Monday, February 6, 2012

Consolidation continues but should turn into Dollar losses by the end of the day

Some time late in my day on Friday I was informed that it was non-farm payroll day. You gotta love ‘em don’t you? Everyone gets hyped up. Cries of “the Euro must collapse now” and “look at those numbers, the Euro can’t survive.”

But it did. And the final impact was to extend the consolidation, let everyone go home and stew over the weekend. Has it changed the underlying landscape? Never say never, but I don’t think so. Indeed, the dip stalled nicely in the correct support area suggesting we’re still in that consolidation and this should extend for at least half of today, possibly even the whole day if trading remains dull…

There are early signs after this morning’s open that we could see some recycling in one or two currency pairs, certainly a good deal of confusion which should warn us not to get too Dollar bearish too soon. Therefore take your time and be prepared to take advantage when the opportunity finally emerges to see the Dollar resume its move lower. In particular I think that EURUSD has a quite clear structure and support/resistance areas that should guide us through the timing.

I’ll add one more event that, depending on whether U.S. equities follow the Dollar or vice-versa, sees equities solidly on their rally. Friday saw the NASDAQ burst above both the 2007 high and last years high to bring it in sight of clear blue sky. The DOW stalled just shy of last year’s high. However, momentum is firm and true to my long held belief they are going to extend that gain with the DOW & S&P aiming for the 2007 highs… I’m quite happy with the strength as I’ve battled with countless Elliotticians who have been gnashing their teeth and calling equities lower as they look for doomsday. Yes, doomsday will happen... but not yet…

Have a profitable week
Ian Copsey

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