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HARMONIC ELLIOTT WAVE

Monday, June 6, 2011

Friday was more remarkable than I had expected…

I had a good shout when EURUSD reached 1.4529 and dipped… perfect I thought… but that didn’t last long. So the Dollar has extended its losses more than I had expected in this leg. USDCHF moved to the 0.8332 target I had held a while ago and just below. GBPUSD has rallied more than expected. Meanwhile U.S. equities have begun to display a rather persistent downside bias that breaks with the recent correlation between the Dollar & indices. It does rather set the cat amongst the pigeons…

So just how deep can the Dollar dip? Good question…

There are pretty firm Dollar 4-hour bullish divergences in EURUSD & USDCHF, and potentially in USDJPY. GBPUSD has mixed momentum. Of course divergences can break and at the moment the Dollar is seeing lower lows and lower highs so until these break we do have an effective trend in place.

Of course, for me there also has to be a structure and that’s the bit I have problems with. What occurs in EURUSD seems quite critical as there is potential for a corrective structure to be in process from the 1.3968 low. It does appear to need one more push higher after this one at least and from this move we may be able to determine whether this is a trending wave or corrective. Very clearly, if this proves to be corrective then it will imply a new low below 1.3968 at some point…

However, looking at weekly momentum I find the prospect of a strong Dollar difficult. Therefore I have to accept that something slightly different to what I thought is happening and until I get a better idea of where the wave relationships lie I feel we should be watching the shorter term and until a clear structure is identified it will be prudent to take some care. Final word though, in the weekly & daily charts the trend is definitely Dollar bearish and that’s something that shouldn’t be fought if it attempts to extend losses…

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

Have a profitable week
Ian Copsey

UPCOMING HARMONIC ELLIOTT WAVE WORKSHOPS IN HONG KONG AND SINGAPORE

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