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HARMONIC ELLIOTT WAVE

Wednesday, February 29, 2012

Can it? Can’t it? Surely not… but it looks like it can…


PLEASE NOTE THAT OVER THE NEXT 1-2 MONTHS I SHALL BE CLOSING THIS BLOG IN FAVOR OF http://harmonicelliottwave.blogspot.com/ IN LINE WITH THE HARMONIC ELLIOTT WAVE BRANDING. PLEASE FEEL FREE TO CONNECT DIRECTLY WITH THE NEW BLOG ON WHICH I SHALL POST ADDITIONAL INFORMATION.




Yesterday I declared a period of consolidation. This morning, after dragging myself out of bed, I looked at the charts and wondered… USDJPY met a solid support, EURUSD has done enough to satisfy a pullback but it was GBPUSD that struck me the most, not so much because of the depth but more the manner of the decline that, with it surpassing the 1.5901 high, makes it difficult to slot into a complex correction. The structure in EURUSD is different but the surge back towards the 1.3486 high has a similar impact – I can’t see this as implying a complex correction…

The only currency pair that didn’t generate the same doubts was USDCHF. Here I find the pullback way too shallow and this was one of the factors for me calling the longer lasting correction yesterday. I still find it difficult to slot in with the others but this pair is one I’d rather not get too tied up with a view as it has a different character footprint to the others.

So, let’s just say that I feel we should consider a direct resumption of the bearish Dollar-Europe trend and be prepared to jump on its back. What is more alarming is the implication in EURJPY for if both EURUSD and USDJPY resume their rallies together the cross has quite startling implications for the next projection target given its very shallow correction from the 109.95 high… Thus, if these respective trends become a reality look more for the cross for not just a bang for your buck but what looks to have potential to be an explosion.

Thus, take the early stages with care. Remember that USDJPY has a harder task to prove the upside can extend directly. Ensure the breaks confirmed and employ a trailing stop…

Good trading
Ian Copsey

Tuesday, February 28, 2012

Consolidation


PLEASE NOTE THAT OVER THE NEXT 1-2 MONTHS I SHALL BE CLOSING THIS BLOG IN FAVOR OF http://harmonicelliottwave.blogspot.com/ IN LINE WITH THE HARMONIC ELLIOTT WAVE BRANDING. PLEASE FEEL FREE TO CONNECT DIRECTLY WITH THE NEW BLOG ON WHICH I SHALL POST ADDITIONAL INFORMATION.


After the early extension lower in the Dollar things calmed down. Although I would have preferred one minor spike lower the pullback hasn’t really altered the balance but there does seem to be a minor disconnect between currency pairs in terms of retracement expectations but only within the boundaries of a set of corrective structures. From a momentum perspective we have returned to an equilibrium currently finding Dollar resistance levels within the underlying trend. However, it looks more to me that instead of provoking a resumption of the downtrend we are more likely to see a period of consolidation. This may cause minor breach of yesterday’s Dollar lows, more likely in the Euro, but overall a period of sideways consolidation.

The above is also reflective of both USDJPY and EURJPY (except the trend is Dollar bullish) that probably enforces the anticipated outlook for consolidation. There does seem to be a possibility of a slightly deeper pullback in USDJPY but not by too much, and more likely to happen after a return higher towards yesterday’s 81.66 high. The larger picture does still look bullish in both JPY pairs but I suspect progress in USDJPY to be less frenetic and when the time comes the rally in EURJPY is should be driven by the Euro more than the Yen.

I’ll just add that the prospect of consolidation does seem to fit in well with the current position in the U.S. equities and even Asian equities, both of which are due minor corrections - although the U.S. still may show minor gains before the mildly deeper correction.

So time to take care. Don’t look for an excessive resumption of Dollar losses unless key supports break. The next 2-3 days looks more like benefitting from short term trades and taking profit when seen.

Good trading
Ian Copsey

Monday, February 27, 2012

Time for a pullback soon, but the overall decline is developing well



Trailing stops would have been the right way to go on Friday and overall I still think the strategy should work although I am suspecting that a mildly deeper pullback is due. It took quite a bit of extended analysis to be able to make sense out of the structure since the 1.2974 low with the initial moves being rather noisy & choppy and this was not just in the Euro but elsewhere too. However, solid progress is being made and should still maintain the general decline in the Dollar over the course of the week.

Even USDJPY has taken on a more frantic look, again requiring a good deal of adjustment to the structure but what is becoming more transparent from these changes, along with the angle in EURJPY becoming almost vertical, is the rising risk that we’ve seen the 33 year cycle low. The rallies have accelerated and look pretty constructive but there are still barriers between the 85.50 high and around 88.00 that should prove critical. However, that is looking ahead a little bit so we shouldn’t get ahead of ourselves too soon.

I’ll leave it like that today, the focus really being on identifying the current anticipated lows in the Dollar for now and how far the corrections can bite. I suspect a slightly deeper pullback though not excessive except perhaps in the Pound that has a sense of great risk for a choppy rally with deeper pullbacks. I’ve been surprised looking around at how bearish people are for the Euro and Pound … which may well be a factor behind their rallies.

Have a profitable week
Ian Copsey

Friday, February 24, 2012

And down she goes…



All best plans laid to rest… At least yesterday’s plans that now look as if I had over complicated the anticipated correction. It seems the market wanted to commit the Dollar to the downside directly and therefore the move lower is well and truly underway. I suspect that this could develop pretty directly with the Pound having faced a gaping hole should it slip any further but now recovering through the aversion to Dollars. This is going to require quite a sustained run higher in the Pound to reach the major upside target and therefore tends to slot in with the same in the Swissie and therefore probably the Euro too.

There is a problem I have for the immediate move since although I can generate projections we haven’t seen sufficient base development for the intervening projections for the smaller fractals that make up the larger. In particular the current move is very much clouded in darkness as it does have any specific target. I could point to the 1.3548 daily corrective high, and I do feel this will have a temporary impact, but otherwise it has been difficult generating accurate levels.

Therefore, keep your eye on the ball and the other maintaining a trailing stop that could produce some decent returns. The time frame for the final Dollar low, from a few sources I keep in touch with, appears to be in the middle of March.

The Yen has lost some of its luster, at least for now, and as mentioned yesterday the pullback is likely to be quite a long and arduous affair. That it failed to reach the ideal 80.50 target annoyed, but I can’t see any reason to see this move towards the 80.50-89 area for the while and expect further slow downside progress. It may slow the rally in EURJPY which I had thought would see a pullback, but the way it keeps pushing higher seems to suggest it means business in a more direct rally.

Thus, emphasis should still be to sell Dollars on pullbacks and maintain a trailing stop…

Have a great weekend
Ian Copsey

Thursday, February 23, 2012

There are a few strange developments…



I found the analyses a puzzling mix today. What happened in the Euro and Swissie did not surprise but was actually the most complex of alternatives I had envisioned. It hasn’t ended yet and may well produce a sting in the tail although if the Dollar downtrend remains intact the sting needs to develop in the form of minor new lows and a recycling. That part was quite a simple deduction but some of the other pairs did raise my eyebrows and my concern.

Just focusing on the other European – the Pound… At first I was quite content with the losses seen and looked to be right on forecast. However, the greasy slip down towards the 1.5644 low was just a bit too much for comfort. This is now stretching my imagination if I am to remain bullish here. There’s a bit of wriggle room and I’ll detail the limits in the individual analysis today, but suffice it to say that if this pair doesn’t recover swiftly and break resistances there is a hint of very strong losses. Given I don’t feel the same way about the Euro and Swissie I’d rather wait for confirmation to be seen in the Pound but it is a risk that should be noted.

USDJPY extended its rally, dragging the cross with it. However, I can’t see either as having the legs for much more topside. Although the area we are approaching has been a target for me, what has bugged me is the lack of a decent intermediate pullback in the approach. Nevertheless, momentum in both has slowed – in hourly and 4-hourly – so I do feel it’s time for a deeper pullback for them both. However, I do see it as a correction at this point.

So today I feel should be a more interesting and important one, in particular within the Europeans. The balance that needs to be observed is between how the Euro and Swissie develop versus the Pound and whether one begins to exert influence over the other. I still find it hard to get bullish Dollars at this point but with this conflict it’s worth noting what breaks what…

Good trading
Ian Copsey