Thursday, December 8, 2011

Getting closer to the end…

Another typical December trading day… If there’s a more difficult way to get from A to B then the market will take it… and made that choice yesterday. There do seem to be some positives in all this and I sense we’re not too far away from a sharp breakout from the current consolidation but there’s still some risk of dull, boring, listless, lackluster, lethargic and comatose trading before it happens. It’s not particularly earth shattering information to say that the market appears to have little interest in pushing the extremes right now… However, it has to happen at some point and it’s not that far away – possibly even as close as later trading but if it’s going to happen then I reckon latest by tomorrow.

The two currency pairs to watch are GBPUSD and AUDUSD, both of which appear to have the strongest risk of follow-through higher. The risk is that the final legs will last just a bit longer and stretch the consolidation just a bit more. Thus, use these two as markers that could highlight a broader based move.

USDJPY needs a special mention. It’s really not doing very well is it? Each bounce in the 77.60-65 support area seems to get weaker and weaker… It’s stretching my patience and also the tentative bullish outlook I was beginning to build. We need to be aware here as there are a few alternatives – two bearish and one bullish – and it’ll be important to note what is expected of each alternative to confirm the correct one. Needless to say, this requires some attention to guide us through to the final outcome. Whichever occurs it’ll either be straight up or down a bit more and then up. There does seem to be a restricted downside risk now.

So for today, remain in observant mode and probably best to anticipate consolidation but with the awareness of what would constitute a break lower in the Dollar…

As always in December… take care and be aware…

Good luck
Ian Copsey


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