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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