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HARMONIC ELLIOTT WAVE

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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