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HARMONIC ELLIOTT WAVE

Monday, April 4, 2011

Slight adjustments required…

Last week started badly for me and, while less so, ended slightly disappointingly also. In particular the NFP played its part by generating a pretty big whipsaw which caused EURUSD to divert from its expected path, drove GBPUSD to its anticipated pullback target and appears to have knocked USDCHF totally off course…

Having seen that on Friday evening I admit to not really looking forward to having to unravel the knotted twines but I do see constructive developments in EURUSD and GBPUSD. The Swissie… well, that’s going to need a while longer to solve. From what I can see Friday’s shenanigans have probably indicated a slightly lower target for this current move higher but still remains in a daily uptrend. This seems to apply for GBPUSD also and probably the outlook for these European buddies appears quite well correlated now. However, it does look more like and up-a-bit… down-a-bit type move for this week.

USDCHF… Now that it’s broken the 0.9274-0.9318 area we’re going to have to take more care.

Perhaps the best success came in USDJPY which reached the upper end of the 84.50-74 target range and stalled. The market is clearly beginning to eye carry trades but I suspect this week will be seeing some unravel a little bit. This was a perfect test but equally, while Friday’s high remains intact the bearish divergences may well have an opportunity to see a pullback lower. The short term is a little less clear as EURJPY actually surpassed the target I thought had a chance of holding. The next projection is still a bit higher so it suggests some short term upside risk for USDJPY to allow the higher target in the cross to develop.

Similarly the Aussie has extended further higher and looks as if it should reach just a bit higher but the bearish divergences are looming more like dark clouds to limit the current upside for a deeper correction – but probably not the end of the daily rally. USDCAD is fluffing around in the sort of support area I’ve been indicating but momentum does suggest there is still downside risk but perhaps mostly done now.

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

Have a profitable week.
Ian Copsey

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