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

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