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HARMONIC ELLIOTT WAVE

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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