Wednesday, November 2, 2011

Signs that the worst may be over?

The Dollar made some further solid gains yesterday and is certainly stretching the upside boundaries that provide that hazy, misty cloud that separates the beam of bright white light that leads to the heavens and a return to heavy mortality.

Can the Dollar still make new highs? Yes… and still not enter the white light? Just about… I feel that should be seen as a minimum. Momentum hasn’t really taken too much of a breather nor provided any definitive signal of a potential reversal at this point. Therefore we should still be very attentive to how things now develop. I do have two strong alternatives for how the final stages of a base for the Dollar to form a multi year low and I am quite happy to follow either.

I have a slight preference for the Dollar to weaken first but this scenario is going to need a solid and quite direct follow-through soon to be able to retain the sort of targets I have in mind – both in terms of price extent and time. The time frame appears to be around the turn of the year and is one that has a history of seeing major price reversals. Thus we have just 8-9 weeks to see the Dollar losses move above 1.5143 EURUSD, above 1.7042 GBPUSD (and probably closer to 1.80) and down to a minimum of 69.00 USDJPY…

If that scenario fails then the Dollar will rally within the larger weekly consolidation, possibly in the same time frame before a temporary pullback before stronger gains are seen next year.

So watch carefully today. I can’t see much room left on the Dollar upside that would absorb any further strength in one or two currency pairs without tipping the scales. Keep an eye over your shoulder for that bright white beam of light…

Good luck
Ian Copsey


No comments:

Post a Comment