure what to expect.

However, there are some clear break levels for the Dollar decline and as a basic start to making decisions these should be watched with care. As I mentioned, while not entirely going as I had expected GBPUSD has been left rather unscathed and the bullish structure most certainly in place. It may have found its low though there is room for further minor slippage. If the key support breaks here then I’ll throw in the towel. The same is true of AUDUSD although this is due a bit of a pullback – not too far – but as long as it holds supports this too remains quite bullish.

Elsewhere USDCAD appears close to a retracement resistance and should see losses. EURJPY has also declined much as I had looked for… I have a fairly balanced view here between bullish & bearish, perhaps slightly more biased to the upside. This bias would still allow a marginal new low but then we need a more decisive decision being made – either it will drop to 108.10 or rally to 115.67… such is the extreme difference between the two…

So, it’s a day for observation into the NFP figures tonight. Watch key Dollar resistance levels and be aware that while these hold the Dollar remains in quite a finely balance moment but one which should define the much larger picture for the coming month or so…

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

Have a great weekend
Ian Copsey

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