Thursday, November 10, 2011

Swings, roundabouts and seesaws…

With tomorrow being Veteran's Day holiday in the States the next report will be on Monday

The fresh green shoots of spring were quickly destroyed with a sharp frost and the swing between bullish and bearish continues. Indeed, it has taken on a potentially distinctly nasty structure with momentum looking quite firm for the Dollar. However, has it confirmed the Dollar upside? Not yet… certainly not enough to be able to hang your hat on it.

Perhaps curiously it is EURJPY that really grabbed my attention having swooped back down to just above the 104.74 corrective low. What’s more, just in any absorbing tale, it doesn’t look like breaking that low which would really lay on the bearish pressure for a drop below 100. Of course it could be USDJPY that thrusts the final killer blow but it hasn’t really shown that ruthless streak… Of course that implies EURUSD as the more likely aggressor.

Looking at GBPUSD and EURUSD – which both have these very clear opposing structural alternatives – momentum looks exceedingly weak and both seem to be salivating wildly with the opportunity of extending the losses seen yesterday. I have to admit that it does look inviting but it would be useful just to keep in mind the last gasp supports.

Today, while there are risks of minor new Dollar highs there is also suggestion that we need a pullback. Just where those stall will be crucial and could end this bickering between bulls & bears. I have stated my preference for a weaker Dollar but I’d extremely open to either side right now. Both suit my longer term (several year) view that we’re going to see a very strong Dollar.

Have a great long weekend
Ian Copsey


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