Monday, October 3, 2011

The Dollar is looking firm …

The Dollar ended up looking much stronger than I had been expecting at this stage. It obviously calls into question the underlying structure but not the direction that, in the larger picture, remains bullish. So the next question is whether we shall see follow-through higher directly or is there to be a pullback or even recycling back to last week’s lows.

Indeed, that is a good question… Structurally it’s possible. Will it happen? At this point it can go either way so is very much a 50:50 coin toss. Therefore we’re going to have to observe key break areas and for the most part these are quite well definable. If there is any stronger indication then momentum does appear to favor the upside.

I had considered attempting to identify the outcome through EURJPY. That didn’t get as close to my upside targets as I had expected. At first I thought this may be the clue we need, but in terms of the correction higher it has done just enough in the correction to be considered complete. I’m still not entirely comfortable though as the downside projections do seem rather too much… and that’s in spite of the fact I have been bearish for along time. It would implicate a retest and break of the 88.94 low in October 2000… Well, it’s not impossible… in fact most likely.

So, today’s out look is a bit hazy though I do expect a correction lower from this morning’s highs – or maybe from a little higher – and then we can watch the critical support levels that will identify whether we’ll get a recycling or not…

Have a profitable week
Ian Copsey


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