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HARMONIC ELLIOTT WAVE

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

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