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HARMONIC ELLIOTT WAVE

Wednesday, June 29, 2011

Mazes, short cuts, long cuts, reversals, whipsaws, chainsaws and hara kire

It seems like the market’s passion for selling Euro has been cut short. It reached the low-end of my day’s target which was pleasing and USDCHF to 2 points above my critical support level and then a bounce. So… what next? If USDCHF break below yesterday’s low which will indicate further losses, will EURUSD continue its rally? Probably... But will that happen today? I doubt it…

The market doesn’t appear to be in a mood to push the limits right now – on either side of the market. Continued Dollar losses just doesn’t seem to be something that could be stomached at this point… The indications I see is that we should see the Dollar recover today and probably approach the levels that would provide the line between bullish & bearish. Then we’ll see whether the market’s guts have the appetite for a break…

GBPUSD appears to be a slightly different proposition with the developments over the past few days not quite going my way. I do remain with a more bearish view but also a slight hesitancy as to whether it can rummage up any energy for a deeper correction or just plain succumb to the downside again. Take care with this one but be aware of the downside still.

All this dilly dallying and procrastination over the Europeans appears to have prodded sudden interest in USDJPY which provided another day of decent strength and it doesn’t look done yet. However, I have to be just a little cautious here as if EURJPY has found a high – at least for now. Both USDJPY and the cross are both at quite important crossroads that apparently justify going straight across… but the timing may be different. As I mentioned, the cross seems to require a pullback which is likely to be driven by EURUSD. However, USDJPY was a touch stronger than expected and I feel could well see further gains today. The interesting point – if I have read this correctly – is that any pullback from the next high would be very shallow and signal higher still. This should develop over the next 2 days if it’s to happen at all…

So, take it easy today. As long as USDJPY rallies and you’re prepared to weather the shallow pullback this seems to have the greater potential today. Elsewhere it looks like we should be favoring the Dollar upside against the Europeans too. However, I’m not sure there’s a home run there… with the only possible exception being GBPUSD – but wait for that to confirm itself…

Good luck
Ian Copsey

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