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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