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HARMONIC ELLIOTT WAVE

Friday, August 19, 2011

Well, if the Dollar didn’t lose ground yesterday… it should today…

More deep corrections, some anticipated, some extending more than expected but overall took most of the day. And so we get to the end of the week in which I have been satisfied with the general Dollar losses but frustrated in having the correct structure seemingly out of my grasp. I’m left with some mixed feelings but still see more risk of Dollar losses. They need to resume pretty quick else I’ll be feeling sore for the entire weekend.

In particular GBPUSD did actually work exceptionally well with the low at 1.6420 and right in my target retracement area. This now needs to extend gains through into the European session and to above 1.66. Once we see that high we’ll be due for another correction and possibly for a day or two before the uptrend can resume.

EURUSD was rather soft also and this is harder to get a gauge on what’s happening. An obvious statement is that it will either go up or it’ll go down. The key is knowing the point at which each becomes reality and breaks the other alternative. I’m pulled by my bullish GBPUSD view but in EURUSD it would imply a more sustained rally than in GBPUSD and that gives me a small concern. Therefore best watch those areas I’ll highlight and that GBPUSD does lead the way higher…

USDCHF… remained in a nasty consolidation. That should soon end and see the upside extend. USDJPY… looked like extending losses but the push lower fizzled out rather disappointingly. It’s tough making calls when the progress is so slow… It’s another one like EURUSD – it’ll either go up or it’ll go down… Yesterday’s range should set the break levels.

However, it seems this is going to have impact on EURJPY which also dipped lower against my preference and is close to extending losses. Here we have an interesting conundrum. If the cross breaks lower it will probably be fairly strong. So which gives? EURUSD or USDJPY? Well even if USDJPY does push lower I can’t see this extending that far which means EURUSD has to provide the catalyst… but that would mean a much more bearish Euro… I’m not quite ready for that. If the cross breaks higher I can see EURUSD having the scope for stronger gains but not really USDJPY… It does sway the argument for a bullish EURUSD…

Good luck
Ian Copsey

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