Wednesday, April 20, 2011

The Dollar’s due a correction after yesterday, but the main direction remains bearish

It was a slow day yesterday but overall the recovery in EURUSD and GBPUSD were pretty much in line with expectations. Interestingly even USDCHF maintained an upward bias also but I can’t see this lasting for long.

Thus, having seen the first recovery it should now be time for a correction. The problem with this stage of the structure is that the correction could be really shallow or it could be very deep… It’s one of those positions where there is no way of knowing in advance the depth. However, should set things up for a much stronger follow-through on the next rally and that is the base message. Don’t get caught up to much looking for losses but spend more time identifying the low.

Once the next leg of the Dollar’s decline begins I suspect it should increase in velocity to easily break through its lows and on towards the eventual targets where I feel we shall see the end of the entire move from the 1.3885 low (EURUSD) and 1.4231 low (GBPUSD.) From there we can expect a pullback for 1-2 months at least.

USDJPY didn’t get very far. However, EURJPY rallied quite solidly and has raised the risk that we’ve seen the low here also. Given the expectation that EURUSD will accelerate higher this shouldn’t come as a surprise – nor should the expectation for a correction lower in the cross. The slightly less obvious one is USDJPY but overall I still see this as positive also which could imply a pretty persistent rally in the cross.

Thus, today’s a day to take it easy for the first half of the day and attempt to spot the pullback lows… I’ll try and highlight the most likely areas but solid trade set ups are a must…

Today’s free analysis is for EURJPY and can be found on

Good luck
Ian Copsey


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