Monday, May 16, 2011

The Dollar recovery continues to develop

Apologies, it seems Blogger had problems on Friday…

Friday began with Dollar losses but ended with the resumption of the basic Dollar recovery we have seen from the 1.4939 high EURUSD. This still has some way to go but the final target doesn’t appear to be a million points away. Indeed, I can even see potential for the pullback to complete this week. While I did have a scenario where the highest point in the correction could be attained more directly, what has surprised is that it actually looks as if it could complete the entire correction. The more rapid recovery was one which I had originally considered as just the first leg of a more complex period of consolidation. From what I can see in EURUSD the structure for such a consolidation does not appear to be developing but instead a complete corrective structure…

The implication of this must be understood. It will imply a swift resumption of weekly Dollar losses that, if I have understood the longer term structure correctly, will imply new highs in EURUSD… Considering I have always suggested that the Dollar is in the final stages of a multi-year cyclic decline there is some corroboration in terms of structure and time. It also suggests that given the relative limited time for the larger structure to develop the reversal lower should be quite sustained.

What then does strike me is that USDJPY may well already be within its own downward leg. I had been looking for a recovery but assuming I am correct about the forthcoming Dollar weakness this seems suggest that USDJPY is already within the midst of its own decline.

But first things first… We still have to navigate the upward correction. This does seem to have potential into Wednesday or Thursday, at a stretch Friday if everything slows down, but that’ll be it… Certainly, as we get to the final stages the normal velocity will decline to generate more choppiness which is clearly going to take some care in navigating.

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

Have a profitable week
Ian Copsey


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