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HARMONIC ELLIOTT WAVE

Thursday, April 7, 2011

Sometimes it seems like the mouse is chasing the cat…

Yesterday was a bit good and a bit bad. The main “bad” was EURUSD… Boy, that has run me ragged this week. Just as I felt the 1.4347-60 area didn’t seem possible it goes and gets there… That has been a weird and wonderful rally from 1.4020… OK, so now it has achieved that target (and allow for a small extension) the risk has to be lower. Bearish divergences are more uniform now also so the pressure for a correction is growing.

USDCHF went right. The early stages yesterday were always going to be a bit touch & go but the drop to 0.9130 was perfect. That should now be set to rally. However, GBPUSD is a slightly mixed bag and one to watch. I don’t think we’ve seen the high here and there is a much stronger risk of a push above 1.6400 before it corrects lower… Watch out for that one.

USDJPY … hmmm… as the day starts it’s pressing that 85.51 high. If I have any preference then it is for the correction lower to develop. What concerns me here though is the lack of 4-hour bearish divergence and indeed even 8-hour bearish divergence… With EURJPY still not having completed its rally and EURUSD not expected to extend that much higher the mode of extension does appear to be through USDJPY… Anyway, let’s face it, right now trying to pick the high is a bit like sticking a pin on a millimeter square while blindfolded… Let’s just say there does seem more to go on the upside but I do sense a deeper pullback not a million minutes from here…

So basically, I do see today as seeing some sort of reaction across the board. There is risk of some early volatility but even in U.S. stocks I see potential for a pullback lower at this point – the S&P 500 finding resistance around these levels and pulling back to 1,300 before rising. Therefore I feel something’s going to surprise today…

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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