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HARMONIC ELLIOTT WAVE

Monday, March 7, 2011

It looks to me that the Euro has made an intermediate top…

Friday provided mixed results again. The high in EURUSD was perfect. However, with the exception of USDCHF which chose to resume correlation with EURUSD the rest of the market didn’t seem too impressed with the Dollar weakness to return rather lackluster movements. So what does all this imply?

Firstly, I’ll take a step back and review from a larger perspective. I feel the immediate high is probably in place for EURUSD now and should generate a modestly deep correction considering the final targets. It should extend losses today but expect a fairly deep correction thereafter. Overall I’d expect the correction to last at least one week and could be slightly longer.

Given that GBPUSD barely managed to raise any enthusiasm for the upside this does look rather at risk. Even if it pops up and surprises I don’t really expect that much from it with a similar fate awaiting it. This then raises questions about the entire rally from 1.4231 and extreme doubts that we’ll see much higher when EURUSD manages its final rally.

USDCHF… a tough one… but I still see potential for a deeper pullback higher but really has done the minimum required. I am more bearish here so therefore aware of the larger downside risk. Take care with this one as it does have the capacity to surprise on the downside…

USDJPY has now retraced too far to retain a direct bearish structure. Indeed, it may even have capacity to generate a deeper move higher but for the time being I’ll watch what happens from here and sense it will probably remain in a range. This could rub off on EURJPY, itself due a correction, but once complete does look like triggering a stronger extension higher.

So, out of the 4 majors there appears to be a rather independence about each that is going to make for interesting developments over the week. Let’s see how it starts…

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

Have a profitable week
Ian Copsey

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