Thursday, June 30, 2011

Just a little further to go and we should start seeing Dollar strength…

Well, yesterday was an interesting day and provided some good information about the near term and probably for the coming week at least. The more direct rally in EURUSD wasn’t quite was I had originally expected but was actually quite healthy and has clarified a few things. The bottom line is that we’re now close to a Dollar low – probably one more high before a larger reversal lower.

This is also confirmed in GBPUSD which is probably even closer to its own high from where we should see the next leg lower. I suspect this has more profit potential than the other Europeans and appears to have a stronger structure to follow. By this I mean it is in a trending structure rather than corrective which appears to be the case in EURUSD and USDCHF. The latter has probably fought off the test of that 0.8273 support I have identified for some while. We’re not completely out of the woods but given the Dollar bullish expectation I feel this is the stronger structure…

Also interesting was the deeper pullback in USDJPY… I had wondered whether this will force losses but more likely I had made a misjudgment in the rally mainly due to my reluctance to be too bullish. As long as yesterday’s low remains intact this still has a bullish outcome and one that is stronger than I had anticipated. That one’s still touch and go, so we’ll have to see how today develops.

The correlating point about USDJPY is EURJPY which does still seem to have further gains to be made. I suspect in the near term these may well be limited and instead we’ll get a deeper correction lower, but the underlying structure does have quite strong bullish ratios and projections as long as certain support levels hold.

Elsewhere USDCAD appears to have confirmed a major high and should head lower… The Aussie … I think that’s pretty much in the same boat as the Europeans and assuming this doesn’t break above the 1.0715 high by too much the implication will be quite bearish and for new lows.

Good luck
Ian Copsey

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