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HARMONIC ELLIOTT WAVE

Tuesday, February 15, 2011

We should start seeing some stronger movement by the end of today

In many ways I am satisfied with yesterday’s developments. However, if these continue to develop as outlined a rather bigger issue will raise its head. I have been looking for EURUSD to find a low and rallying. What I had in mind yesterday was for USDJPY and USDCHF to push higher more promptly to see overall moves become correlated but this failed to materialize. Clearly something has got to give unless we’re to see EURUSD to move of its own accord.

The failure for GBPUSD to move lower has also concerned. I reacted yesterday to the rallies in USDJPY and USDCHF and also to the picture in the larger time frame and I have always had a mild preference to see these two rally quite strongly. Very clearly there’s a conflict. Either EURUSD and GBPUSD have to decline more aggressively than I had thought or USDCHF and USDJPY have to recycle back to their respective lows…

Therefore it’s going to be an interesting day to see which scenario is going to play through. I can see individual arguments from both sides. In many ways the decline in GBPUSD appears too deep to permit another push higher but then its decline has hardly been strong. EURUSD has quite good support – and a zone which may be used as a break level but the bullish divergences look quite firm. However, we don’t really have bearish divergences in USDJPY and USDCHF…

Any clues elsewhere? Well, EURJPY actually did pretty well yesterday and seems to be following the intermediate triangle that should keep it in a sideways consolidation for another 2-3 days. That in itself suggests that we should see USDJPY and EURUSD remain fairly well correlated but with the Euro losing out against the Yen mildly over that period. Will that be from a weaker than expected Euro or USDJPY?

Elsewhere USDCAD seems quite close to finding a bottom. It’s messing around just a little but once it gets below 0.9800 it shouldn’t take long to bounce right back. AUDUSD also has fallen into range trading and needs to start higher quickly if it’s to break in one direction or the other…

Watch levels closely today and bear in mind the impact of correlation – or lack thereof…

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

Good luck
Ian Copsey

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