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HARMONIC ELLIOTT WAVE

Wednesday, August 31, 2011

Time to lie down and die?

I wasn’t quite ready for the depth of the corrections in both EURUSD and GBPUSD. It has shifted the short term structure but not the long term and unless calamity occurs it is time for the Dollar to lie down and die. Of course, it will rise from the dead at later date … but not in 3 days… The coming week is therefore critical for my underlying Dollar bearish view and there are signs appearing from many areas that point to this outlook. However, what is needed to hammer down the final nail in the coffin is downward acceleration.

Gasp… wait for dramatic drum roll…

And indeed it is critical. I have long indicated my Dollar bearish preference into the tail end of the year based on 16.5 year cycles. The one caveat I have is that we are within the window for this cycle low and from a timing perspective the reversal higher could occur at any time. For whether we have seen the low I obviously work with Harmonic Elliott Wave and at this stage I can’t see that we have seen those lows. Apart from USDCHF neither have we seen the normal spike lower that is normally seen at such cycle lows. To see what they look like take a look at the monthly USDJPY chart for 1978 and 1995. Right now we are seeing the same cycle approach its low. The same can be said of USDCHF…

From what I can see of EURJPY it’s also ready to lay down and die and if this also occurs then it does imply a much more aggressive decline in USDJPY than rally in EURUSD. These are more clues to try and identify whether my outlook is correct or not. The cross should ideally now not move above the 111.94 high. There is a minor risk of a limited break but it does seem pretty distant.

There will be plenty of room in the Dollar’s demise so even if we miss the early stages to confirm the risk there should be plenty of opportunities along the way…

Good luck
Ian Copsey

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Tuesday, August 30, 2011

Foundations under construction

I wasn’t too surprised with yesterday’s developments. The initial break lower in the Dollar had been swift but at the same time left open a few holes that needed to be filled and there does still seem to be need for firmer foundations to be laid. Even the Swissie obliged with both hourly & 4-hour bearish divergences and could come back into the European fold to join in the anticipated final decline in the multi-year bearish cycles.

Will that continue today? Maybe… but if it does I think it’ll be later in the day after a correction. However, when the next leg lower develops it should prove to be far more powerful than we’ve seen so far in terms of endurance and persistence.

Even AUDUSD and USDCAD joined in the happy gang with the Dollar losing out and that has been echoed in the U.S. indices that have broken to a new high following the major lows, the potential outlined in yesterday’s U.S. report and also in the Asian indices report. That tends to argue for further choppy gains over the coming weeks which does seem to walk hand in hand with the Dollar.

For today I still think there is more reason for caution, a pullback due but probably not too deep but it’s this correction, once complete, that should provide the stronger basis for the persistent losses.

Good luck
Ian Copsey

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Monday, August 29, 2011

The beginning of a stronger move?

I think there’s a good chance that the craziness we’ve had to endure over the past two weeks is over. Well, I certainly hope so… Even then, right to what I think was the very end it stretched the imagination and even the Dollar bearish outcome that I have maintained throughout.

This morning’s task has been to try and identify the correct foundation waves that will identify the correct projections but given the way the horse bolted from the gates it’s not entirely clear. I feel it may well be down to whether we see prompt follow-through or a pullback before the next leg in the downtrend.

Before I go further, let me just say that this does have the appearance of being the final stage of the multi year Dollar bearish cycle. In particular, both EURUSD and GBPUSD are quite clear in this with both expected to push above the 1.5143 and 1.7042 highs. I’d like USDCHF to make one last low also. USDJPY should also extend losses although I have much stronger bearish targets at this stage. For those targets we are going to need some fairly shocking losses. If they don’t come I may well have to be satisfied with a less aggressive final low.

As a guesstimate I’d imagine this should be over within around 2 months.

A word of warning on EURJPY also… That failed to extend gains as I had been looking for and could well be the sign of a reversal lower… Take care here. This also tends to suggest the risk of stronger losses in USDJPY…

For today, while there is still some uncertainty over the base structure of the decline (direct follow through versus a correction) we’ll have to be somewhat cautious. However, be aware that the risk should now be more strongly lower for the Dollar…

Have a profitable week
Ian Copsey

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Friday, August 26, 2011

The end of a long week…

Well, it certainly doesn’t look like the consolidation is going to end today… In fact, maybe it’s best just to take the day off and make it a long weekend…

It was basically more of the same stuff yesterday in the game of guessing the next corrective structure within the intermediate correction within the larger correction. However, I do still think the larger structure is Dollar bearish and thus it is just a matter of time before we are finally released from the current corrective straight jacket.

There are now probably one – well two – stronger structures, those being in USDJPY and EURJPY. As I pointed out in yesterday’s report, the 1 point break of the 76.47 low and stronger reversal in USDJPY held a warning that we could well see gains, and up this went. There is still a little way to go but not so far and in the absence of EURUSD fueling the rally in the cross USDJPY has stepped in to maintain this. The rally in the cross has been a bit ragged too, but recognizable and this should extend further today to generate a deeper correction.

I still maintain the cross may well be a good indictor of when EURUSD may resume its rally. I am quite bullish for the cross for a while longer but I’m still not certain that USDJPY can carry it all the way. It will need help from a firmer EURUSD at some point – probably after the correction following today’s anticipated rally in EURJPY. I can’t get overly bullish for USDJPY though and not enough for the cross to reach 114.17 again. Thus, over the coming days watch the balance of this ménage a trois for signs of being caught in the act…

For today… have a good break.

Should you wish to join me on a webinar introducing Harmonic Elliott Wave, the basis for the adjustment in the impulsive wave structure, and a few examples of the remarkable forecasting capabilities I shall be starting at 17:00 EDT. There are limited spaces so please book in advance on this link: https://www3.gotomeeting.com/register/426054294. Login early as you will need to download the software.

Have a great weekend
Ian Copsey

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Thursday, August 25, 2011

The long and winding road… that leads us … nowhere…

Gee, it’s painful. It’s even more boring than reading a book called “The mating habits of cheese mold…” Very plainly the market is awaiting a catalyst. Very plainly there hasn’t been one… But there will be one. When? I don’t know! Actually, I do feel it is imminent, well fairly imminent, but whether it’s this week or next I’m not sure. I just can’t see how the market can avoid a break of the recent range…

Even USDCHF, the slowest moving major currency pair, is closing in on the end of its consolidation and just needs one more dip now before it can extend gains. At the same time GBPUSD dipped lower and confirmed the intermediate high at 1.6618 so that too is due to push higher and should start today but the early stages have potential to be slow to start. EURUSD continues to confound & baffle how it can invent new back flips and triple somersaults without breaking the range… In particular this one is exceptionally complicated.

I think you get the point. It’s tough out there right now. Remember you don’t HAVE to trade. If you are uncertain then go make a cup of tea and watch a Doris Day movie so you can get a good sleep to be ready for the action when it comes. There’s just no point to talking trades because you feel you have to…

Patience … normal service will resume shortly…

Good luck
Ian Copsey

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Wednesday, August 24, 2011

It’s all still a bit messy but there are one or two signs of Dollar weakness


U.S. equity indices fought off breaking to new lows but are not out of the fire yet. The Dollar on the other hand is not looking that positive. It really has been a messy, nasty period recently with all currency pairs dithering and displaying exceptionally erratic price behavior that is more in line with corrective price activity rather than strong directional. The twists and turns to this tale have been quite extra-ordinary but there has to come a final conclusion. Obviously the big question is when that will be.

However, within all this mess we have seen the core foundation has been a Dollar bearish one. Perhaps USDCHF is an exception, but a temporary one I feel. USDJPY has already confirmed that it has seen its corrective high and I’m watching that decline as the implication is strongly bearish and as we move out of August the risk is for acceleration irrespective of the recent intervention.

Having said that, I have to add a note of caution still since EURJPY still seems to be on the way higher and if that proves to be the case then it will need EURUSD to break higher. I see this Dollar bearish potential in GBPUSD also although that pair has also played a merry dance that has made identification of follow-through higher hard to pinpoint. AUDUSD is also displaying the same indication of breaking back higher…

In these cloudy circumstances I feel the best approach to adopt is to be aware of the Dollar’s vulnerability and be prepared to take advantage. Keep track of EURJPY in particular as I feel this is a defacto barometer of movement in EURUSD in particular … especially in regard to any potential strength in EURUSD.

Good luck
Ian Copsey

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Tuesday, August 23, 2011

Probably more of the same but perhaps with the Dollar on the soft side today

Yesterday was not a surprise. I wouldn’t have minded a surprise but the market is just not ready to commit to any significant break and I can’t see too much risk that we’ll see any today either. Quite a few currency pairs have the potential to just remain in the confines of the recent range and in this lackluster, summer doldrums market the general favored pastime appears to be watching paint dry…

If there’s any one pair I have hope for it’s GBPUSD but I don’t think it will quite manage it today. Even if it does it should reverse straight back to where we are now.

This type of tight range trading could last into tomorrow as well though I still maintain that we are still in the process of developing a stronger foundation for Dollar losses and I have a hope that by Thursday and Friday we’ll begin to see the outer edges of the range being pushed with greater enthusiasm. I hope so as it’s pretty tough trying to second guess all these corrective structures…

Finally, just as a possible stronger indication of a stronger move we should perhaps watch EURJPY. That moved higher yesterday but even then appears to have gone into a sideways trading range. I prefer higher but I’m not particularly keen on USDJPY strength – or at least not much more than we saw yesterday – and therefore it will imply that EURUSD has to take up the rein. However, even the cross looks likely to be subdued in a range today as well. Eventually though, a break has to be seen and perhaps the cross will point the way.

Try and enjoy the calm while you can…

Good luck
Ian Copsey

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Monday, August 22, 2011

Twists and turns, blind alleys and dead ends…

Just as I thought things should progress the market dodged a decision and brought the Dollar back into range to smother the breakout I had been looking for. I still think it will come but whether the current corrections will reverse into a directional wave or just extend the series of corrective consolidation patterns is something that needs observation and patience.

I can see from the equity markets that the fragility persists and may even see new lows this week. That situation is still pretty much in line with my larger picture and arguably could make the correction in the U.S. markets more pinpoint in terms of targets. It is quite possible that this general state of unease will continue to hinder any real progress in the currency markets and could even extend through the entire week. At best, any directional moves may well only generate modest new Dollar lows that would still require corrections before the larger downtrend develops.

That picture has even been seen in USDJPY which had a pretty whippy day on Friday, finally reaching my 75.70-00 target. However, the manner of the decline made it clear that this was not part of the downward move but merely a correction. However, even so, very clearly it is setting itself up for a tidy downtrend. That obviously has implications for EURJPY that may well fuel the recycling back to 114.17. It has made a big struggle of the recovery so does hold risks still but once the downtrend begins it could be quite a solid decline.

USDCHF is playing around as well now… possibly a dip first before rallying to the full extent of the correction I am anticipating. GBPUSD doesn’t seem able to hold on to gains… quite frustrating… but it too seems to be playing around with corrective patterns that have been slowing the bullish process. I still remain overall bullish but any progress over the next 2-3 days could still be slow and choppy.

Have a profitable week
Ian Copsey

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Friday, August 19, 2011

Well, if the Dollar didn’t lose ground yesterday… it should today…

More deep corrections, some anticipated, some extending more than expected but overall took most of the day. And so we get to the end of the week in which I have been satisfied with the general Dollar losses but frustrated in having the correct structure seemingly out of my grasp. I’m left with some mixed feelings but still see more risk of Dollar losses. They need to resume pretty quick else I’ll be feeling sore for the entire weekend.

In particular GBPUSD did actually work exceptionally well with the low at 1.6420 and right in my target retracement area. This now needs to extend gains through into the European session and to above 1.66. Once we see that high we’ll be due for another correction and possibly for a day or two before the uptrend can resume.

EURUSD was rather soft also and this is harder to get a gauge on what’s happening. An obvious statement is that it will either go up or it’ll go down. The key is knowing the point at which each becomes reality and breaks the other alternative. I’m pulled by my bullish GBPUSD view but in EURUSD it would imply a more sustained rally than in GBPUSD and that gives me a small concern. Therefore best watch those areas I’ll highlight and that GBPUSD does lead the way higher…

USDCHF… remained in a nasty consolidation. That should soon end and see the upside extend. USDJPY… looked like extending losses but the push lower fizzled out rather disappointingly. It’s tough making calls when the progress is so slow… It’s another one like EURUSD – it’ll either go up or it’ll go down… Yesterday’s range should set the break levels.

However, it seems this is going to have impact on EURJPY which also dipped lower against my preference and is close to extending losses. Here we have an interesting conundrum. If the cross breaks lower it will probably be fairly strong. So which gives? EURUSD or USDJPY? Well even if USDJPY does push lower I can’t see this extending that far which means EURUSD has to provide the catalyst… but that would mean a much more bearish Euro… I’m not quite ready for that. If the cross breaks higher I can see EURUSD having the scope for stronger gains but not really USDJPY… It does sway the argument for a bullish EURUSD…

Good luck
Ian Copsey

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Thursday, August 18, 2011

The Dollar continues to lose ground… further to go today…

I’ve been getting the direction right but the pullbacks have been deeper all the way which has been frustrating… I’ve had to look at the structure from the lows once again as these deeper corrections are indicating a different structure. In doing so I am mindful of the eventual targets and therefore need to ensure that the current moves are neither too short to reach target, nor overextend too far that would imply break of those targets.

The end result of my changes are a little difficult to envisage as correct but do seem to hold good ratios for the most part. This should mean a pullback into the European day and then extensions of the moves in EURUSD and GBPUSD. We should note that as we approach the 1.4696 corrective high in EURUSD and towards the 1.6745 high in GBPUSD we are almost certainly going to find some natural barriers and the probability of a longer lasting correction.

In USDCHF this is just about the reverse in terms of Dollar direction. It has slowed considerably but does seem to need further gains before we can feel safer on the downside. It’s still a very tricky structure and I am more concentrating on the larger retracement resistance levels and having to “feel” my way through the developments.

USDJPY… as warned yesterday did lose out and has further to go. I don’t see this as the major drop but more the foundation for a stronger decline that should slot in place with the Europeans. Thus, I’m not going to get too bearish at this stage and doubt we’ll get much below 76.00… This should keep the cross on the defensive for a while although I still prefer a recycling to 114.17 overall.

AUDUSD is due a correction before another rally too and is probably very similar to EURUSD and GBPUSD… USDCAD is still playing cat & mouse but I remain cautiously bullish for now.

Good luck
Ian Copsey

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Wednesday, August 17, 2011

The building is being constructed…


Yesterday, while not exactly as planned again has actually seemed to progress a level from foundation to starting on the actual construction. More than anywhere GBPUSD seems to have the stronger structure now, the anticipated correction being much shallower than I had looked for and this does point to quite firm gains for the rest of the week – probably into next.

EURUSD is not far behind though still in the early building stage. Having said that, for both GBPUSD and EURUSD, while the immediate pressure is higher I do see a modest pullback before too long that, depending on how long the additional poke higher takes, could extend into tomorrow… However, both seem destined for higher levels afterwards.

USDCHF appears to have run out of steam. I still think it has further to go on the upside so no reversal yet but it’s beginning to point to a more terminal extension that should see a reversal maybe next week. The Aussie remains firm and USDCAD held in a sideways range.

That leaves USDJPY… sleeping diligently, perhaps in a coma even… and likely to extend that comatose state for today that will allow EURJPY to make another push higher but itself limited by EURUSD. The interesting part will come when USDJPY awakens from its coma. Having seen continued range trading I am turning marginally towards a second dip lower – not too far at this point – but then a correction. As long as EURUSD resumes its rally as I suspect then we should see the cross rally much higher over the coming week.

Today… limited moves but in line with the general trends…

Good luck
Ian Copsey


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Tuesday, August 16, 2011

The foundations are being laid…

Some good bits and bad bits yesterday. The Dollar weakness in EURUSD and GBPUSD has been slightly stronger than expected and that demands some adjustments to the short-term structure but the additional gains still slot into the larger picture. It’s still not quite ready to begin the stronger thrust but I don’t think it’s too far away now. Maybe we’ll see this begin this week but if not, then next week should see some moves that will surprise and shake the market from its slumber.

Now, what did go wrong was USDCHF… I had been looking for a corrective high and reversal lower but it took the contrary view and just extended gains. I can’t see that it has finished yet either. I can still fit this into a bearish structure but even that would still allow slightly deeper gains first. I’m not quite ready for this to maintain a bullish trend while EURUSD and GBPUSD head in the opposite direction… However, for now the USDCHF upside doesn’t look to have completed.

EURJPY benefited from the Euro strength while USDJPY languished in one of its stifling trading ranges. Given that I think the cross can extend gains over the coming sessions USDJPY has two possibilities:- that it corrects higher a little more deeply (though not too far) or it remains fairly static but within that sees a minor extension lower and correction. I feel the cross is going to provide some guidance to us as these developments progress.

Thus, overall I see a similar pattern of moves today in the Europeans, gains to be made but probably with less intensity but moving to a point over the next day or two that should generate a correction lower.

Good luck
Ian Copsey

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Monday, August 15, 2011

More monkey business?

Friday proved to be a pretty dull day, the market clearly not up to challenging either direction and settling into mostly dull range trading or limited moves. Even USDCHF, after having pushed up so strongly on Thursday failed to generate any substantial strength but did extend gains later in the day … and has been a bit more aggressive this morning on open. Momentum is still firm here and could well imply a deeper move to the next retracement resistance. I remain with what I feel should be stronger Dollar losses once the Swissie has made its high.

EURUSD and GBPUSD both seem to be making headway but it’s pretty dull. The moves do seem more positive but the general lethargy in their rallies is rather frustrating. We still need a pullback anyway – it’s picking the right area for the top that’s proving tough… and points to a slow start to the expected Dollar weakness. Of course that risks us getting lured into complacency so that when the breaks happen we could get caught off our guard.

The same appears to be true for USDJPY. I had raised the alarm for stronger losses. They will come but Friday’s moves and today’s opening have taken the shine off the downside. It was getting tough anyway as the short term just wasn’t shaping up well enough to generate the sort of bearish projections that would have been enough for them to hit levels that fit into the larger picture. That does seem to indicate a possible move above 77.24 before we can see the downside begin to develop…

So I have to provide the same general advice of taking it easy. It’s the summer doldrums, Japan has Obon holidays this week while Asia and N.A. are still in the grips of their own fears so unless those fears are stoked the market may be quite dull.

Have a profitable week
Ian Copsey

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Friday, August 12, 2011

Eyes peeled…

The monkey’s moving closer…

There are definite signs of life… The currency pairs are all moving towards what should be a decisive moment and all it appears, beginning to correlate with one direction… The Dollar looks more and more on the brink of a move lower… dare I say “collapse…”

Maybe I’m conjuring up a false correlation but yesterday’s moves were quite uniform in many respects, removing some of the discrepancies and more critically, with the positive exception of USDCHF, all resisting a substantial Dollar gains. Indeed, the rush higher in USDCHF was in the right direction even if I didn’t anticipate it developing quite so quickly. This has alleviated some of the extreme divergence against the other Europeans, even if it had created that divergence itself by such persistent losses.

I could even see some of the Dollar weakness beginning today. If it does I can’t see it being strong at this point but when USDCHF has reached its target I feel we’ll start to see losses begin to accelerate. In all I feel we probably have 2-3 months for this move at least and I think that by the end the general feeling will be one of shell shock, rather similar to that seen in the equity markets these past two weeks. It now seems time for the currency markets to assume some of the burden.

The downside in equity markets is all but done with only the risk of one final push lower… I feel they’ll rally directly but have to voice some caution until they’ve recovered just a bit further. I don’t see the equity markets being rampantly bullish but more erratic and messy recovery.

Softly, softly catch a monkey…

Have a great weekend
Ian Copsey

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Thursday, August 11, 2011

Softly, softly catchy monkey…

Stronger moves are coming… of that I’m sure but the market has been caught in the blinding headlights of a steam train thundering down the track. In the nick of time it’ll jump to escape that steam train and probably not stop for some while as it runs away…

Right now the Dollar has been caught in corrections or range trading. Even USDJPY, having reached its downside target is due a correction. EURUSD has begun to sense an invisible outer limit to it trading range while USDCHF has taken hold of a convenient branch temporarily in its decline down a sheer cliff. GBPUSD… ahhh… now there seems to be a clue… After making that marginal new high at 1.6476 it has taken advantage of being freed from the constraints it had and plotting its correction lower.

Note the word “correction” used… We are waiting for the end of that correction and probably the clearest of all should be GBPUSD. It’s not that far away from finding a corrective low, but not quite yet and there could still be more disjointed and befuddled moves through to the end of trading tomorrow. However, I sense that next week could see something that will start the larger move.

For now… take it easy… don’t try for too much… softly, softly catch a monkey…

Good luck
Ian Copsey

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Wednesday, August 10, 2011

Disjointed, bedraggled and bewildered…

EURUSD up, GBPUSD down, USDJPY dipping its toe before it moves and USDCHF jumping off the high board… and U.S. equities performing with more restraint… Yes… it all makes sense… and if someone can explain that to me I’d appreciate it…

To quote Jonathan Cainer, a British astrologer: “the current square between Mars and Uranus. We've seen the worst already. The wave of anxiety gripping the financial markets is chiefly to do with Mercury Retrograde - plus a series of special additional factors” and that included the London riots. It most certainly is a tumultuous period…

The U.S. equity markets are almost over… maybe the drop is over… but I’d still fancy one more drop before they stabilize and recover. I certainly think we’ll see some greater coordinated move in Forex too. It seems more a matter of allowing the nerves to settle, for the market to take a deep breath and break the larger ranges… but which way?

I have long detailed by Dollar bearish cycles. The shuddering drop in USDCHF yesterday is very much reflective of this cyclic influence. I do feel at some time the same will happen to USDJPY, not quite yet, but I don’t think it’s week’s away… I have struggled to catch USDCHF but if my measurements this morning have caught the structure now, there is room for a correction higher… a correction only mind you.

And I do feel this is the same fate that will befall GBPUSD also… to a lesser extent EURUSD. The question is “when” and frankly it’s a little clouded. I wouldn’t want to open too much risk for a directional move until we have stronger indications. I think they’ll come over the coming week or so…

Good luck
Ian Copsey

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Tuesday, August 9, 2011

The markets are sure displaying tension…

The past week or so has been pretty tough in the Forex markets. Equity markets are doing as expected so no surprises there. I’ll just mention the equity markets as the decline is now approaching key support areas not too far below yesterday’s close. However, an additional drop is still required to complete the sequence so a correction is now required if those support areas are going to hold. Keep that in mind. If a modest correction develops then the next drop should be the last…

Now, for the past week Forex has been a bit jittery too. The swings have been rather wild, especially in EURUSD and GBPUSD while the drop in AUDUSD has been far stronger than expected. What’s more any general sense of correlation has fallen apart…

If nothing else I do feel that overall, including equity markets we are on the brink of a decisive move. If my forecast from last year proves correct we should soon see U.S. equities recover… However, I don’t see them rallying to new highs just at this moment and more likely remain in a large range but more upward. If I’m wrong… then that’s the end of the U.S. stock market… Nope… can’t see that happening just yet…

So I can’t help feeling that there’ll also be a market decision to force a more directional move in the Dollar. My preference remains bearish Dollars for a few more months yet. We are getting mighty close to those 13.5 year cycle lows but so far what is different in USDJPY compared to the prior cycle lows is a panicked spike lower which is a feature of such major lows.

I’m not so sure about EURUSD yet as it has its own structure and own internal issues but the other majors do look like seeing Dollar losses for another 2-3 months. Watch carefully today as there does seem to be need of some stronger decision…

Good luck
Ian Copsey

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Monday, August 8, 2011

Debt, debt, collapsing equity markets and red herrings…

The U.S. has a serious debt problem… Quick! Sell the Dollar… Sell U.S. equities!
The Eurozone has a serious debt problem… Quick! Sell the Euro… Sell European equities!
The whole world has a debt problem… Quick! Sell the world! Sell global equities!

You know something? I’m glad I don’t follow economics… You’ll see in my book that I called for a high in the Dow around about where it stalled and then for a 20% price drop. What’s all the fuss about economics? It’s a great source of employment for economists I suppose…

Having said that, the Dollar has been playing a merry tune recently and it hasn’t been the easiest task working out what’s happening. My core view remains broadly Dollar bearish and it’s the navigation of the individual steps it will follow that is the main challenge. The rallies in GBPUSD and EURUSD on Friday were quite positive in that respect, even the break lower in USDCHF … which wasn’t what I had really wanted at this point, but does adhere to the bearish Dollar cycles. In fact, this is quite a key point as the cycles are literally in the last few months of a 16.5 year cycle… and arguably a 33 year cycle… Just taking the example of USDJPY look what happened in 1978 and 1995… That is what we should be expecting now…

But first things first… We have to navigate the short term. The Dollar definitely seems to have the potential to extend losses. What we have to watch is just how far it corrects higher today to make sure it doesn’t perform one if its recycling tricks… I think not… but just keep that in mind…

Certainly AUDUSD is meeting downside targets now, GBPUSD has pushed up nicely but is in the midst of a correction, the Swissie is rather like USDJPY and very clearly in the final stages of that massive down cycle. USDCAD still seems to have one more leg higher to go but may even see a pullback lower before it can achieve that target back at the 0.9912 high. If nothing else, remember these Dollar bearish cycles are still in force…

Have a profitable week…
Ian Copsey

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Friday, August 5, 2011

Dollar gains still expected today… perhaps not so aggressively…

Yesterday certainly kicked up a storm… The clear & obvious culprit was USDJPY with the central bank intervention. I am always asked whether technical analysis is broken down by intervention. The answer is no. It merely stretches the structures or can cause different corrective patterns to emerge. Yesterday was such an event. Rather than EURJPY, the move in USDJPY has much greater corrective characteristics (yes… in spite of the strength of the move) and has gotten nowhere close to reversing the larger structure. I can’t rule out another push higher in USDJPY but I have much greater doubts about EURJPY. I can see a larger consolidation as one option but further strength above yesterday’s high has much lower risk. The larger downtrend remains in place and it’s more a matter of “when” and not “if” to me.

Now the Europeans… I was not surprised with GBPUSD… There was a small ambiguity but the downside did look stronger. I was less certain about EURUSD but that played tag behind GBPUSD and is flirting with its lows. I have been more bullish for GBPUSD… I won’t say that I’ve changed my mind but can see potential for stronger follow-through. There’s a band of support that I’d prefer to see hold but if it breaks I’d begin to get a bit more nervous. That is emphasized by EURUSD. So far the decline does have certain directional properties rather than corrective and it’s this which is causing me to feel more defensive about the near term – and possibly medium term – outlook.

I can see EURUSD driving a move lower in EURJPY if this develops a little more strongly and as I mentioned above the cross does seem to have made its highest point in the pullback higher and therefore the downside holds the greater risk. I do have a preference for a correction higher from current levels before it extends lower but I’d not fight direct losses.

The general Dollar bullish outlook for the day is backed by AUDUSD which, while I foresaw the downside risk, actually pushed lower far quicker than I had expected. It should move below the 1.0390 low but not by too much I think… USDCAD looks set to retest the 0.9912-50 area but not directly – it needs a correction before that.

Have a great weekend
Ian Copsey

Thursday, August 4, 2011

I still see a lack of correlation across the currency pairs…

I had the feeling that yesterday could be messy. I’m not sure it’s going to be much different today… My preferences run:
Dollar bullish: USDCHF, GBPUSD, AUDUSD;
Dollar bearish: USDCAD, EURUSD… except that could be both but Dollar bullish first…

Can we rely in USDJPY? Well, the only thing you can rely upon here is that it will either remain in a semi-comatose state or it will go ballistic – that could be in either direction as the market tries not to upset the MOF / BOJ but then can’t hold off from Dollar selling…

The pointer for USDJPY may come from the cross. Obviously this has rallied strongly along with USDJPY this morning and has a little further to go, as does USDJPY. This should take a few more days and in the meantime the risk is for a correction lower in both before the final push higher… Overall I remain bearish for both USDJPY and the cross in the longer term.

EURUSD… Hmmm… Yesterday’s rally looks bullish. If I’m honest, I’m bullish GBPUSD as well. However, here the issue is more whether the decline we saw to 1.6224 was a correction or we have one more dip to go… My thoughts are more on the GBP bearish side before it can extend its gains more robustly… but I wouldn’t fight against a direct rally…

But it does seem to conflict with USDCHF… Having said that, my calls in USDCHF haven’t been the best for the past week or two. I am longer term bearish so all I’m battling with is whether a correction higher comes first or we see direct losses…

So in summary, there is some ambiguity in the short term but don’t fight any solid resumption of Dollar losses…

Good luck
Ian Copsey

Wednesday, August 3, 2011

Take care today… I feel there’s a little more consolidation to go…

I wouldn’t say the picture is totally clear but I feel yesterday took one step forward to start clarifying what’s happening. As a broad generality I feel the market remains in a rather mixed mode, pausing for a while to take a deep breath before the next larger move. I do think we’ll begin to see a stronger trend develop at that point. The trick until then is to identify the end of the correction.

My preference? Dollar bearish… That has been the constant outlook I have maintained for some while… actually that “while” measures into years… I remain looking at what I feel are the final stages of a massive Dollar downward cycle. We are already in the window of the cycle low period but I can’t see any signs from momentum suggesting we’ve got to that low yet. Hence, I still remain bearish overall.

In the meantime we still seem to have a little further to correct on the GBPUSD and EURUSD downside and that’s what I’ll be watching over today and possibly into tomorrow. I’ve had my doubts on EURUSD as it does seem to be in a slightly different place than GBPUSD but from the short term movement it’s beginning to look a little more directly bullish.

What I am less convinced about is USDCHF. It still has further to decline today but that looks to move into an intermediate low that would require a pullback. If this is right then the CHF crosses could see some unwinding.

On the other hand, USDJPY remains critically ill and susceptible to the downside. I am still a little mixed over what happened yesterday, which was not as positive as I’d hoped, but therefore does seem like balancing on a high wire. Even if it recovers I can’t see it being by much and the downside looming. That is also reflected in EURJPY so keep a close eye on anything JPY related…

Good luck
Ian Copsey

Tuesday, August 2, 2011

Hmmm… things are getting a bit messy…

That was an interesting day… It has left me a little bemused for two reasons. First the outlook I had for EURUSD and GBPUSD appeared to break down and secondly USDCHF and USDJPY have provided even more evidence that they are in the midst of some possible stark losses. Actually, although GBPUSD appears to have broken down its medium term outlook remains bullish. The current impasse is more one that it didn’t find the upside target for this first move as I had expected. So that’s three of the majors that have strong Dollar bearish outlooks.

Now, EURUSD… Well… the structure of the rally has not delivered what I had been looking for. There are two possible reasons for this (apart from the fact I misjudged it…) It may have fallen severely short of target in a type of truncated recovery or; given the overall Dollar bearish structures across the other three majors the possibility that we have 100% divergent results – Euro losing against the Dollar while the other majors look set to gain from a severely weak Dollar – that there is some other more Euro bullish outlook.

Indeed, even in my bearish Euro outlook I still felt the ultimate result would be a retest at 1.5143… I still find the structure a bit inconclusive but I’d rather concentrate on the other three and observe the Euro for fresh clues.

Indeed, even the other three majors do have signs suggesting a pullback higher in the Dollar is necessary but they’re not quite in synch. In fact, USDJPY appears to already be half way through that process while USDCHF seems to require another decline and then the pullback.

Hence, I think we’re going to have to proceed with care today and react to events rather than anticipate. Watch for the developments I feel are likely and if they occur with decent accuracy then it should increase the confidence for resultant trades but make sure that trade set ups are valid and strong.

Good luck
Ian Copsey

Monday, August 1, 2011

The Dollar remains more vulnerable to losses…

What a strange day Friday turned out to be… Deeper pullbacks than expected but then the anticipated Dollar losses, at least against the majors. At this point I still think that there’s further to go but there’s a also a degree of disparate short term expectations.

For a start USDJPY slipped rapidly lower at the end of the day to the 76.72 target I have been quoting for a couple weeks. When I looked at Friday’s close at 76.75 and the momentum it was rather difficult to see how it could not break lower without some intervention on today’s open. I have no idea whether there was any intervention this morning but it sure acted like it… The chance that we’ll see a period of consolidation is very possible but there isn’t very much wriggle room for this correction and seems to suggest a period of sideways consolidation. The longer term is much, much lower…

This is in contrast to EURUSD which, while it dipped below what I thought would provide support, ended the day doing what I had expected. This means it’s on its way to a final high and total reversal… GBPUSD is similar. It should make a new high now and reversal but I have this as a correction only… To make things more complicated USDCHF is more like GBPUSD. It needs another dip and then pullback but I see that extending lower. Therefore, it’s EURUSD which, in the medium term, is pointing to another bout of nerves.

This seems to put the EURJPY cross into a rather small bag to be shaken around in the short term but the outcome remains as I have been saying, a complete collapse. The next few days could be stable but when EURUSD tops out then it’s going to make another dive… and at some point, when USDJPY has completed it’s correction, it looks like a rather spectacular drop for the cross…

From all currency pairs, for those looking for a position to hold for some while, EURJPY looks like the best bang for your buck over the next month or so…

Have a profitable week
Ian Copsey