Friday, December 2, 2011

More consolidation or further losses?

It seems Wednesday’s Dollar losses were a bit too much of a shock for the market that it stopped dead in its tracks in fear. I made a small perusal of a few Elliott Wave sites and even saw some predictions for GBPUSD to rally to at least 1.78. There, or even a bit higher, has been my alternate target but it is way too early to begin to contemplate after just a few days of recovery.

At this point, yesterday’s subdued reaction is slightly disappointing but considering the sort of daily structure I think we’re seeing, perhaps it shouldn’t be too much of a surprise. There’s even risk of continued sideways consolidation today. However, I do feel that overall we’ll see the Dollar lose out whether it resumes today or early next week. It’s more a case of patience and observation. Should here be a deeper pullback then I don’t see it being much beyond yesterday’s Dollar highs.

A word on USDJPY… It did what it has become accustomed to doing… pretty much nothing… I can’t say it has broken its downtrend but I don’t see much upside left before we seriously have to consider the potential for another rush higher. I have the same doubts over EURJPY also which has turned its nose up against the downside it seems. Of course, it could be EURUSD that takes it higher but do note that if USDJPY rallies too far it would appear to have quite bullish implications…

So the message is basically the same as yesterday… note break levels… Until they break there is still risk of a dull day. Otherwise the outlook remains Dollar bearish to me…

Have a great weekend
Ian Copsey


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