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HARMONIC ELLIOTT WAVE

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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