Thursday, May 5, 2011

Was that the Dollar low I’ve been looking for?

Yet another messy day, confused moves and very confusing structure. The most interesting parts of all that mess were the 1.4939 EURUSD high and 0.8551 USDCHF low. Both of these levels are indicated by terminal projection ratios in the Dollar declines from 1.2858 EURUSD and 1.1730 USDCHF respectively. Both were valid to within a 3 point variance and therefore stick out like a sore thumb. However, the problem I have with these is not the level but the structure leading to them. I find it very hard to accept that these were the final Dollar lows.

However, given the risk that we’ve seen highs in GBPUSD and AUDUSD I have to acknowledge the possibility and therefore need to find supporting evidence and preferably a break level that would raise the alarm a little more strongly. It does look as if we’ll see some Dollar gains today and just how far these move – particularly in EURUSD – could provide a better clue. It should mean a break below the 1.4754 low – by how much will be the crucial issue.

There are bearish divergences in EURUSD now across the board from hourly through weekly charts. I can’t say the same about USDCHF however which only has a weekly bullish divergence. These were present in AUDUSD. In GBPUSD there was a daily bearish divergence but not weekly.

Therefore, in general, given the rather erratic nature of moves we have been suffering over the past 2 weeks the same message as yesterday remains valid. Take care and if in doubt, don’t open any risk. In particular take note of EURUSD as this does seem to have a quite clear break level that would send it tumbling.

For those of you in Asia please note that I shall be in Singapore over the weekend to present an introduction to Harmonic Elliott Wave at the ATIC conference.

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

Good luck
Ian Copsey


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