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HARMONIC ELLIOTT WAVE

Thursday, March 24, 2011

Further Dollar gains expected…

In particular the outlook for EURUSD worked extremely well yesterday and at this point, as long as we don’t see any early recovery the prospect for this to extend its losses seems on track. There’s quite a bit more to go as well… This downturn for the Euro appears to have jabbed a spike in the side of the docile USDCHF which, in spite of the minor new corrective low I didn’t allow for, does seem to have, at last, to have awoken from its brief hibernation and managed to clamber higher as if someone stuck a sharp needle into its derriere… All’s good there and both should extend their individual moves over the course of today and into tomorrow.

Where I did kick myself a lot more yesterday was in GBPUSD. Having called the 1.6400 high I had a fit of doubt with short term momentum looking strong… I shouldn’t have doubted as it more led the way to drag EURUSD in its wake. It may have potential to stall and move sideways for a part of today but I can’t see this reversing higher right now. Too many bridges were burned yesterday…

So the Dollar has at last shown some mettle against the Europeans. As a generality I suspect this will continue but not without a deep pullback and this I suspect maybe the story for next week. However, the Dollar strength against the Europeans failed to have any impact on USDJPY… I’m watching EURJPY for signals here. Yesterday’s drop to 113.84 was quite positive but the recovery hasn’t confirmed any stronger follow-through yet. I can see risk of minor new lows in both USDJPY and the cross but we’re dabbling a little with key supports at a time when EURUSD is looking vulnerable. If the cross is to recover – which is my preference – then USDJPY needs to pull its socks up and get on with the business of rallying else we’ll see both JPY pairs begin to sink further…

Interestingly I was right about the Aussie, extending its gains and in defiance of the Dollar’s resurgence elsewhere still seems to have potential for a move closer to the 1.0200 high – probably won’t quite reach today though. USDCAD was positive also yesterday and should have further today but we may have to allow for a slightly deeper pullback before it gathers further upside momentum…

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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