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HARMONIC ELLIOTT WAVE

Friday, October 28, 2011

I guess you can call that move an extension lower…


It now seems strange that I was so cautious yesterday. Even U.S. equities were gagging to rally. Well, it came and there does seem much more to come. I am just bit surprised at how deep these losses have developed as the eventual target of this move seems to be around 1.47-48 EURUSD while the eventual final target around 1.5185. That does appear to suggest quite a steep pullback in between. That may not be such a surprise as GBPUSD found it difficult to hitch a lift and display more robust gains. This is a situation to watch with care as while it has broken above 1.6082 the impact of the anticipated (later) deeper pullback in EURUSD needs to be observed in case we revert to a alternative picture for the Pound.

Anyway, that’s a consideration for later. For now we’re due a correction higher in the Dollar. I don’t see it being exceptionally deep. There are a couple of scenarios I’m considering so quite where the pullback stalls today should provide a stronger clue. The other clue comes from the U.S. equities and they’re much in the same boat – potentially a mini follow-through higher today but then a pullback – but that’s expected to be shallow too. That tends to smack of a potential consolidation in Forex and therefore the possibility of a relatively quiet end to the week…

One pair to watch today is USDJPY. It may have found its low yesterday but there is still a mild risk of marginal new lows but I’m more in favor of this moving back to 76.48-60 again before it can make a greater impact on the downside. This clearly has an impact on the cross but having seen yesterday’s rally we are approaching a cloud of resistance and I’m not convinced that it will continue to remain strong.

Have a great weekend
Ian Copsey

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