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HARMONIC ELLIOTT WAVE

Tuesday, January 31, 2012

The rest of the week is going to need some deep TLC…



It was a case of the good, bad and the ugly yesterday. Well, not too ugly. The deep pullbacks in EURUSD and USDCHF began to develop well. Actually USDCHF was close to perfect ending only slightly above the retracement target. Where things went a little wrong in particular was EURUSD where price retraced all the way back to the 1.3077 low plus another point. GBPUSD sagged and USDJPY wilted earlier than expected… Overall, looking at the general equilibrium of all currency pairs it certainly looks as if we are at a crucial juncture between marginal extension of Dollar losses and a longer sideways correction. Even if we see new Dollar lows they’ll be limited and the long consolidation develop.

The legacy of all these moves, if a team of lawyers got involved, would be a long, drawn out case that would drag on and on until a crack opened. Actually, I think that probably adequately describes the situation we face now. The high in EURUSD could be considered a completed intermediate move; the low in USDCHF doesn’t really fit into the normal projection ratios and would still risk marginal new lows. Indeed, I think I prefer that. In fact it may even suit the overall situation since the correction in USDCHF is expected to be much shallower than EURUSD.

That sort of leaves GBPUSD hanging rather in the middle and doesn’t seem to have any obvious structure to follow but perhaps that’s the reality given we are, overall, due this period of messy correction… The Aussie appears to be in the same boat. I’d much prefer this to extend gains and it must now or suffer the same fate of messy consolidation.

However, taking up the strain is USDJPY that failed in the pullback but extended losses more directly. I suspect we’re due a deeper pullback but probably not before another bump lower. Overall, rather than the broader consolidation I had been expecting to develop this now looks more like seeing a retest of the 75.57 low… and I wouldn’t be too surprised to see 75.57 again…

Good trading
Ian Copsey

Monday, January 30, 2012

The Brief Harmonic Daily Forecaster

The Brief Harmonic Daily Forecaster

Close to the next bigger stalling point… but how close?



Friday was good and the Dollar’s still on course in its move lower. Indeed, Friday’s lows came tantalizingly close to reaching those targets so the question is whether it’ll move directly through to those targets or see a correction first. I reckon the latter and it could – or should is more appropriate – be quite deep. From this supposition it’ll mean that it’ll take until European and more likely American trading to reach the target projections.

Once reached the implication is for a correction/consolidation and not just a modestly firm pullback but one that should be quite complex. For non Elliotticians complex can form a flat correction – so a retest of the high we should see later today before recycling, an expanded flat which will imply a marginal new high before recycling or possibly a triangle. The bigger headache I have is that the pullback in EURUSD should be quite deep, in USDCHF quite shallow but sideways complex while GBPUSD may well continue to make new highs…

Therefore, today looks like the simplest of all days with the prospect over the rest of the week being for some rather confusing trading.

A word on USDJPY that has obviously taken the bearish option… Something, or someone, appears to have poked a sharp stick up its backside… The past 4 days has seen a combined range that must be the equivalent of 10-12 days of what we had before. It’s broadly following the general Dollar bearish developments and should continue to do so for a while longer. So while there is risk of a minor new low early on we should actually see a pullback into the end of the day. This has made the rally in EURJPY from 97.03 to look more corrective. USDJPY itself has been so complicated over recent months I still prefer to take this one step by step but I’m not so sure the cross has much upside left in it. This could be a crucial indicator to the movements in USDJPY while those in EURUSD appear, at this point until a wheel falls off, to be quite clear.

Have a profitable week
Ian Copsey

Friday, January 27, 2012

Further Dollar losses to come today



Dollar losses extended yesterday, a little more directly than I had anticipated but to the sort of areas expected – in EURUSD to the very point. The additional developments have solidified the structure a bit more and barring any consolidation the greater risk is for the week to sign off having seen new lows. However, this should generate a mildly longer lasting correction before the next leg lower but that should come next week.

The early part of the day in Asian trading should see consolidation and a mild extension of the current correction. Possibly this could extend slightly into Europe but I can’t see it lasting through to N.A. open and thus look for the Dollar to resume losses by early in the European day.

USDJPY saw the expected decline and has stalled within 3 points of my target. This is now critical support and the fine line between bullish and bearish. That EURJPY is also hovering around retracement support may not really have too much impact on USDJPY given that EURUSD is expected to rally. However, I feel we should see a recovery but which may well be subdued. I’d like to think that it could make new highs above 78.28 but given the recent aversion to trading USDJPY I’ll remain more prudent. Let’s just say that if USDJPY manages to break above 78.28 I think the argument for having seen a major multi-year low at 75.57 rises significantly.

That’s about it… In summary, selling into this Dollar correction should set us on course for a decline into the end of the day…

Have a great weekend
Ian Copsey

Thursday, January 26, 2012

The Dollar looks extremely vulnerable…



Yesterday went right down to the line – the FOMC one – and sparked the resumption of Dollar losses. Indeed, the outlook for the Dollar does not look healthy at all and as warned, once the correction had ended the risk was for potentially substantial losses. Therefore, it should now just a matter of the correct pullbacks but within a predominantly bearish direction.

Having said that there are intermediate barriers to watch out for marked by key swing highs/lows that could well contain the move today. The 1.3197 swing high in the Euro is one, the 1.5774-79 highs another. I can’t see that they’ll hold for too long but definitely areas to exercise additional care. Overall I feel this can be quite a direct move.

USDJPY… retested the 78.28 high precisely and dropped. However, if I look at the manner of the rally I can see potential for yesterday’s high to only be part of a stronger rally. There should be support not too far below where we are now so if this doesn’t get below 77.00-20 then be aware of another leg higher… That seems to be echoed to a certain extent in EURJPY but to a lesser extent before a pullback. That could either be generated by a break below 77.00 in USDJPY or that we merely see a holding pattern for USDJPY before stronger gains… Again, this is something to observe and be aware of the alternatives.

Finally, the Aussie is very much in the same position as the Europeans… gains expected here too…

Good trading
Ian Copsey


Wednesday, January 25, 2012

Flip of the coin…


The market sure seems to be bent on selling Dollars… Further marginal new lows yesterday, in EURUSD and USDCHF just about holding to extreme projections while GBPUSD has moved beyond that. Just commenting on currencies alone the depth of correction is pretty much an unknown quantity. The Dollar bearish structure is within an internal correction that can be limited to as little as 23.6% but can go to 85.4%. So from that perspective the range is not too helpful. What’s more, the projections for the next leg lower can be absorbed quite comfortably probably from either extreme of the retracement, though a 23.6%-50% area would be the most likely.

I have actually based my expectations more on the U.S. Indices. Monday’s highs were all projections I’ve had for 2 weeks or so, imply modest pullbacks that should take some while to complete. Hence the call for deeper corrections in Forex.

Today, I am told (as I really don’t take any notice of fundamentals) is the FOMC. Normally that implies pretty dormant trading for the next 20 hours… So from that perspective we can probably take our cue from the release. In terms of Forex we can only but acknowledge that the major direction is Dollar bearish (against the Europeans) and thus any further weakness could well release any restrictions and fuel additional losses that do suggest quite a solid follow through on the downside. Otherwise look for a day or two of continued correction before that move develops.

A word on USDJPY… It saw strong follow-through higher and is close to a pullback itself, but not by too much before it can make it back to the 78.28 high and possibly just above. How it reacts at that point could determine the move into the end of the financial year…

Good trading
Ian Copsey

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Tuesday, January 24, 2012

Conundrum (mostly) resolved…


Ouch, yesterday was painful again. To be honest, yesterday’s Dollar lows could still be counted as just a deeper correction in EURUSD. However, the additional follow-through in USDHCF and GBPUSD merely emphasized the task required to get EURUSD (independently) lower to the 1.2443-55 target. That GBPUSD and USDCHF extended their moves is more of an annoyance factor as they are still within the normal projection ranges for this particular area of the structure. That being said, the potential for EURUSD to reach the triangle target while the other two merely correct is just not something that can be justified.

So, it required another review and I can see that we had a string of short Wave C projections in several places which were much shorter than I would normally look for. Taking this into account the projection and retracement ratios were pretty good.

Thus, the Dollar is in a move lower across the Europeans… But… as there always is… I don’t see it extending today – or not by much – literally 10-20 points at most though I doubt we’ll see that. Part of the reasoning for the call for a correction yesterday was down to the U.S. Indices that I felt were close to a high and in need of a pullback. Well, those minor new high targets were met yesterday and these imply a period of sideways consolidation.

Equally, the same should be true of the Dollar. So expect a correction today…

USDJPY – still hanging between two scenarios – but of more importance is the EURJPY cross. Now that I can’t justify stronger losses in EURUSD I have to voice doubts over the cross also. The only possible outcome must be a very weak USDJPY. Well, that needs to be proven first – and of an extent that would drive the cross lower. I’m certainly not going to stick my head out for that one…

Good trading
Ian Copsey

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Monday, January 23, 2012

Conundrum ahead… extreme caution advised…


Wow, well that was a weekend of head scratching… The Euro made a minor new high on Friday but still within the boundaries of the retracement limits. USDCHF also made a marginal new low but remained above 0.9305 while GBPUSD made much higher highs that imply the downtrend is complete. OK, nice statements but…

Well, the problem is that the Dollar Index has topped out. USDCHF is half-way into a trending move. The rally in GBPUSD appears to confirm the same – that a Dollar top has been seen. However, try as I might (and I did spend a LOT of time on this) I still cannot see how EURUSD has found its low yet… Well, that’s sort of screwed up the whole picture. The Dollar has topped out and should go higher… except… it needs to rally further against the Euro. Can it happen? Well, I guess so but it’s hard to really say it with a swagger.

Well, let’s look at how it may happen… For a start both USDCHF and GBPUSD are due a correction and today’s open tends to point in this direction also. IF we are going to see the Euro target met and at the same time have a scenario in GBPUSD and USDCHF then the only way I can envisage this is for Euro to decline in 3 legs lower while the other two map out sideways consolidations, possibly with a minor new Dollar low and then recycling…

It’s possible. However, I’d really like this to begin to develop in line with the scenario I have just described. We’re going to have to watch this carefully as it will imply the Euro weakening quite a bit against the other two.

There’s another argument for this to develop also. It’s EURJPY which has similarly reached the sort of retracement area that I feel appropriate here also. That too needs to make a new lows also… So let’s not write off this potential but do monitor the developments closely.

Have a profitable week
Ian Copsey

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Friday, January 20, 2012

The Dollar must rally now… or risk the potential that we found its high already


To be honest, if you look at the Dollar Index we have already seen the Dollar high… It’s now more a matter of how the individual pairs react…

Overall yesterday was quite a good day. The Euro reached its ideal target and actually to a slightly deeper retracement at 1.2971. However, there is one important element in EURUSD that gives me a few jitters. The nice solid looking hourly bearish divergence is no longer nice and solid, but could reform. In other words it has to go down now in order not to strangle the life out of the divergence…

Having said that, the Swissie reached its target too and needs a pullback. This shouldn’t get anywhere close to the 0.9595 high but it should recover. The Pound rallied and like the Euro to just a little higher than the favored target and may well mean that we’ll not see new lows. That one is touch and go… So bottom line, yes I do think the Euro is going to move lower – the crucial issue here is that more than ever the Euro decline needs to totally outstrip the any pullback in the Swissie. This would probably occur in a manner where the Euro dives but the Swissie manages only a grotty, choppy pullback. I’m open to the Pound doing either. In terms of the larger picture it doesn’t make any difference in the long run whether we’ve seen the low already or we see a limited new low.

What else supports the argument for a larger drop in the Euro? Well, EURJPY also reached its ideal target at 100.05. There are deeper and we cannot ignore them while USDJPY remains above 77.00 but this does look to encourage a bearish move back to the 97.03 low and beyond. I can’t see USDJPY fuelling that at this point.

The Aussie bothers too. Even yesterday’s (U.S.) Dollar weakness didn’t empower the Aussie to push higher… that’s a bit strange and does cause me some concern. I’d like to see it higher today but that it conflicts with how I feel about the (U.S.) Dollar in general I’m watching out over my shoulder…

Have a great weekend
Ian Copsey

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Thursday, January 19, 2012

Just a bit more…


I can’t say yesterday was particularly tidy but the Dollar continued its correction lower as expected. I can’t see that it has ended yet either but it’s not a million points away now. This overview of further limited Dollar losses appears to be reflected across all majors except perhaps USDJPY and possibly to minor varying degrees. I’d even suggest that this overlaps to EURJPY which has also extended its choppy pullback but to within touching distance of decent retracement ratios.

Once the Dollar low has been seen we should see another round of gains – possibly into early next week – that should mark the end of this segment of the Dollar strength and for a much deeper pullback lower over the coming 2-3 months.

I’ll add one more point. Having seen USDCHF drive lower I feel that it found its top at 0.9595. There is just a minor risk of a marginal new high – and that’s by a slim slither – but I think it has done enough and therefore the recovery should just be a correction. Otherwise I expect EURUSD and probably GBPUSD will form new lower lows. AUDUSD risks a much deeper correction. EURJPY should also take out the 97.03 low for another low before a pullback.

Now, just where this leaves USDJPY is more of a guessing game. For some while 10 points seems like a massive move and does give the impression of still being in a mighty long sideways consolidation. It’s still possible this can continue if 95.95-00 supports… However, even if it does continue there should only be one leg left in the consolidation so overall we should be looking for a more directional move sooner or later – and the way things are going the longer side appears more appropriate.

In summery for today I feel we should be looking for those Dollar buying areas…

Good trading
Ian Copsey

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Wednesday, January 18, 2012

Mixed fortunes but some possible confusion solved…


The rally in EURUSD obviously didn’t come as a surprise and in some respects the Dollar weakness against the Pound and Swiss Franc, while not totally unexpected, has forced a change in outlook for the pair. Actually, when viewed along with the Dollar Index the adjusted expectation for the latter currency pairs tends to click. The Index just hasn’t taken off as strongly as I had expected, has weekly and daily bearish divergences and is warning of an imminent reversal lower. That the Dollar has failed to capitalize against the Pound and Franc adds to that warning… Both seem to be pointing to recycling – and quite a solid daily one. Equally, the Dollar Index has that potential but I’ll take that step by step as the alternative is just a jolly good shake out in a correction.

This shouldn’t impact on the Euro’s fate. It’s looking firm and although I see one small risk of a dip to the 1.2602 support I had originally targeted I actually still prefer the Dollar to correct lower again today. The only issue there is whether we’ve seen the full extent of the correction from yesterday’s 1.2808 high. Once this correction is complete the risk remains for one more drop before the larger Dollar reversal becomes uniform across the European currencies.

USDJPY baulked at my request for a rally but the losses didn’t really harm the bullish expectation in the cross. This has produced a double twist in terms of what happens next. EURJPY has been playing around and difficult to tie down in terms of wave relationships. They’ve been close but somehow avoiding a more convincing structure. It has left me very mixed for the day – basically between confirming the resumption of the larger move lower and a deeper correction. I can see arguments on both sides but I’d clearly prefer a friendly push by price to confirm just what the heck it thinks it’s doing…

The Aussie remains bullish for now… but not a million points away from a deeper correction…

Good trading
Ian Copsey

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Tuesday, January 17, 2012

We’re at a key juncture within the larger Dollar rally


Friday’s Dollar gains were pretty much on the spot so we’re one step closer to the eventual high. However, not all is plain sailing and I had a rather mixed view develop as I went through the analysis today with the basic conundrum of seeing the decision between a sharp pullback or sharp extension pulling one way and then the other as I progressed through the currency pairs. If I favored a Dollar bearish correction in one then it would cause havoc with the structure of another.

In the end I have cautiously settled on the Dollar bearish although there’s still a risk of a minor new high before that pullback develops. The preference was borne of a product of the EURJPY cross. The downside in USDJPY appears to have broken down to imply a second push higher – probably still in a correction – but nevertheless a recovery. Equally EURJPY appears to require a deeper correction but one that should break above the 98.80 high. That factor implies that we need strength in EURUSD also and given that this pair has been quite consistent the argument does favor this outcome.

Now, the conflict I have is with GBPUSD and USDCHF within a Dollar bearish correction within an overall Dollar rally, and in particular with the anticipated eventual targets together with the structure required to reach them. This is what is in conflict with EURUSD.

The message here is: I’ll stick with the currency pairs that have developed well in the structures I have been following; that is, EURUSD, EURJPY and USDJPY. If today’s description of the type of moves I expect in these three break down – then follow the alternative route of Dollar losses extending. I would also add that even AUDUSD needs one more push higher in this segment of its own structure which again adds weight to the scenario call for a Dollar bearish correction.

Take care in the early hours – with more defined developments probably more likely to appear in European trading.

Have a profitable week
Ian Copsey

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Friday, January 13, 2012

The Dollar recycled but doesn’t change the overall bullishness

Please note that since Monday is a U.S. Bank Holiday the next report will be on Tuesday


Yesterday was a case of Murphy’s Law. I had considered the potential for a recycling because of a term called “alternation” (the relationship between two corrective points in the wave structure) but had considered the first leg as unlikely to provide the basis for such an event. Well, clearly my judgment was flawed and back we are towards the corrective areas I had highlighted earlier in the week. All that means is a slightly deeper correction and as such the Dollar should resume its rally probably by the end of the day. That does imply there should be mild follow through in the recycling today but now in a fairly well defined area.

Having dropped below 1.5371 GBPUSD extended its losses to stall just above the daily 1.5271 low. While it doesn’t come as a surprise that the low didn’t break, it’s more common that key lows don’t break on first test. However, it does set up a make-or-break situation. It now must rally firmly to stave off additional losses or suffer a stronger decline. On the bearish judgment in EURUSD the upside in GBPUSD is not a foregone conclusion. However, if it can push up enough to break the bearish structure then it may just be able to withstand the expected decline in EURUSD and still remain above 1.5271. It really is a tight call at the moment but currently more bearish than bullish…

USDJPY dipped further yesterday, still remaining above the 76.60 low and itself needs a firmer rally now to avoid a bigger drop. Again, the bias here does seem lower but it’s causing a battle in the EURJPY cross where my preference is to see a deeper correction higher. Unless USDJPY suddenly rallies strongly (well, I should add EURUSD even if I am bearish…) then the upside appears limited right now. We’re still going to have to watch for clues from the individual currency pairs to solve this one.

The Aussie is still looking firm but may well reflect the same development as EURUSD – so up a bit and down…

Have a great long weekend
Ian Copsey

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Thursday, January 12, 2012

Dollar resumes rally…


It came more directly than I had hoped but the Dollar made some solid gains and, against the run of recent form, it forced GBPUSD below 1.5361 but not yet below 1.5271. I’m not sure there’s any way back at the moment and therefore the risk does still appear to be for the Dollar to push on higher. It shouldn’t be all one-way but the pullbacks don’t seem to have much elbow room so the rally should continue through to tomorrow at least. However, do be aware that once we have seen this next rally there should be quite a sturdy correction so it wouldn’t be wise to get carried away with this coming move. That said, the early part of the day looks like providing the customary correction during Asian hours so we should see the rally extend by European/N.A. trading.

Now, I’ll just continue the GBPUSD story… This is now almost at the point of no return in terms of a possible break below 1.5271. If it manages this – and daily momentum has just broken below its bullish divergence support – then we can obviously expect more to come. I raise this because of the recent complications in terms of irreconcilable corrective patterns and the fine balance between bullish & bearish. A breach of 1.5271 would push this further to the downside but in a rather similar weekly pattern as EURUSD the implication is for overall limited losses before a much larger daily correction higher. Only a break above the recent daily highs will force this back into bullish contention.

USDJPY did its best to push higher yesterday and thus risks the downside but still does require a break below this morning’s low to confirm that. Until then it remains with a fine line between bullish & bearish. Of course, the current problem with USDJPY is the sheer ability to find the slowest way to move from point A to point B so we’ll have to remain aware of both sides. However, if it chooses lower and matches the Euro then it would look quite bearish for the EURJPY cross, and probably the best bang for your buck if they both head lower…

Strangely the Aussie looks stubbornly bullish… to contradict the expectations elsewhere. Perhaps it’s best to consider the potential for range trading – but don’t fight any rally… quite the opposite…

Good luck
Ian Copsey

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Wednesday, January 11, 2012

Hopefully we’ll see the correction complete today


Yup… it was pretty subdued yesterday and much as expected. The Dollar edges lower and not really in an impulsive fashion so the game is on to identify from where the Dollar rally resumes. Indeed, the observations I offered yesterday still pretty much apply.

EURJPY could well be a key indicator but will no doubt require USDJPY to be a little stronger to reach the sort of corrective highs I am anticipating. EURUSD doesn’t seem to have sufficient headroom to generate the strength required to push the cross that much higher. Therefore the jigsaw in how all these fit together could become an interesting pastime to observe today.

I’ll raise GBPUSD as well. It’s no secret that it has me puzzled. It has lagged behind the Euro in terms of the extent in their declines and recently every single move looks more corrective. It seems to me that there must now be a resolution in terms it making up its mind exactly what it wants to do… Even then it still has to push below the 1.5271 low to approach its potential weekly triangle targets. If it fails to do so then the rally promises to be extremely strong. If that develops at the same time as the Dollar finds its highs against the Euro and Swiss Franc it would all fit in quite well together. It’s just the intermediate moves that need to be sorted out…

In a type of link to this is the topic of the U.S. equities. As you may know from the video on my home page I am bullish to new highs in the rally from the 2009 lows. The past week has seen a rather weird and wonderful complex set of moves that has defied the general Dollar strength, although from the perspective with the Dollar Index appears quite reasonable. The combination of the reversal from the anticipated Dollar high targets in EURUSD and USDCHF should also provide the indices with the boost to continue their way to my targets. Overall, therefore, the markets are correlating but at this stage there are a number of conflicting moves that need to be handled with kid gloves.

Today, for Forex, look for the Dollar to bottom out and display some strength into the end of the week…

Good luck
Ian Copsey

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Tuesday, January 10, 2012

Calmer trading for today


The Dollar’s rally stalled just a bit short of expectations yesterday. It was rather a weird day to be honest with a number of conflicts in terms of rather shaky projection ratios and how the Dollar highs seen yesterday fit into the larger picture. I think the correlation side of things has probably settled but at the expense of ratios that didn’t really appear correct. I still have a few doubts but I’m going with the majority view in terms of correlation since this seems to have a stronger argument in terms of the overall picture.

On that assumption we should see a repeat of yesterday I think. That is, further Dollar losses within a correction which should continue through today at least and depending on the speed and complexity could even stretch through to tomorrow. This certainly seems to fit within the Europeans and Aussie but I’m slightly less certain about USDJPY. I sense even USDJPY could spend a quiet day also, which would be not much of a surprise given its ultra-slow moves these days. More, I tend to point to EURJPY. This too made a low at a less than satisfactory projection but seems to now require a pullback higher before the downtrend can resume. Thus, with a firm EURUSD it will aid the cross and if anything we could see a firmer USDJPY. However, it will be one to watch carefully.

Thus, today looks like providing subdued trading but with a more Dollar bearish bias and potential for some whippy price action. Best focus on identifying the Dollar supports and potential for taking advantage of the next rally…

Good luck
Ian Copsey

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Monday, January 9, 2012

Dollar strength continues…


Well… the pullback I was expecting never materialized and the headlong decline in the European currencies continued unabated, extending even on this morning’s open. It’s not what I had preferred, quite clearly, but still in line with the underlying medium term analysis. It’s not too much of a problem but the lack of pullback does imply that the available space for projections and pullbacks is becoming rather cramped not only in terms of extent but also in time. Hence, the coming week or two may well prove to be quite a choppy affair.

There are a couple of things that would be well to highlight. Probably the first that is pivotal is EURJPY. This cross is behaving somewhat the same as EURUSD but at the same time the USDJPY decline is also beginning to display a little more robustness and is on the verge of promising more significant losses. The interesting point here is that the cross still has someway to go but pullbacks perhaps less significant than expected in EURUSD. This tends to suggest that USDJPY now has potential to challenge the 75.57 low. Overall this is pointing to what should be the final decline to a low that promises to hold for many, many years. As you will know, this is my overall view for the Dollar in general although each currency is in a slightly different pattern in the overall scheme of things. The Dollar Index has already made its multi-year low and now promises only a one-way street as far as the much larger picture.

Another aside is the situation AUDUSD – this looks like recycling back to its recent 1.0044 low but I actually remain overall bullish for this pair for a while longer and this should coincide with the pullback lower in the Dollar once this current segment of the rally is over.

Thus, today should see further gains but be prepared for a pullback and choppier week with two-way flow developing.

Have a profitable week
Ian Copsey

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Friday, January 6, 2012

Yesterday’s targets met … and should indicate a correction


If Tuesday’s analysis started of the year on a bad note then yesterday’s brought some success. With the exception of AUDUSD and USDJPY all pairs ended the day within spitting distance of the targets I set for them. Even AUDUSD merely saw a deeper than expected correction. USDJPY just hasn’t yet reached its target. So, although the momentum conditions are not particularly favorable as long as yesterday’s extremes hold all appears to be back on target and should lead to Dollar losses today within a correction.

An interesting point is the EURJPY cross. This stalled 8 points below my target and should now see a modestly firm pullback. Given that USDJPY should still have a little further to go on the upside and EURUSD is also expected to correct higher the cross is probably the better bet today in terms of a bang for your bucks. What does need to be managed here is the balance between the degree of gains expected in USDJPY versus EURUSD. I suspect USDJPY will find a top earlier so don’t look for them to top out together.

A word on GBPUSD also... This was a little ambiguous in the analysis in terms of whether it has found its corrective low yet though in some ways the fact it stalled at the prior corrective low does lend support to a more bullish outlook. In the larger picture the fact that it hasn’t followed EURUSD to new lows does have potential to imply a much stronger bullish outlook for the coming 3 months. It’s still a bit “up for grabs” since it needs to fight off the issue of the expected losses in EURUSD and just how much correlation there will be between the two. If GBPUSD is to be strong then really I’d prefer it to be quite strong during this general Dollar bearish correction…

There is just one caveat I’ll add. The 1.2770 low in EURUSD is just 6 points above the higher of the two weekly projection targets. I have favored the lower. However, I can’t see that USDCHF has finished its rally and I still see (overall) downside for EURJPY. Therefore I’m not in favor of having seen the weekly low but take note of the break levels that would suggest Dollar weakness all round…

Have a great weekend
Ian Copsey

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