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HARMONIC ELLIOTT WAVE

Wednesday, March 2, 2011

Just a bit more Dollar strength before it resumes its losses…

Yesterday saw a little of what I was expecting but also a mild misjudgment in others. In particular EURUSD rallied but failed to move to new highs and basically appears to be recycling the prior move. It should still lead to minor losses early today but I still see the end result as a rally to new highs. While the current correction continues it would be useful for USDJPY and USDCHF to deepen their corrections also. Their relative performance in terms of reaching preferred retracement targets was slightly disappointing…

What has surprised is GBPUSD, moving to a new high but then failing to sustain those gains. It has confused the larger wave structure and forced me to review the daily charts. However, I can’t see any significant topping signal from momentum and probably quite the opposite so it seems more appropriate to watch for support levels to see the upside resume. However, it does look as if it needs to do this quickly else see a more complex corrective pattern emerge.

Indeed, this appears to be the case in AUDUSD and USDCAD… both are still displaying a more Dollar bearish outlook with just the immediate issue of where the correction stalls. Here, as elsewhere, the implication appears more towards a final extension in Dollar losses over the coming 1-2 weeks but which should be followed by a more robust correction higher in the Dollar. There are a few mild variations of the same outlook in the majors but the common theme does appear that the recent Dollar losses will probably not extend too aggressively at this point.

That leaves EURJPY which failed to push home with the gains I had been looking for but instead dipped firmly lower. The past weeks have been a bit of a cat and mouse type game, neither bulls nor bears able to press home their advantage. It does seem to be coming down to either as short term consolidation before higher or just plain, direct losses…

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

Good luck
Ian Copsey

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