Tuesday, May 26, 2015

WEEKLY OUTLOOK FOR GBPUSD

INTRADAY CHART
26th May:

We should be seeing a double zigzag at least. The (purple) Wave v could reach close to the gap high at 1.5357 - and allow for a small margin below. 

Now, what happens next is important. A double zigzag would allow a resumption of gains. However, to confirm that we'll see direct gains we actually need to see a break above the 1.5699-07 highs. If so, then we'll be looking for a 5-wave rally in Wave [c]. The target is not really known until we see the initial development but take note of the Wave (ii) retracement areas.


However, with EUR and CHF losing out against the Dollar, it's not impossible to see a triple three in Wave [b]. Thus, take care until the 1.5699-07 area is overcome. 

Good trading
Ian Copsey

There’s potential…

The Dollar correction ended abruptly on Friday and saw some solid gains once more. The depth of the correction in that position has many choices but I was actually quite surprised with the relative shallow nature – that included EURUSD, USDCHF, USDJPY and to a certain extent in AUDUSD. So, after minor breach of the 4-hour Price Equilibrium Clouds, the Dollar decided that it would prefer just to extend its gains.

Yesterday’s U.S. holiday was enough for the market to basically take the day off. The problem we now face is two-fold: first, low liquidity tends to (and has) produce a messy structure that can cause complications; and second, how deep could any correction retrace. I do have some problems with this but which should be resolved over today. What I do feel possible is the potential for shallow corrections so focus more on the Dollar upside.

The sooner-then-expected resumption of the Dollar gains actually helped GBPUSD that came perilously close to breaking above 1.5706. Further losses did seem to be implied – but it’s never that comforting to see a retracement almost hit the prior corrective high. The downside is still expected but take care in the early part of the day.

As mentioned above, USDJPY also decided to cut short its holiday and rejected the bear in favour of the bull. This seems to be more-or-less correlated with the Europeans but probably with EURUSD being the stronger of the two – which should maintain the downside in EURJPY. ‘Steady’ is probably the word to use for USDJPY while EURUSD has more potential for a firmer move.

Thus, expected EURJPY to extend losses although there are a series of supports that need to be challenged which will imply a more volatile decline.

Have a profitable week
Ian Copsey  


Friday, May 22, 2015

DAILY FORECAST FOR USDJPY

INTRADAY CHART
BIAS: We should be seeing continued drifting sideways and then lower

Resistance: 121.10-20 121.47 121.64-84 122.02
Support: 120.73-90 120.50 120.28 119.90-00

MAIN ANALYSIS: No new highs and a break of 120.90 which has confirmed the top. This has generated a sideways consolidation and may well continue between 120.90-121.15 before losses can break below 120.84 to test the 120.73 low and probably below. Be aware that this could be a slow process and potentially choppy. Overall, I suspect a minimum target around 120.28 but see a support area around 119.74-00. I suspect this could hold but will need to be judged when reached. Below 119.74 is the 119.50-55 support. As this moves lower continue to observe for bullish reversal indications.

COUNTER ANALYSIS: Only a break above 121.47 would see gains extend to the 122.02 high at least.

MEDIUM TERM ANALYSIS:
22nd May:  We should have seen a high at 121.47 for a correction lower. Support areas to watch for are around119.74-90 - maybe as deep as 119.50-55. As this develops watch for bullish reversal indications for a second rally to move above 121.47 and to 122.02 at least...

Good trading
Ian Copsey

Slow going…

That was an exciting day wasn’t it? I was able to take a break, took a walk, sipped some tea and put my feet up. Well, not really but the market appears to have taken that opportunity. I’m not even sure we’ll see much difference today. It’s a long U.S. weekend and probably, with very little to shake the market, the indifference shown yesterday seems likely to extend. I do think yesterday’s range will break but I doubt it will be with much vigour.

In some ways, as I mentioned yesterday, the face-off between Dollar hourly bearish divergences and the Dollar supportive 4-hour Price Equilibrium Clouds extended the deadlock. However, there is another influence, and that being the daily Price Equilibrium Clouds continue to provide a barrier to the Dollar upside. These Clouds in EURUSD and USDCHF are flattening out so it will be a matter of time before there is any breach. In GBPUSD it’s slightly different with its daily Cloud still pressing higher. There’s still a gap below price so some slippage could be seen, so just keep an eye on it…

The Aussie also succumbed to lethargy. It’s basically matching the Europeans in general but begging to resume the decline. Could it do so today? Maybe… but like the Europeans the daily Price Equilibrium Cloud is buffeting the price lows at the moment… but it’ll be a matter of time for the next break.

Yesterday I had a Eureka moment in USDJPY. For two months we’ve had this wretched sideways consolidation, and I’ve had a wretched time working out how these move slot into the larger picture. The end result is that, over the coming few weeks it will break the range but then turn back in on itself. So don’t look for home runs here yet. The coming week or so still has potential for a minor directional move but not anything significant. However, today should see it move back lower. This will help EURJPY move back lower having reached 1 point above my extreme retracement level and I see losses but because of the market lethargy don’t expect much.

If you’re not interested in scalping… then take the day off…

Have a great long weekend
Ian Copsey  


Thursday, May 21, 2015

DAILY FORECAST FOR GBPUSD

INTRADAY CHART
BIAS: Mixed - currently in a corrective area

Resistance: 1.5566 1.5587 1.5598-19 1.5644
Support: 1.5510-15 1.5492 1.5472 1.5445

MAIN ANALYSIS: The break above 1.5566 implies we had already seen a low at 1.5445. However, it still suggests another decline - but could see a deeper correction higher first. Thus, price is balanced in mid range with currently no bearish reversal indications. I suspect we'll see the recovery edge a little higher above 1.5587. There's a minimum target around 1.5598 with deeper retracement areas at 1.5619-44. Thus, from 1.5598 upwards we should be looking for bearish reversal indications. This should lead to losses back to 1.5445 - and below note the 1.5389-02 area and 1.5366 - even 1.5331...

COUNTER ANALYSIS: Only a break above 1.5706 would suggest a deeper recovery towards the 1.5813 high…

MEDIUM TERM ANALYSIS:
21st May:   The downside has developed close to expectations and does not look complete. While the 1.5619-44 area caps there is still room for another decline below 1.5445 and to 1.5389-02 at least and I suspect a bit lower, noting 1.5366 also. The problem with this decline is that it could get deeper - to 1.5331 but should not break below 1.5089... Thus watch for bullish reversal indications.

Only below 1.5089 would send this directly lower.

Good trading
Ian Copsey

Conflicting indications emerge

Yesterday’s developments were predominantly as expected with precise hits in EURUSD, USDCHF and EURJPY while close in AUDUSD. It was just GBPUSD and USDJPY that were a little off track. Just focusing on the Continental Europeans, we now have a face-off between Dollar hourly bearish divergences and the Dollar supportive 4-hour Price Equilibrium Clouds. I should note, to add to the conflict, is the generally bearish 4-hour momentum. This will be the main source of conflict with the solution being patience, waiting for key breaks.

GBPUSD failed to make new lows and recovered sufficiently enough to suggest that Tuesday’s low was an intermediate low and tends to suggest that there should be another new low. The slight snag is in knowing where the current correction will stall. There is also a risk of a minor lack of correlation between GBPUSD and the Continentals – which may not be an issue but does tend to complicated things a bit. Therefore, please be alert to the individual risks.

Compared to the past few months, AUDUSD has begun to see the pace of its decline slow down. It’s not really a problem except a dash of impatience. There is a firm hourly bullish divergence but a weak 4-hour divergence. This tends to sway the expectation to a period of consolidation/correction but still with the general underlying bearish outlook.

To cover the JPY pairs, I’ll cover EURJPY first because that developed within the boundaries of the correction I had suggested. Is it complete? Maybe… but in terms of depth there are still potential deeper retracements but within a move lower. Which will force it lower? EURUSD or USDJPY?  Well, it’s not quite so simple. USDJPY has potential to make a new high but keep an eye on the back door. The rally we have seen has some ambiguities in the final stages so take care.

Good trading
Ian Copsey  


Wednesday, May 20, 2015

No repeat of yesterday…

A stronger Dollar was clearly on my mind yesterday but I hadn’t really set a target. The extent of the gains surprised somewhat, but overall very encouraging. Having seen this strength, I’m not really expecting a neat repeat of the same feat. That isn’t to say that we won’t see any further gains, but more likely the momentum will more likely be less rigorous. An important issue to note will be the hourly momentum in general. There are tentative signs of Dollar bearish divergences. If my expectation of limited gains is correct, then we will need a corrective phase to take the heat out of hourly momentum before following through.

So, the Europeans are looking good. The Aussie was unusually reluctant to follow the cue of the Europeans – but has made further losses in a steady and measured way. This lagging nature versus the Europeans is rather interesting because, over past months it has tended to lead rather than follow. There’s no problem with this and indeed, it seems about right when comparing the respective targets. Basically, it remains correlated with the Europeans.

Perhaps out of all the currency pairs it was USDJPY that surprised me. Having been reticent in terms of expecting significant movement yesterday was quite a breath of fresh air. However, the position within the larger daily structure is underwhelming – still holding within the range of the past two months. While an impressive move compared to its recent languid range trading, we are still not that close to key daily break levels that would point us one way or the other. I’d still suggest a healthy dollop of care.

Even if USDJPY saw a burst of bullish energy, compared to EURUSD it was a like a single raindrop in the Pacific Ocean, allowing EURJPY to drop quite dramatically. The decline was no real problem and was expected, but the depth of losses is what surprised. Today could see some stability but does remain vulnerable to additional losses.

Good trading
Ian Copsey