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HARMONIC ELLIOTT WAVE

Friday, September 30, 2011

Dollar losses still to come… but maybe not today…


For the most part I was happy with yesterday’s analysis. With the exception of USDJPY and EURJPY the early Dollar resistances held within 1-2 points to prompt Dollar losses. Having seen them I have to say I can’t get too excited about seeing them follow-through at this point. The greater impression I got from just about everywhere (except USDJPY and EURJPY again…) is that we’re going to see out the week on a rather lame note. The implication appears to be for some consolidation, range trading and general fiddly, annoying corrective structures.

If there is anywhere which has more directional potential then it’s in USDJPY and EURJPY… Even then I’m not totally certain of this. Yesterday’s push above 76.85 has rather muddied the waters. The entire development since the 76.11 low has been one of confusion but to the point that there is a growing risk that it could push higher, perhaps in a more complicated correction to the drop from 80.23 that could see this back above 78.00 again.

The clues from the cross, however, are also mixed. It does still have another 100 points to rally, maybe a little more. It could occur directly should EURUSD remain subdued as I feel today but driven more by any strength in USDJPY. It’s more one to watch for and take advantage if it occurs. Once that move higher in the cross is done & dusted then the bearish risk returns for the drop to… and possibly below… 100.

To be honest, if you want a long weekend I think this would be a great opportunity…

Have a great weekend
Ian Copsey

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Thursday, September 29, 2011

The deeper correction has further to go…


The development of the Dollar correction lower proved to be more laggard than expected but has actually provided a much stronger feel to what’s happening… I think… Today should see the Dollar losses continue or depending on the speed of the move perhaps just revisit the lows we have seen so far. There should be more to go and I feel that by the end of tomorrow the Dollar will have lost more ground and probably to penultimate lows ahead of a final push before a reversal higher.

The story spreads across all currencies – except perhaps USDCAD which should continue its rally and AUDUSD which looks to trade in a sideways consolidation.

A word on USDJPY that gave me a headache first thing as it rushed back towards the 76.96 high. It looks like it will continue in the 76.10-80 range for today at least, maybe into tomorrow given its propensity to find the least efficient route. While it holds below the range high the risk remains lower.

This slots in with EURJPY that has still a way to go on the upside in this correction. As much as it has recovered it should be just a correction with the next drop facing the risk of approaching – maybe even breaking – 100. All JPY crosses remain in a downward path with temporary breathers for corrections. They still remain the clear picture for me over the coming weeks.

Thus, today should be a day to look for Dollar losses…

Good luck
Ian Copsey

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Wednesday, September 28, 2011

The larger correction is in development


Yesterday sorted out the situation and quite an interesting one. Sometimes I am astonished how the market collectively can identify the limits to which it can push to reach levels that rest tantalizingly between bullish & bearish. That has occurred this week. What’s more the U.S. indices stalled at levels where it seemed inevitable for them to collapse but somehow managed to rustle up a deep correction. They are in quite a state… The DOW reached new lows, the S&P stalled millimeters above its low while the NASDAQ has got nowhere close to reaching its lows… It’s a bit like a T.V. thriller series, leaving the hero hanging by a thread until the next episode…

So where are we here? Bullish Dollars or bearish in the larger picture? Yes! Good question!

At this point my feeling is that we are just seeing a correction in the Dollar and I’ll play it that way until I’m proven wrong… The clue for me is in EURUSD which seems more likely to be in one of those recycling periods. GBPUSD also seems to be mapping out a more corrective structure, probably USDCHF too. It still has a way to run and supported by EURJPY that still has another 100+ points to correct higher before that resumes losses.

That also poses a question about USDJPY which has done one of its turn-abouts and also seems destined to push higher too. That has a more vague outcome that in turn also adds risk of some more complicated corrective moves in the meantime.

Overall I will gauge the ending point more by EURUSD as this has a more defined structure. As I mentioned I think this is in a correction higher only but this structure will also generate a break level to indicate the alternative Dollar bearish scenario that would present the exact opposite – new Dollar lows.

Today… I think we see some further losses…

Good luck
Ian Copsey

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Tuesday, September 27, 2011

Somewhere around betwixt and between…


Yesterday provided some decent price action but without either side really gaining any ascendancy. I feel it has cleared up quite a few question marks – not all – but should provide a better framework to establish the next move. However, the base assumption of a higher Dollar does still seem to remain intact but we have to work through this correction. Of all, I found GBPUSD to provide the least clarity. I could count the 1.5327 low as the end of a bearish move but I’m not so certain given the relative proximity of what I feel should be a final daily downside target. In comparison EURUSD has more room on the downside but has a certain ambiguity – as do all the Europeans – that the Dollar highs seen so far could also *just* still work within a weekly Dollar bearish outlook.

At the same time the U.S. equity indices have fallen short of breaking the August lows so maybe there is a “get out of jail” card that can still be played… I have to admit they look pretty dire, and the Asian equity indices certainly look as if they have tipped over the edge, but it’s never over until it’s over… Thus, for now let’s just see how they all develop. As far as I can see the U.S. indices have pulled back higher and close to their limits. Much more on the upside could allow them back track around the Monopoly board.

So for today I do expect the corrections that began yesterday to continue but we’ll need to closely watch how they develop – and that includes U.S. equities…

Good luck
Ian Copsey

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Monday, September 26, 2011

Is the correction coming earlier than I had thought?


What a dull day Friday turned out to be, the Dollar stubbornly refusing to extend its gains but instead remaining in a range. It has left me in middle ground with upside projections not reached but the correction from its highs being such that it’s difficult to envisage direct follow-through higher. In essence it has left me in the middle of the proverbial rock and hard place. Well, more accurately, any further losses in the Dollar would result in a deeper correction.

It seems that all currencies are in the same boat which has me quite perplexed and therefore I’m taking a step back to observe and look for evidence of any push in one direction that would solve the puzzle. As far as I can still see we are in a larger push higher in the Dollar but not one that is going to break key highs to trigger frenetic selling at this moment. Therefore the puzzle is more one of how this structure develops – whether we see modest gains and then a pullback – or a stronger pullback before further gains…

If there is any single European pair that may highlight the way I think it’s GBPUSD which has approached the 1.5501 high very closely and should therefore represent a key break level. Even then I can’t see the Pound rallying too far.

I should also cover USDJPY that has been developing quite well in its overall downtrend. I certainly wouldn’t want this to break above Friday’s high else this would put more weight on a deeper correction higher. That also represents the situation in EURJPY also. I still prefer the downside as always but it really does need to extend losses now else we’ll see a much deeper correction. That would bug me from the cross point of view also. That needs to push lower now else see a much deeper correction.

So while not decisive comments today I feel they do represent the balanced risks… Hopefully by tomorrow we’ll have a stronger picture.

Have a profitable week
Ian Copsey

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Friday, September 23, 2011

A larger correction looms


Yesterday proved to be quite a turning point – not so much as a change in direction but more one of the final confirmation of crossing the line between two alternatives. This occurred not only in the Dollar but in equities also. In particular the drop in the U.S. market is making it mighty tough to maintain a bullish structure there. Not that I feel we’ll sail happily into the sunset. There’s still some twists and turns further down the road but as a view over the more distant horizon the outlook the Dollar should be making its final preparations for take off into the 2015-2017 time frame.

So feet, back on earth and still in the departure lounge, we have the near term to navigate. Well, I feel there is modestly deeper correction to come now but there is a slight duality and we’re going to have to watch key Dollar supports early in the day. While they hold we can see another leg higher… If they break then a deeper pullback but I can’t see it being overly strong and should be the penultimate correction in the decline. Thus, don’t get too carried away with the move higher and look for losses to resume once complete.

That leaves poor old USDJPY. While the Dollar rushes heavenwards against just about everything the Yen is soaring against the rest and what’s more, there’s no end in sight there either. Having said that, after another drop the cross is due for a correction… but a correction only… before making an assault on 100 which should break with ease once tested. Indeed, there is risk that we’re going to see the losses in USDJPY I have been waiting for also. Overall, for the JPY crosses the way forward will remain to sell into corrections.

Have a great weekend
Ian Copsey

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Thursday, September 22, 2011

More Dollar gains – but some caution required


Yesterday was pretty much close to the initial template I described: Asia sat on its hands. Europe waited for North America. Finally, North America saw that neither Asia nor Europe committed to any moves waited for the FOMC. However, the FOMC appear to have provided the parcel to pass.

The Dollar has taken a sharp shove in the back and pushed its way higher again and there seems more to come but I feel the evidence in other currency pairs does imply that some caution is required in expecting excessive gains. We should also note that some Dollar bearish divergences seem to be developing and being towards the ending stages this amplifies the risk of some choppy moves.

Even USDJPY has seen a slightly deeper correction than anticipated but I don’t want to get too bullish at this stage. More, I do see risk of a day or two of consolidation before it does extend losses so it’s probably not the best time to hit USDJPY but EURJPY does look vulnerable as ever. It won’t quite hit 100 at this stage but it’s making its way down there bit by bit…

Also of interest is just how the equity markets will react. There is risk of modest losses but I’m not overly bearish at this stage. The need here is limited losses while the Dollar rallies but stronger gains while the Dollar corrects.

Good luck
Ian Copsey

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Wednesday, September 21, 2011

Somehow this looks as if it could be a mostly boring day…


I can’t say yesterday saw too much that surprised me although I would have preferred the Dollar to push higher. Even the losses seen weren’t that strong so there’s no confirmation of any reversal. So here we sit, mesmerized by watching little dots move up and down, drawing out their vertical lines, chewing little chunks from our nails and sighing a lot. Good fun this game isn’t it?

I started off observing that the Dollar had edged itself into a position of neutrality, not confirming the upside but having also set itself up for possible losses. The risk is that Asia will see that and will sit on its hands. Europe will see that also and wait for North America. Finally, North America will see that neither Asia nor Europe have committed so will wait for the FOMC. It’s a case of pass the empty parcel.

I’m open to either direction in EURUSD and USDCHF… The duality of EURUSD remains. I could treat the decline as a correction for a stronger push higher or as part of a larger decline. The problem is that since the 1.6036 high, all those many moons ago, EURUSD has been developing in 3-wave structures – that is corrective – and there are two valid ways of looking at it.

However, when I look at the structures and feel that GBPUSD still needs to drop… and logically that seems to be the implied risk. However, it will be best to wait for confirmation…

The apparent contradiction is that USDJPY and the JPY crosses remain bearish. I have been patiently waiting for USDJPY to accelerate to the downside but these days it makes heavy work of any move at all… The fact that the JPY crosses are still weak is perhaps evidence of a possible rally in the Dollar elsewhere. It’s just a bit tough to envisage quite how long that polarity can exist...

Thus, it doesn’t seem like it will be particularly enthralling today but perhaps we can take the day off and wait for the next break…

Good luck
Ian Copsey

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Tuesday, September 20, 2011

It looks like the Dollar will extend its gains today


With the exception of USDJPY the Dollar extended its gains yesterday and it certainly looks as if there’s a good chance it will extend even higher today. If it does the chance of a quite a solid follow-through is there also, edging the Dollar towards the more extensive downside targets. I still want to err a little on the side of caution as I need to match the bearish targets in EURUSD and GBPUSD but there are still a few hurdles that could cause a “snafu.” I also see initial limited losses in GBPUSD that should add to the attention we need pay to how price develops.

What could be the stronger trade is EURJPY as USDJPY doesn’t seem to have much upside in it – and may even have seen its pullback high already this morning so a combination of lower EURUSD and USDJPY would provide stronger profit potential. Best watch how these all develop to ensure they are all in tandem.

Another interesting development yesterday was the stronger recovery in USDCAD… That seems to point to further gains but I can’t see this going on forever either.

However, barring any recycling of corrections the overall implications appear for a higher Dollar today but take it step by step to ensure that we don’t get too married to the position.

Good luck
Ian Copsey

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Monday, September 19, 2011

It looks like a week that may sort out the bulls from the bears…

The week ended on a dampener with the Dollar not able to extend losses and opened this week with a gap higher. I am struck with a number of ambiguities, discrepancies and confusions that in some ways are always likely due to the heavy duality in the daily charts. I also had a second but less rushed look at the Dollar Index after my comments last Thursday and noted a similar situation offering two completely different outlooks.

So we have to sift for clues… One actually may come as a surprise – the Loonie. Now whether one can really rely on a Loonie is questionable, but the target I had on Friday was hit within one point and this is pointing strongly to a slightly deeper pullback, extension lower and then total reversal higher.

There is also EURJPY although this is complicated by the component parts. As always I am overall bearish and to quite significantly lower levels and over time there is a lot of room for losses but for now I am targeting the 101-102 area. It is time for USDJPY to begin a stronger push lower and I’ve always expected this to accelerate. It just hasn’t managed to stop pushing the bike and start freewheeling downhill. Let’s just say the risk is most certainly there. The bigger issue is whether it has enough downhill acceleration to offset any gains in the Euro… At this point, until USDJPY does see the downside accelerate one has to prefer the Euro leading the charge…

This is echoed by GBPUSD – for the moment at least. There will come a point where it has to make its own decision whether to climb back up the hill or just take an easy ride lower. One point top note about any stronger rally in GBPUSD… it has to be a strong rally to above 1.7042 at least and one has to wonder whether it has the legs for that…

Otherwise we’re down to looking for clues on where structures break down. I would suggest that for the moment there has been no confirmation of a reversal lower in the Dollar and until then, unless we see a stronger sign, the odds favor the downside.

Have a profitable week
Ian Copsey

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Friday, September 16, 2011

I hate it when I make stupid mistakes…


Arrgghhh… Going back over EURUSD in particular I can’t believe what a silly error I made. Having analyzed that decline again I can see such a better set of linking ratios that made the low very obvious. Given my original 0.8997 retracement target in USDCHF also the peak we saw was well within bounds of variance. Head bowed and humbled but quietly satisfied with the daily picture…

Actually, one of the contributing factors to looking for EURUSD to make a new low was GBPUSD which… I still feel has downside risk. Yes, that recovered too but nowhere near to the extent of EURUSD. It’s more a matter of how GBPUSD can extend to new lows while EURUSD remains above 1.3494. It’s quite possible but let’s take one step at a time.

What does all this mean? Well… recall my comment about the Dollar Index yesterday? It would seem that as long as that analysis is correct we have one more low in the Index and that should translate into Dollar weakness overall. The low in EURUSD was at a convenient level to make a push above 1.5143 – even if briefly – quite possible. I’d like GBPUSD to move to a new high too… equally the U.S. equity indices… but once again… let’s take one step at a time since there is an alternate structure.

First of all I still feel EURUSD and USDCHF have a little more to go in this initial reversal. EURUSD in particular is approaching suitable levels that would enable a pullback and then follow-through higher that could reach 1.4930 again. However, I will be expecting a pullback so don’t follow-through with this move strongly and more watch for signs of the Dollar’s weakness fading. That should allow a pullback and this is where GBPUSD has to prove its stronger vulnerability.

Equally, the description of EURUSD also fits the situation in EURJPY… and the downside is still the stronger risk in the cross but we should now begin to see USDJPY take over the reins to carry the cross lower.

Have a great weekend
Ian Copsey

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Thursday, September 15, 2011

The correction has been long but should finish today

Yesterday was partly a boring day – mostly in Forex – and partly interesting with the U.S. equities apparently defying ardent Elliott Wave guys who are frothing at the mouth waiting for doomsday to appear across the horizon. Having said that, there has been no final confirmation of a break higher yet in the latter and I don’t think that situation is going to be resolved this week.

However, I was quite happy to see that rally as it still provides a cushion for the expected follow-through higher in the Dollar. On that subject, for last night’s Mentor Service I was asked to demonstrate how to view a chart and how to know where to start a wave count. I haven’t really worked with the Dollar Index that much so used it as a live example of identifying a wave count. In looking at the decline from the 2007 high it became apparent that we have not seen a final low yet. What’s more, it does point to another push higher but quite limited.

So the coming week or two looks like being quite interesting as I do feel we shall be due a deeper correction after the anticipated coming rally so it will be interesting to see just how strong the reversal is. As you know, I have always had the preference for one more low in the Dollar so we’ll have to wait and see. At least it will be an improvement over the past two days.

So what for today? I think one more dip in this Dollar correction lower and then we should see some firmer gains again. Keep your eyes peeled for the reversal which should initially move back to the recent highs. That should help EURJPY continue its safari into the black hole…

Good luck
Ian Copsey

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Wednesday, September 14, 2011

Dollar gains to resume?


The anticipated consolidation developed yesterday. Has it completed? Well, if it hasn’t then I can’t see that it can last much more. It could continue for just a bit longer but I can’t help but feel that by the end of the day we’ll see the Dollar upside extend a bit further.

I did spend a while contemplating the larger structure, even considering the situation in the equity markets. What I can say is that I feel we are sitting on a fine line separating a much stronger Dollar/weaker equity markets. Technically I can see both sides and each implies quite a strong reaction. There seems to be no middle ground – the equity markets collapse and the Dollar rallies – or we see a truce allowing equity markets to recover and the Dollar return to its habitual softness.

Where’s the political will? Who or what will steer the path of those seeking power? After all, it is power that drives the human psyche…

The one thing that does look steady is EURJPY… That too has a small question mark over whether it has completed its correction. Possibly… possibly not. I do feel it would benefit from a minor new high but the downtrend remains intact and I can’t help but expect another leg lower, but one that could generate a slightly longer lasting pullback… However, a correction only. I still see this destined to move below 100…

Tread softly for the first half of the day. I feel that by the second half we’ll begin to see stronger directional movement…

Good luck
Ian Copsey

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Tuesday, September 13, 2011

I feel we may see some consolidation for a day or two…


At long last I think I’m getting the feel of this forced change of view but there are some minor wriggles and vulnerabilities that need to be observed over the couple of days where a sideways consolidation could develop.

First of all, not exactly where I had placed my bet but we finally saw some Dollar highs and a pullback. In one way we do seem close to completing a correction. I say “a” rather than “the” as this initial correction has developed in a way that could warn of a more complicated consolidation. In fact, I tend to prefer that view when looking back at earlier price action. This should relate mainly to EURUSD and its new piggy-back partner USDCHF – oh, and possibly AUDUSD and USDCAD…

Elsewhere GBPUSD appears to be playing some games. Yesterday’s low was a trice below expectations but not along way but the manner of the decline was not quite what I was looking for. What’s more, the recovery from those lows was not what I would have expected in the structure I was looking at. It was quite feeble whereas there should have been a much stronger reaction. Therefore I suspect some shenanigans…

Some while ago I took a look at GBPJPY and thought… “oooh… bearish…” I can’t see GBPUSD matching EURUSD & USDCHF and feel the downside risk is now stronger – exactly what GBPJPY needs. Therefore be wary of this currency as the risk remains lower and momentum tends to point to that.

Watch USDJPY also. Yesterday’s drop is looking quite bearish and I wouldn’t be surprised to see extension towards the 75.94 low. It still has a small window to allow another push higher but needs to do so quickly else it’s time this went lower and probably more directly than before as new PM Noda has more than enough on his hands with political politicking, sabre rattling and thinking up ways to make the electorate like him.

EURJPY is doing ok. Yesterday’s low was not the one I had envisioned, but it’s in line with the negative structure I have. If it has any higher to go then it’s not by much and this cross looks heavy too…

Good luck
Ian Copsey

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Monday, September 12, 2011

That correction is closer… but may need a minor new high first…


The Dollar has certainly made its presence felt. I don’t think we have reached the extreme as yet but I do feel we are approaching an intermediate high that should trigger a correction – and probably over the first half of today. I suspect too, that the correction could last a while. Maybe it can last until mid-week but there will still be further highs to come. Right now there is just no sign from momentum even suggesting we’ve seen a major turning point.

So watch out for the next few days as this is going to revert to messy corrective structures for that correction which means greater potential for stops getting hit and further frustration.

Even USDJPY “screwed up” in its own way on Friday, looking as if it had broken higher but then recycling lower. While a bit frustrated with the more complex correction it doesn’t really change my view but we do still have a little further higher to go so this should keep EURJPY from excessive losses right now but I still retain a longer term bearish outlook that will also see USDJPY begin to make its own impact on the decline. Probably we’ll see the high some time this week depending on how slowly/quickly it can follow-through with the current rally. For the cross – well I wouldn’t be surprised to see 100 tested again around the turn of the month maybe…

Just a note on USDCAD which has been pushing higher itself. This still has a little further to go but I can’t see this developing an aggressive rally but does seem to require a pullback also. AUDUSD has some losses to come also. Quite what it does once we reach that low will be crucial and could be an indictor for the longer term.

On the issue of whether the 16.5 year Dollar bearish cycle has ended I remain open at this point. I’d rather look to see how the Dollar reacts when it reaches those anticipated highs and how the reversal develops. It’s not impossible but just a trice too early to be totally certain.

Have a profitable week
Ian Copsey

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Friday, September 9, 2011

That correction… it didn’t happen yesterday … but maybe late today?


The Dollar never really made much of an attempt to correct lower yesterday did it? I was obviously a bit too hasty in looking for that but it should come and may even reach its high later today to start the reversal. What does strike me is that the failure in GBPUSD seems to point to more losses there and could approach close to the 1.5780 low… I don’t think it’ll break and actually I don’t think it’ll get below 1.5800… Conversely the drop in EURUSD is looking like it will get pretty close to the 1.3837 low…

Even USDCHF extended its rally and by a lot more than I had expected. Here I feel the rally is tapering off and is due quite a deep pullback. Clearly there has been a lot of hype with this one. Even after a correction it should move to higher highs, but I still have this as a correction only. I have been bemoaning the lack of daily deep Wave (iv) corrections here… the depth of this one has certainly resolved that issue! Once it’s over I’ll expect a decline to new lows…

EURJPY is edging closer to the precipice… I can see the next day or two as being controlled in its decline while USDJPY completes its sideways correction today and pushes higher… but once that rally is compete the cross looks like entering an abyss as we’re due a much larger decline in USDJPY also… and well below 70.00…

So far today – it should be much the same as yesterday but this time we should see the Dollar reach its current highs…

Have a great weekend
Ian Copsey

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Thursday, September 8, 2011

That correction… it should happen today…


Things seem to be settling down… I still can’t 100% rule out marginal new Dollar lows in the Europeans but the threat is definitely waning and there are early signs of the reversal I had suggested was close. There are modest Dollar bearish divergences in place with the final requirement for losses to extend a bit further than yesterday.

Once this develops I am erring towards this being a correction. The stalling levels in EURUSD could still be accepted as part of the elongated consolidation since April but I’m no longer really convinced since the decline appears more directional rather than corrective. In GBPUSD the decline has been just a bit too deep to fit into a bullish outlook and the rally in USDCHF does seem to need to extend further. The Swissie actually seems to be more in correlation with the other Europeans, still hasn’t completed its rally, but also looks close to correcting lower first…

The Aussie looks firm, the Loonie looks… err… Loonie… but these two need some kids gloves still as the structural development has been labored and just a little clouded.

So that just leaves USDJPY and its cross… These two… are… well just a little awkward right now. I can’t see that USDJPY has completed its rally. More, I feel it will remain in range today, initially higher but then correcting lower before it can push higher again. That seems to imply the cross will be a bit firm. I had considered a triangle here but the limited sideways consolidation is stretching this possibility. I do feel the correction higher could continue today but once that’s complete the next move should be strongly lower. Part of that could/should come from USDJPY but probably the thrust will be more from EURUSD – but we need the correction to end first… More kids gloves required here too…

Good luck
Ian Copsey

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Wednesday, September 7, 2011

Further to go… but corrections required soon…


It sure was an S&M day yesterday… whips were lashing out in a frenzy…

The Dollar has strengthened and frankly it’s hard to fight against this right now. I’ve had to review the daily and in some cases weekly charts. I thought I’d turn totally Dollar bullish – the type that would confirm the 16.5 year cycle low. Maybe it will but I do still see potential obstacles. Obviously the shorter term charts look pretty battered but the daily, and more the weekly, haven’t really technically reversed. The U.S. equity market wasn’t too impressed after their gap lower from Friday’s close and actually closed at the day’s highs after getting quite close to the support levels I had indicated in yesterday’s report.

Indeed, while there does appear to be room for minor follow-through in the Dollar strength early today I’m expecting a correction and one that could be quite deep. Therefore I don’t recommend getting into the Dollar rally at this stage but there should be opportunity over the next day or two.

The strength seen in USDJPY has confounded but in some ways makes the downside targets a more comfortable projection. I’m not quite giving up on the downside yet. Maybe I’ll be forced to later but only when there is a stronger signal of a larger reversal and frankly that won’t come until above 80.23. It has also caused EURJPY to become somewhat ambiguous. Again, there’s no break higher but a little conflict here or there that needs clarification. I wouldn’t even be surprised if it goes into another of its sideways consolidations…

So today needs some kid gloves I think, and a good deal of observation if my thoughts of a Dollar up-down day develops…

Good luck
Ian Copsey

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Tuesday, September 6, 2011

Once bitten, twice shy...…

The coil in the Dollar bearish structure has unwound itself. Has it turned bullish? Well, it’s towards the high of the range but is in some ways in exactly the same position on the opposite side. The Dollar is stronger but hasn’t confirmed the upside either.

So what next? To be honest, I think we have to wait. When the break comes I think it will be quite decisive but having been bitten on the bottom… umm… side… I’ll not stick my head above the parapet in case I get my head bitten off too…

There seems to be this big battle between the Dollar bulls/equity bears and the Dollar bears/equity bulls. From the noise I hear the former are a louder group, but have been for some while (and many having been bearish equity since the 2009 low…) We are due a very big reversal higher in the Dollar, I agree, but I’m still not certain that we have quite reached that point.

Right now we are still in the 5-month range seen in EURUSD, a commendable period of stagnation and indecision. Even if the outcome is going to be Dollar bullish I don’t think it will come directly. There should be a pullback higher in EURUSD at the very least and from not far below where we are now. The difference between the bull/bear outcome is that this decline is likely to be the final part of the consolidation in a Dollar bearish scenario and would drive EURUSD higher directly while a Dollar bullish outcome would require a correction only and then decline…

Therefore it still smacks of indecision and confusion which equates to continued whipsaws and bitten bottoms... and tops…

Have a profitable week
Ian Copsey

HARMONIC MENTOR NOW LAUNCHED

Friday, September 2, 2011

High Noon

With Monday being Labor Day holiday in the States the next report will be on Tuesday


Amid the chaos yesterday there were a few success stories. I had warned of a dip in EURUSD to 1.4206-26 - upper resistance met precisely; in USDCHF a downside target of 0.7918 - the low stalled at 0.7925; and finally USDJPY with an upper range target of 77.24 – also precise.

Now… does that mean the Dollar is going to continue lower? I’d like to think so but I’ve made that statement so many times and had to suffer the consolidation continuing that it tends to weaken the confidence. I have to say, there is virtually no more room left in EURUSD and GBPUSD on the downside for me to feel comfortable so really, if the Dollar is going to weaken it had better do so now or forever hold its peace.

In particular USDJPY looks bearish. Yesterday’s high was as far as it can go without forcing a deeper correction while the downside is actually more of a gaping hole and this does tie in with EURJPY. However, the cross is perhaps not quite ready to step into the hole. It still has a little downside to go but then another correction higher – depth not known – before it can join USDJPY in stepping over the precipice. Therefore it seems as if the process there will take just a little longer and possibly – well hopefully – it’ll be EURUSD that provides the driver of the correction. Be aware, on these assumptions – a rising EURUSD and a dropping EURJPY it will imply downside acceleration in USDJPY…

USDCHF has probably done enough for now on the downside and needs to correct higher. Later it should join the expected/desired Dollar losses and could well end up back at 0.7066 in the process and later lower.

The greatest concern I have is GBPUSD. That was either an amazingly deep correction for the position it’s in… or it needs another minor new low… even then I’m uncomfortable. It’s one to watch and I hope it doesn’t spoil the party…

Have a great long weekend
Ian Copsey

HARMONIC ELLIOTT WAVE FORECASTS NOW AVAILABLE FOR ASIAN INDICES

Thursday, September 1, 2011

Time to lie down and sleep?


Forget the drum roll… This market is becoming tedious…

The whole market is against me! Maybe I should feign the admittance of defeat so it can turn round and bite me in the backside. I mean, what does it take to do something with more intent? Joking aside, this total indecision with the Dollar is a time bomb waiting to go off. Once it starts, in whichever direction, it risks a strong whiplash of pent up emotion.

Which direction? Well, I’ll still feel it’s going to be a weaker Dollar. I just find it hard to consider that the downside has a completed structure. Make no mistake, it’s driving close to breaking down but for the moment the bearish structures remain in place. It’s just the sheer complexity of the corrective structure that is quite bewildering.

However, if it is going to end I feel it should be soon as there are a couple of break levels that aren’t a million points away. Could it happen today? Of course but at this stage I’d rather it proved itself. Just looking at EURUSD by itself I can see two options: either it remains above 1.4328 and begins the much awaited rally – or risks sinking all the way back to 1.4220-58 again. However, I feel that GBPUSD doesn’t really have that luxury and must remain above 1.6208…

Let’s just say, speaking from my bunker and covered in war wounds, that I still prefer a Dollar bearish outlook for another 1-2 months but my patience is running very thin. I’ll try an outline what to look for in terms of clues that will highlight one way or the other…

Good luck
Ian Copsey

HARMONIC ELLIOTT WAVE FORECASTS NOW AVAILABLE FOR ASIAN INDICES