Friday, December 16, 2011

What should have come yesterday … is likely today…

That was a weird old day… in some respects as I had expected but just took all day to complete the anticipated corrections in EURUSD and GBPUSD while both USDCHF and USDJPY saw stronger drops and EURJPY went nowhere at the speed of the Higgs Boson…

However, it does seem to have provided more meat to the bone and the follow-through in EURUSD and GBPUSD should occur today. Both should then see a more intermediate correction developing before the next extension lower. This does still seem to slot in comfortably in the overall Dollar rally and we’ll just need to handle how it develops around the Xmas break.

The pullback in USDCHF was also quite healthy – not that I expected it – but has generated a more robust structure. It will probably mess about for a couple of days, a recycling higher today but then lower again next week as EURUSD and GBPUSD start their corrections higher. At that point these should all revert back into a correlated move.

USDJPY… hmmm… the dominant sluggish reactions for some while have made this tough to follow (mainly because I keep falling asleep when I look at it…) but I do find yesterday’s losses slightly harder to fit into a bullish structure as I had begun to consider. I’m still a bit wary of this one as it hovers one way and then the other. Bottom line is that even if we see new lows I can’t see them being extensive. I think for today we’ll just have to see whether it extends losses or makes back what it lost yesterday…

As always in December… take care and be aware… The ratios are becoming a little stretched right now which is a common factor in December’s low liquidity markets so take levels as approximate

Have a great weekend
Ian Copsey


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