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HARMONIC ELLIOTT WAVE

Monday, November 7, 2011

Is this the beginning of the end?


The market just didn’t have enough confidence to extend Dollar losses aggressively, concocting a rather complex structure that had some ambiguity in it and perhaps suggesting a subconscious back door route to extricate itself from being bearish. The Dollar gapped lower on open for the most part this morning and this is adding to the weight of argument in favor of Dollar losses. This remains my preferred outlook although I should re-iterate the delicate high-wire balancing act the Dollar is performing right now. Whatever the Dollar decides to do through to the end of the year, the outlook for next year is a much, much stronger Dollar.

For now I feel the stronger argument is still Dollar bearish into the New Year and that being the case it will need to demonstrate this today – at latest tomorrow – by extending losses in a constructive manner. If there are to be any currency pairs that take more benefit from this then I’d go with GBPUSD and AUDUSD which, in this position, both need to make substantial new highs. By contrast I feel that EURUSD and USDCHF will probably demonstrate weaker momentum. For GBPUSD a break above its 1.6166 high would be very beneficial and should then make constructive progress towards the 1.6618 high.

So for today, watch the short term projections to get a sense of whether the Dollar weakness is developing in line with expectations. Confirmation will provide a much stronger base for attacking pullbacks for potential selling opportunities.

Any break back above last week’s highs would be a bit of a dampener although there are deeper corrective resistance levels. However, it will run the risk of the alternate structure of Dollar gains within the larger daily consolidation into the end of the year – but still end with strength next year…

Have a profitable week
Ian Copsey

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