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HARMONIC ELLIOTT WAVE

Tuesday, March 29, 2011

Still a bit more to go for the Dollar

With the exception of GBPUSD the Dollar continued its pullback yesterday. In many ways this was in line with the development I expected except it developed much slower than I had looked for. That means the basic message expressed yesterday for further Dollar gains to develop remains the same but having reached the pullback area in EURUSD today should see the follow-through higher.

However, just as the Europeans saw a mixed bag of reactions yesterday the same appears to be possible today. The deeper decline in GBPUSD does need its own correction higher. At the same time USDCHF stalled at an in-between area – not quite satisfying the targets for bullish correction but having done enough to require an intermediate pullback lower before it can muster the strength for what I feel will be the final leg higher. The only risk I could envisage for EURUSD is that it maintains a sideways consolidation but not a new corrective high I feel…

AUDUSD should also now join the Europeans in a Dollar bullish move. I don’t think we’ve seen the final high for the Aussie just yet but it is in need of a deeper correction now. That should also brush off on USDCAD which itself requires a firmer move back higher.

That leaves USDJPY and EURJPY… The ranges have widened at least but overall there hasn’t been any particular strong indication of follow-through higher. If it is going to happen then it should do so today. In normal conditions I’d say that both have not really done enough to fit snugly into a bullish structure but given the length of the consolidation it really does stretch the imagination. I can’t rule out the upside completely but the odds don’t favor it. Indeed, if the cross is to rally, given the bearish EURUSD picture I have painted it’s going to need a very firm USDJPY to extend gains in the cross. Never say never… but “nev” is probably closer…

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

Good luck.
Ian Copsey

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