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HARMONIC ELLIOTT WAVE

Monday, August 22, 2011

Twists and turns, blind alleys and dead ends…

Just as I thought things should progress the market dodged a decision and brought the Dollar back into range to smother the breakout I had been looking for. I still think it will come but whether the current corrections will reverse into a directional wave or just extend the series of corrective consolidation patterns is something that needs observation and patience.

I can see from the equity markets that the fragility persists and may even see new lows this week. That situation is still pretty much in line with my larger picture and arguably could make the correction in the U.S. markets more pinpoint in terms of targets. It is quite possible that this general state of unease will continue to hinder any real progress in the currency markets and could even extend through the entire week. At best, any directional moves may well only generate modest new Dollar lows that would still require corrections before the larger downtrend develops.

That picture has even been seen in USDJPY which had a pretty whippy day on Friday, finally reaching my 75.70-00 target. However, the manner of the decline made it clear that this was not part of the downward move but merely a correction. However, even so, very clearly it is setting itself up for a tidy downtrend. That obviously has implications for EURJPY that may well fuel the recycling back to 114.17. It has made a big struggle of the recovery so does hold risks still but once the downtrend begins it could be quite a solid decline.

USDCHF is playing around as well now… possibly a dip first before rallying to the full extent of the correction I am anticipating. GBPUSD doesn’t seem able to hold on to gains… quite frustrating… but it too seems to be playing around with corrective patterns that have been slowing the bullish process. I still remain overall bullish but any progress over the next 2-3 days could still be slow and choppy.

Have a profitable week
Ian Copsey

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