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HARMONIC ELLIOTT WAVE

Friday, December 9, 2011

We could have taken the week off…


Just as I thought there was potential for the Dollar to resume its losses… that December moment hit yet again… Has it forced a change in the underlying expectation of seeing that weakness? I don’t think so. If you look at the charts for the past week the clear picture is one of confusion and lack of will in pushing the market in either direction a.k.a. a corrective market.

Indeed, broadly the sudden rush higher in the Dollar hit key resistance areas and adds weight to the basic underlying risk of further losses. The question then to be asked is whether the market has any intention to push outside the recent range given that liquidity will be lessening even more rapidly from this point into the end of the year. That factor is actually a double-edged sword. The reduction in liquidity will merely exaggerate moves and increase the reactions to relatively smaller trades and from what I can see this should extend the Dollar’s losses.

The Dollar upside is either complete or we’ll see just one more poke higher but only to marginal new highs but overall the risk does appear to be lower again though the chance of seeing a break of this week’s lows today seems unlikely…

USDJPY… Well, that was a weird move. It has left me just a bit mixed. EURJPY went lower also and could see another dip but the move lower from 105.69 does seem corrective also. Hence I feel this should be on its way higher. Of course it could be driven by EURUSD but if I’m right in what I’m seeing then it will require a double effort from both constituent parts to take this higher. Therefore, I am cautiously bullish on USDJPY also…

So the bad news is that we’ll probably end today still within range but the good news should be that next week has more potential for a directional move…

As always in December… take care and be aware…

Have a great weekend
Ian Copsey

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