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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