Thursday, November 17, 2011

Looks like the market has a bit between its teeth…

Yesterday provided several opportunities for the market to choose to double check, perhaps ease back on the gas, take a small breather, take a pit stop or allow for a deeper correction but each time the Dollar buyers came along and kept banging on those resistance levels until they, without too much effort, they just fell away. I had the same feeling this morning – perhaps we could just see a pullback now with Dollar bearish divergences beginning to develop – but no the market has stripped the poor daisy of all its petals and the collective decision appears to have been made.

There are still some possible banana skins to be avoided although, at this point, they seem more to be fairly temporary setbacks rather than any larger reversal. The biggest problem I had this morning was matching them up across the affected currency pairs in areas that would be correlated with respective structures. The second biggest problem was just the sheer noise of the moves that tend to make identification of major wave endings rather tough to identify. Thus, there’s still reason to be cautious, but for the moment the main risk is Dollar bullish and that’s something we shouldn’t really fight.

Perhaps the exception is USDJPY but since it’s moving in a semi-coma, broken only by short periods where it wakes after a nightmare and decides to have a panic attack, it’s one pair that seems pretty much unaffected by the developments in Europe. I still feel this has further losses to come, not as bearish as I once felt, but do note that it has met its minimum final projection in the decline from 277 in 1982 (only 10 points variance), is right on the month where a “perfect” cycle low is due so we should be aware that at some point it too is going to wake up and begin a very strong recovery.

Good luck
Ian Copsey


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