Thursday, October 13, 2011

More conclusive…

Pigeons, cats, scramble, chaos… reversal.

Well, that seems to be it then. What shouldn’t have happened appears to have happened… If this is the case then it looks like we shall see Dollar weakness through to the end of the year I’d estimate, maybe just into January. This had been my original expectation that I had reluctantly changed with the depth of the Dollar’s rally. It’s rather early days, but this switch has quite a dramatic impact on the entire landscape and seems to imply a move to above 1.5143 EURUSD and in GBPUSD potentially above 1.7042. Even this tends to have its conflict since the Euro should make this move in two rallies divided by a correction while GBPUSD needs to complete this rally in three rallies divided by two corrections.

However, first things first… there are a few minor conflicts now but overall further Dollar losses are expected but not for too much as a larger correction is due. Each currency will have to work though its own minor structures so there could be a degree of non-correlation today. However, if in doubt favor the Dollar downside is probably the more healthy risk.

Along with this confirmation of Dollar weakness USDJPY has also gone haywire after the long consolidation. It bounced nicely from my 76.32 support … but then never stopped. I suspect we’re due another leg higher though we’re going to need to balance this out with the cross which has similarly broken the bearish structure and has been rallying with equal venom. The cross has a way to go towards just above 109.00 before a deeper pullback. What is needed is to balance out the expected strength in USDJPY and also EURUSD. There are a few possible combinations so it’ll be worth judging the individual currency pairs with the cross.

Good luck
Ian Copsey


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