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HARMONIC ELLIOTT WAVE

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

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