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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