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HARMONIC ELLIOTT WAVE

Monday, May 23, 2011

It certainly looks like we should see the Dollar rally again…

The final moves higher in EURUSD and GBPUSD can hardly be called text book, but both just managed to reach their last swing highs as expected and have turned lower with some gusto. This is the decline I had initially thought may be occurring a week ago before we saw the corrections recycle. As far as I can see this should herald follow-through to new lows, the question being how far and how quickly. Final moves can have a tendency to become quite complicated and therefore quite whippy – note the final stages of both EURUSD and GBPUSD into the end of last week…

This should also fit in with an extension in the pullback in USDCHF which bounced nicely from the 0.8748 support on Friday. A confluence of these three reaching their respective targets may well be a good signal for a larger Dollar selling opportunity later this week – something I feel could be quite a solid affair.

What does still hang in the balance is USDJPY. I did begin to have thoughts of a stronger rally. Well I still do, but the question is just how far. I’m talking the difference between a (brief) move above 85.51 or merely a pullback. For the moment it will be safer just to look for a pullback. This too slots into an outcome that calls for significant Dollar losses and by this I mean new Dollar lows – quite significant ones too. The only exception will be GBPUSD that is still in a pullback to the drop from 2.1160.

The interesting thing to note is that the U.S. Indices are also pointing to a similar outcome. They do still seem to be within a downward correction but are due to rally again once these lows have been established and to a new high in the rally from the 2009 lows.

Thus, to sum up the week… the general indication I’m seeing are Dollar gains/U.S. equity losses followed by what should be a sustained Dollar decline again to allow the Indices to rally…

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

Have a profitable week
Ian Copsey

HARMONIC ELLIOTT WAVE FORECASTS NOW AVAILABLE FOR U.S. INDICES

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