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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