Wednesday, December 7, 2011

The consolidation still doesn’t look complete…

It really gets very difficult to provide extensive constructive advice when in a consolidation… We saw some Dollar gains yesterday albeit not as deep as I thought it might go but even worse than just writing “the consolidation should continue” I feel that it has potential to last for much longer. In truth it could actually extend even longer and potentially to the end of this week.

I should try and describe that just in a bit more detail. For Elliotticians we have seen a 3-wave move and in the current position that could be a completed correction or, of course, it could form a complex correction and with the way things are going most likely a triangle, which will be really quite painful to sit and suffer. Certainly, if I look at the Dollar Index it does seem to have potential for another push higher in this correction and that’s the basis of my reasoning for the current consolidation to extend longer.

However, after the limited gains seen yesterday consolidation doesn’t really indicate Dollar strength… so it has to come from somewhere. Where I can see it developing still is in GBPUSD (slightly) and most likely in USDJPY. In contrast, if there is any stronger risk of Dollar losses it’s in AUDUSD but only after a little more consolidation. Therefore, the picture being painted is one of another dull day but with what could be a push higher in USDJPY and possibly lower in GBPUSD.

In the background of all this is the underlying risk that the Dollar will just lose out against the Europeans. It’s not something I favor but given the current position also not something we should forget since it could be one of those super-sharp moves that’s over & done in a flash…

As always in December… take care and be aware…

Good luck
Ian Copsey


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