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

No comments:

Post a Comment