Monday, January 30, 2012

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

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