Monday, December 19, 2011

Still looking for that extra push higher…

Gee, the Dollar became pretty stubborn at the end of last week but perhaps that’s just a factor of the time of year. Guess what? I’m still looking for that additional rally… It’s this next push that should generate a longer lasting pullback that could even last until after Christmas.

That being said, there are some issues that need to be considered, the main one being the depth of the pullback seen in USDCHF which appears to be one step ahead of EURUSD. I had been anticipating these to occur together. However, it may well be that we’re going to see a longer consolidation in USDCHF over this coming week and perhaps in the form of a triangle. Pragmatically, the potential for currency pairs to develop at different stages must be considered given the weirdness that can occur at this time of the year.

The other area that should be highlighted is that of EURJPY which appears to be aligning itself with EURUSD. By this I mean that it, too, seems to require one more dip before a longer lasting correction. Now, that may not seem particularly surprising but the knock on impact is what happens to USDJPY and the answer seems to be very little. I have been sitting very much on the middle line between quite bullish and quite bearish for a while trying to spot the breaks that would upset the equilibrium to push it one way or the other. To be honest I’m still at that point… At this point all I can say is that USDJPY is the wild card that could impact on the cross in a larger way. Right now, the status quo is neutral but it is one to watch…

For today, while there is a mild risk of a minor new Dollar corrective low I still look for it to rally. However, as we move into the week before Xmas so be aware of the whips and weirdness that it brings. I am noticing projection ratios beginning to become more vague, shallower than normal pullbacks and also projections…

Have a profitable week
Ian Copsey


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