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HARMONIC ELLIOTT WAVE

Wednesday, February 16, 2011

To correlate or not to correlate… that is the question…

…and I’m not sure of the answer…

Yesterday provided a mixed bag of individual moves but it seems to me as if there is a common theme developing but may take until tomorrow or Friday to see a uniform end result. Overall there seems to be a growing convergence towards Dollar gains but at this point not quite all currencies are apparently prepared to conform to this…

One more that was added to the pot yesterday was AUDUSD with its decline which has extended this morning and seems to be heading lower. USDCAD had a sideways day but sets up the same outcome – a move to minor new lows which should be followed by a deeper recovery higher.

USDJPY progressed nicely, albeit it at its own pace while USDCHF has reached the higher end of the support area I have been touting. It may just dip a little more and probably I favor that but it’s very much in line with a bullish Dollar.

That leaves us with the prime European pair… GBPUSD and EURUSD. Frankly, while GBPUSD rallied yesterday it really was in a bit of a messy manner which doesn’t engender much confidence and actually tends to point to it being a correction rather than a more directional rally…

So what of EURUSD… Ahhh, this is interesting… The recovery to just below the 1.3557 high could be seen as a correction and still allow the drop to my target. The interesting point about this rally is that the correction has been in a manner which could be treated as a complete correction but could also trigger one more corrective pattern high. If that’s the case then EURUSD will also fall into the Dollar bullish camp…

One more thing to watch is EURJPY… itself pretty much in the balance but may rely on the outcome of EURUSD…

All eyes are on the first move in EURUSD today in that case…

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

Good luck
Ian Copsey

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