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HARMONIC ELLIOTT WAVE

Tuesday, March 8, 2011

Nope… yesterday provided the Euro top…

It wasn’t quite the start to the week I had envisioned but in the larger picture yesterday’s new high in EURUSD was close to a deeper projection target and the basic assumption that we should be seeing a brief period of Dollar corrective strength remains valid. This should last for the rest of the week and probably into next which does seem to imply some rather unpleasant choppy price action that will keep us on our toes. Therefore the general advice will be to take profits when they arrive in your lap and ensure solid trade set ups are seen…

Elsewhere USDCHF really spent a day doing very little. This one for me has more potential to be the dark horse which could surprise. This has a lot further to go on the downside, much more than EURUSD so that timing issues in terms of final Dollar lows (assuming there is correlation…) is going to be an interesting issue. I still have a mild preference for a deeper correction higher now but frankly it has done the bare minimum so there’s no structural reason why it cannot just extend losses now. Therefore be aware of both sides for now.

GBPUSD attempted to retest the 1.6343 high, failed and as a result collapsed. This pair is still in a dark place of confusion and probably my least favorite pair right now. However, after yesterday’s move the downside risk is now much stronger…

Then on to USDJPY; Once again this didn’t quite develop as I expected. Never-the-less it remains above the 81.56 low and I still fancy this higher for now. The larger picture is all a bit hazy also given the general expectation for the Dollar to rustle up some corrective strength sometime in April. Thus my focus is on the near-term which needs a stronger structure to dominate.

One of the factors included in USDJPY is going to be EURJPY which dipped further yesterday. The cross has done the minimum required to achieve the normal area of projection targets from the 106.82 low so has every right to reverse lower. However, structurally I’m not convinced that the rally is yet complete. With a generally softer EURUSD (barring deeper corrections) this does seem to imply a stronger USDJPY.

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

Good luck
Ian Copsey

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