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HARMONIC ELLIOTT WAVE

Wednesday, March 21, 2012

Time for the Dollar to resume losses..?

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Yesterday saw a pullback as expected. Actually, I think it’s complete and that implies the Dollar should resume losses today. That destroyed my more complicated outlook for how the European currencies should develop in terms of the Euro and Swissie versus the Pound, the latter barely managing to lose much at all. That in itself has forced me to re-evaluate the sharp rally on Friday and brings it into line with the continentals – though the Pound’s upside does still need to lag the Euro and the Swissie which need to display some robust gains to meet their respective targets.

That should be the expectation for the day – Dollar losses once again – and moving back closer to the late February lows but most likely holding above those on the first attempt. This should see the Pound retest close to the 1.5991 high, perhaps even an outside chance of breaking above but this is where it needs to see a deeper pullback compared to the other two.

USDJPY… refused to bow to my commands… and is taking on a rather weird and convoluted structure. It does make me wonder whether I made a misjudgment along the way, and in one way has reached a higher enough level to provoke much deeper losses that even I had been looking for at this point. I do think that’s going to happen – still in a correction – but I had bargained on one more high although needed a modest pullback, lower than we’ve seen, before it could generate a marginal new high. So what we’ve seen has confused and perhaps best to wait for the two extremes of the range and not trading the consolidation we are seeing.

That tends to suggest EURJPY is going to make a solid rally too… The question is whether we are still in a complex correction from the 109.95 high that could see a recycling lower or a more trending rally. To be honest, it’s now hard to see this as a consolidation, even if USDJPY does correct sharply lower since unless I’m wrong about the Euro rallying sharply, even the decline in USDJPY would not be stronger than the Euro’s rally… It does seem to point higher… The question is whether it’ll be direct or not…

Good trading
Ian Copsey 

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