Wednesday, October 19, 2011

Dollar losses to resume…

Right… time to brush hands off and get back to the trend… The recycling, the simple plain corrections and consolidations appear to be done with and it’s back to think about one direction… and that direction is lower for the Dollar. What’s more, from what I can see the risk is for quite a strong move now so be prepared to hold on to your hat and ride the wave…

Out of interest, I also began looking at the Dollar Index yesterday. Out of a somewhat (expected) surprise guess what? Yup… It completed it’s own recycling and what’s more the outlook is bearish and still looks to have 2-3 months more of a decline to go matching the expectations in the Europeans in particular and also the Aussie. It shouldn’t be a simple straight line though. In fact, it should coincide with how I see the Dollar overall which is a basic decline-correction-decline move.

Now, right now we’re at the initial foundation laying stage and that’s going to make the early follow-through just a little complicated to try and anticipate with any great accuracy. I’ll give some ideas of the type of areas that appear to be front-runners for the stalling points of the first waves but it’ll take until tomorrow/Friday to begin to be able to generate a more solid immediate projection targets. For EURUSD and GBPUSD I have a pretty good idea of where the larger intermediate targets should lie so for the moment it’s best to sell on rallies…

One caveat: while I do feel we’ve probably established a key corrective high in the Dollar, until we have escaped from the last stages there is just a small risk of one more rally… I doubt it given the clear recycling targets in USDCHF and even EURJPY that have been met and should now hold.

Good trading
Ian Copsey


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