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HARMONIC ELLIOTT WAVE

Monday, March 5, 2012

An obvious need for a change in game plan…



PLEASE NOTE THAT BY THE END OF THIS MONTH 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.



Very clearly the Dollar bearish expectation came to a rather violent end on Friday. Does that mean the decline is done? I doubt it. However, very clearly it requires a rethink. The first thing that struck me was the fact that the 1.3886 high in the Euro was comfortably within the range of my original estimate back at the end of January. The second factor to consider is the rally from 1.2974. Many are calling this a completed 5-wave rally. However, within alternation the clear majority of 5-wave moves have corrections in the Wave 2 and Wave 4 that, when summed, come to a total above 80%. Clearly this was not the case. Just as telling is that the 1.3486 high was just not deep enough for the end of a triangle.

So, case presented, I don’t think we’re moving to new lows just yet. Yes, the losses will continue, but not below 1.2623. Take a look at the U.S. Indices too. They hardly reacted with fear. Indeed, while an intermediate high is not a million points away, there is still some upside left in this part of the move.

However, there are some issues to be resolved, one being GBPUSD… The question here is whether we see it recycle back to 1.5644 and then go higher or whether it will just continue lower. Well, looking at the relative drops in EUR and GBP it is quite noticeable that they have taken on different structures and this appears to point to new lows below 1.5233… In some ways this would be quite beneficial as, similar to the Euro it is in a weekly triangle but has not reached its penultimate leg. A drop now would allow this but then imply a final rally – much as we’re seeing in the Euro.

Thus, while corrections can take on a multitude of patterns, and can be exceptionally challenging, the overall implication is for a fairly long period of consolidation, possibly as long as a month. This outlook would actually suit the balance between the Dollar and U.S. equities (and actually the Asian indices too,) probably precious metals but probably extend this last leg higher in the Euro, and eventually the Pound, into May or June…

Today, further early Dollar gains followed by a pullback…

Have a profitable week
Ian Copsey

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