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HARMONIC ELLIOTT WAVE

Friday, March 23, 2012

Maybe if I say the Dollar won’t go lower today it’ll finally go down…


PLEASE NOTE THAT THE FINAL UPDATE TO THIS BLOG WILL BE ON THE 30TH MARCH. THEREAFTER PLEASE SEE  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. 




Very clearly my Dollar bearish view has caused me to anticipate it far too early, the past few days seeing all my expectations evaporate into thin air with the market very obviously not ready to take that step. I do remain bearish and find it hard to contemplate a stronger bullish move given the structures across the Europeans and even in U.S. equities. I still don’t think the break lower is that far away. It could happen today but there are some conflicting signals with both the Euro and Swissie having mapped out Dollar bullish head & shoulders patterns in the hourly charts. Yes, they can break down, but prudence suggests that we should make sure they do so. All three Europeans have seen deep enough corrections to suggest they could be complete. However, even from what we’ve seen thus far, the structures would allow one more ratcheting move before the Dollar finally descends. I could say it’s a flip of the coin but we should be able to work out where the line in the sand is drawn that will push the odds one way or the other…

USDJPY finally made it lower and to my retracement support and 10 points more. Even those 10 points made me take a double take as the retracement ratio was really at its maximum and we needed the pullback to satisfy the relationship with an earlier correction. So it did get me thinking. However, the noise from early in the rally from 80.58 may well have been the problem. Edge the early turn points to the lower corrections and suddenly the 82.32 level became perfect. So, talking of lines in the sand, that’s the level that turns USDJPY lower in a bigger correction. Until then, with an hourly bullish divergence and low 4-hour reading I’ll cautiously stick with the original view of one more rally to a marginal new high and then the bigger pullback. However, keep in mind that this pair is more likely to become a lot more erratic and irrational over the coming few weeks before it can extend its rally further.

Now this brings an interesting focus on EURJPY. As far as I can see it has formed its own line in the sand between a recycling back to 105.64 and a stronger rally to above the 111.59 daily swing high, and by quite a decent margin. This will require both USDJPY and EURUSD to rally. You know my views in the Euro, and the limited additional pullback implied by the head & shoulders can still be absorbed but this will need USDJPY to rally to offset any further losses in the cross. Ideally, both should rally together to make a unified statement. However, a break in the cross much below yesterday’s low is going to cause major headaches as it could drag the Euro more firmly lower also…

Have a great weekend
Ian Copsey 

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