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HARMONIC ELLIOTT WAVE

Thursday, March 31, 2011

There were some good calls yesterday but I’m not sure we can relax yet…

That was better… It was nice to follow a bad day with a good one. The highs in USDJPY, EURJPY and USDCHF all identified quite nicely. GBPUSD came quite close too but may not have quite completed the move…

Having congratulated myself I have to admit that there are a few things that make me nervous… In particular the reactions in the JPY pairs have not really filled me with the greatest of confidence and probably more with a sense of nervousness. Ideally these should both decline further, USDJPY fueling the decline in the cross. It seem s the most obvious outcome but we do have to take EURUSD into account…

So what is Dollar-Europe doing? Well, yesterday’s high in USDCHF has been a target since the 0.8918 low. The manner of the move higher also looks corrective so I’m pretty confident this can move to new lows over time… So will the Dollar losses here have any bearing on the other two? I’m not really sure that today will provide the answer. Correlation between these three has not been particularly reliable.

What about EURUSD? Well, that has confounded for the past 2 days and its failure after what I had thought to be a major top has not really been consistent with the normal reaction to initial key retracement targets. This is causing me quite a degree of concern. Back to GBPUSD, I was staring at the daily chart which is still a bit challenging and saw a potential structure that could indicate that the 1.5936 low was a final one… I certainly think GBPUSD can edge higher again today but there’s key resistance just ahead and I don’t think it’s going to break today so we’ll have to observe the pullback…

Further Dollar losses across the board may still be a risk… and with my underlying view on gold remaining bullish for a short while longer this outcome would be quite consistent.

So, in summary, I think today will probably not bring any final conclusion to this puzzle and it will more likely be a more tight range day for the Europeans. For the JPY pairs I am more open and will react as further developments occur. However, I have a sense that the moves may not yet be over…

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

Good luck.
Ian Copsey

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