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HARMONIC ELLIOTT WAVE

Friday, March 16, 2012

One more rally for the Dollar?


 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. 



There was no decisive follow-through in the Dollar’s rally against the Europeans yesterday and from early in the day it made a long, slow correction until late in the day. Now comes the crunch time. We should be close to a reversal that will see the Dollar give back much, and possibly all, of the gains seen over the past two weeks. The question is whether we have seen the final high or not. Personally I think not. However, the good news is that the break levels that prove me wrong are quite clear.

Out of the Europeans it’s GBPUSD that continues to confound. On the assumption that all three are going to reverse it places the Pound in a bit of a quandary as there is little, if any, room available for losses that would keep any chance of a rally intact. Let’s be clear about this, the options for the Pound are 450 points either side of current levels. That is, it either rallies by 450 points or drops by 450 points… After having become bearish, this recent lack of downside progress is not encouraging for that view…

It looks too, as if USDJPY is still on a bullish run. The pullback from the resistance area I identified yesterday has been slightly more than expected but well within the normal ranges and as long as yesterday’s low hold there should be further upside progress to come today. It’s actually looking as if it will approach the 85.52 high a lot earlier than I had been anticipating and could even eventually break above now.

This should allow EURJPY to push back to the 109.95 high and possibly a bit above. There is still some uncertainty there but potentially if I’m right about the reversal higher in EURUSD and the continuing firmness in USDJPY this would imply greater upside… Thus, unless one or the other of EUR or JPY begins to drop more strongly the cross could well end up moving even higher.

Fro today just watch how the Dollar fares on the upside and be prepared for a reversal…

Have a great weekend
Ian Copsey

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