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HARMONIC ELLIOTT WAVE

Tuesday, March 15, 2011

Mixed signals… but overall I’m becoming quite neutral…

I shall be brief today. The threatened power cuts require me to complete the report very quickly today and focus is on getting out the analysis.

Yesterday’s whippy start deteriorated into a rather languid uncertainty. If I look at EURUSD and GBPUSD it certainly looks as if the upside potential for them both is limited which tends to point to a sideways consolidation. I’m not so sure about USDCHF however, as this has potential for a more directly bearish move.

The divergence between these two sets doesn’t disturb too much and in some ways would make my outlook for the Europeans more balanced in terms of where the eventual Dollar decline will stall. USDCHF has a lot further to drop than the other two have to rally so it would actually suit my outlook.

The other currency pair that sparks some attention is EURJPY. Its pullback higher after the initial drop was rather deep and in terms of retracements has been supported by an interesting level at 112.47. I’m somewhat taken aback with this as firstly this could be just a correction of the rally from 106.82 and this has been relatively brief in terms of time. Secondly, if we had follow-through higher the target would appear to be around 125.00…

That takes some time to digest in terms of exactly what could drive it there but almost certainly a combination of both USDJPY and EURUSD. Well, the latter doesn’t seem quite ready to take the lead role. This means that, if this outlook is correct, then USDJPY is going to see a solid rally… It’s one to watch out for but best have this confirmed.

Otherwise I think today could be similar to yesterday with gentle Dollar losses against the Europeans…

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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