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HARMONIC ELLIOTT WAVE

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

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