Tuesday, June 21, 2011

Yesterday’s lack of sustained Dollar gains is just a little concerning…

The day started reasonably well. The Dollar attempted to renew pressure on the upside but couldn’t really sustain that pressure. I’m not going to change my view at the moment but will register a red flag… My basic thoughts are that there remains a potential for a minor new corrective Dollar low which, as long as it’s not too deep, could still allow the upside to resume. However, if those losses extend too far it could well tip the balance in favor of renewed losses…

So right at the start of the day there’s a small tug-of-war in place that needs to be monitored. This is pretty much a common theme across the Dollar-currencies so be prepared to act when key levels break.

The larger picture is one of a broad pivotal moment. My Dollar cycles are bearish to the end of the year. However, the problem with these cycles is they are not pinpoint and thus a reversal can occur within 6-9 bars of the cycle low. Given we’re already in that window there is a need to be alert. The stronger cycles are in USDCHF and USDJPY and given these have both seen new multi-year lows it’s not impossible that we have seen the final lows.

However, I feel that momentum conditions aren’t quite right for the reversal right now. That does therefore leave a window open for losses to resume. It’s just a matter of when and at from what area.

Thus, today isn’t a day for establishing sizeable positions but more one to identify short term opportunities while being aware of the larger structure.

Good luck
Ian Copsey


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