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HARMONIC ELLIOTT WAVE

Wednesday, May 11, 2011

More corrective price action appears likely

I was quite aware that yesterday could have been a mixed, strange day. Therefore, the way it developed turned out to be not so strange. In fact, I have to say that I was quite encouraged by the basic moves. Not all my retracement areas were reached at various stages but the overall development was one that provided me with a degree of confidence that the minor conflicts I could see may well be contained.

The biggest of these was in GBPUSD but it appears, at this point at least, to have done exactly what is required to remain in a tight range for today and tomorrow. Well, this is still to be seen, but the start has been good. For the rest the basic pullback in EURUSD, USDCHF and even USDJPY appear to be in line with expectations. I expect these to continue in their current choppy manner today.

One to watch is EURJPY. This stalled right in the support area I was looking for and has potential to have completed a pullback from the 123.31 high. I say “potential” as the corrective structure seen is one of those which can prove terminal but also allows one more blip. So I can’t rule out that “blip” but if it does happen it has little downside leeway. At the same time, while a feel a recovery is possible I don’t see this as being direct. That leaves it in the twilight zone between the two possible outcomes. For the moment it is best left alone until it confirms its break. Given that I can’t see too much upside now in USDJPY but greater downside when this correction higher is complete there is most definitely continued downside risk and the issue is one more of timing of the independent moves of EURUSD and USDJPY…

Finally, the rally in AUDUSD appears pretty corrective and doesn’t look to have much upside left… Watch for the downside to resume – an interestingly potentially leading EURUSD and GBPUSD as before…

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

Good luck
Ian Copsey

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

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