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HARMONIC ELLIOTT WAVE

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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