U.S. Bank Holiday on Monday

With the U.S. on holiday for Memorial Day the next update will be on Tuesday

DAILY FORECAST FOR EURUSD

BIAS: This looks like moving higher to around 1.3043

Resistance:	1.2956	1.2981	1.2994	1.3020-25
Support:	1.2920	1.2900	1.2876	1.2854

MAIN ANALYSIS: The break above 1.2915-25 came as a surprise and having reviewed the rally from 1.2796 I see that it developed in a rather skewed impulsive manner that explains yesterday's strength. The rally from yesterday's low is just as skewed so do take care but I feel that while 1.2900-20 supports that we should see further upside progress through to 1.2981 and later 1.2994. Look for a correction of around 60 points before the rally resumes for 1.2994 and later I feel the 1.3043 area (max 1.3077-92.) Above 1.3020-25 observe for any bearish reversal indications. 

COUNTER ANALYSIS: Only an earlier break below 1.2875-00 would take us back lower but considering the rather vague structure I wouldn't want to get too bearish. Note the minor pivot support 1.2821 ahead of the 1.2796 low… 

MEDIUM TERM ANALYSIS:

24th May:   The overall picture remains the same but it looks like we shall probably see the 1.3043-77 area cap for losses back to 1.2821, 1.2796 and the lower target remains the same at 1.2644.

Only back above 1.3095 would confuse and send this back higher.

Good trading

Ian Copsey

False alert

Blast… I was in too much of a rush to call for the Dollar upside to resume. It will but not yet. It would make much better sense to take the day off and make this a 4-day weekend. So many things went awry yesterday that it was clear that something was wrong. Indeed, the only calls I really controlled were in the U.S. indices that reached to the support levels I have outlined over the past week.

So it’s back to square one.

The Europeans and Aussie should continue make gains against the Dollar today. We should see a move above 1.2997 EURUSD and below 0.9633 USDCHF. The downside failure in GBPUSD took some while to resolve until I realised that we had seen two 5-wave declines that implied the adjustment I had considered earlier in the week therefore had to be correct. This should see a slightly deeper retracement but don’t expect too much. Just as the Europeans had stunted moves (compared to my projections) it has also adhered to my original structure. That should have a decent two-way day but end higher.

Once these moves have completed we should then find the Dollar will resume its move higher next week.

The JPY pairs: I have been wary about these chappies for a while as not all was going to plan. I have been very wary about how the correction in USDJPY was going to develop due to the bulk of the current wave being consumed by the massive consolidation over the past month-and-a-half. Wednesday’s high in was a valid projection and yesterday’s collapse was more like the move I had been expecting from 103.30. I can’t say that the decline we’ve seen so far is particularly straight forward. I have my boundaries for this move but found USDJPY a bit vague. However, EURJPY has much more clarity and that is the one which points us to the downside. Thus, with EURUSD expected to make further (limited) gains it does imply losses in USDJPY today.

If anything, I’d prefer to put in some orders in the Europeans and pop out for a long walk…

Have a great long weekend

Ian Copsey  

TECHNICAL INDICATIONS FROM 22nd MAY

As usual, here are a few more observations from yesterday's developments. The charts display the day's support and resistance from the daily report issued around 2am-3am GMT and last for the rest of the day. 

Comments provide examples of integrating technical indicators and the implications. The Dollar appears to have quite firm bullish momentum...

These indicators and daily support and resistance are available free of charge on the fast and responsive WorldWideMarkets MT4 platform. Contact me for more details or sign up here. (Offer applies to non-U.S. residents.)

USDJPY

EURUSD

USDCHF

GBPUSD

EURJPY

AUDUSD

Good trading
Ian Copsey

The Dollar upside has resumed

It was a better day yesterday, particularly in EURUSD that made its final high smack in the middle of the higher retracement range and shot lower. Such sharp movements are not particularly helpful given they hide the true structure and it requires using as low as a 1 minute chart to try and make sense of the moves.

That good old Big Ben rattled the table with his cries of success of the monetary easing I can’t help but liken it to a serial gambler who’s lost some money and is determined to double his bets until he gets his money back…

Oops, I have wandered from my non-fundamental approach! However, it was clear that his utterances would provide a catalyst and they did so perfectly. While there is early risk of consolidation there does seem to be a consensus for quite a solid follow-through later today. This does seem to have confirmed my original, and more aggressive, bearish view in GBPUSD and what appears to be an even stronger rally in USDCHF. Indeed, the Swissie may well be a better vehicle on which to hitch a ride.

The Aussie has extended losses nicely also but in the process has a slightly mixed structure. I suggest observing the original target but from the look of momentum it seems more likely to extend even further. A trailing stop seems appropriate for this guy.

And finally the JPY pairs. As I suspected, with the way things were developing, we saw both rally to new highs and has put itself in a rather balanced position. I still find these two flying into the face of maximum projection zones and as mentioned yesterday the huge consolidation seen over the past month (and a bit) does raise the risk of skewing the final stages of this rally. There are no strong reversal indications at this point and thus there does seem to be risk of further gains but I’d suggest taking a cautious stance and awareness of any faltering in this rally.

Good trading

Ian Copsey  

What a mess…

Goodness gracious… That was a mixed up reaction across the board. EURUSD made some modest gains, USDCHF couldn’t be bothered and GBPUSD failed to recycle and slumped lower. AUSDUSD attempted to resume the downside but kept getting prodded higher. EURJPY seemed to love lounging around the area of Monday’s gap lower and USDJPY seems to have altitude sickness at these dizzy heights.

Obviously I look for structure and for appropriate ratios to be present for each segment of development. Even that was pretty tough in much of yesterday’s moves that looked more like someone cleaning the PC monitor and accidently rearranging the bars.

So we’re left with some rather vague structures that seem more corrective in nature but with the added challenge of slotting these into the larger fractals. I do still feel that the Dollar bearish correction is not yet complete. This seems to be strongly implied in EURUSD. I can probably add GBPUSD to that following a slight adjustment in perception yesterday following the upside failure. Even then it’s not a structure that has great clarity but seems to fit in better with the larger fractal targets. That just leaves USDCHF doing its own thing and needs to develop some clarity in its next move and to fall in line with the other two Europeans.

The Aussie corrected higher more deeply than expected. I can still absorb the deeper pullback although it’s approaching its limits. Ideally this should soon extend losses.

As for the JPY pairs… whew… they’re quite a mess in the short term development. In particular EURJPY was stronger than expected, not excessively, but for its position does raise some questions over whether it’ll resume losses or actually make a new high. I’ll not rule it out but it’s not one I’d like to touch at this point. This pair, when it gets complex, is a bit like a long piece of string that has dropped and become entangled. I’d suggest waiting for more clarity.

USDJPY failed on the downside and recovered but not enough to break above Monday’s corrective high at 102.91. This one should also be approached with care as this sideways consolidation seems to suggest a sharp break and obviously that could be in either direction. My preference remains lower but the large consolidation over the past month does have potential to skew the ratios in the terminal stages of this rally. Thus, best be sure of the move before raising risk…

Good trading

Ian Copsey  

WEEKLY OUTLOOK FOR THE DOLLAR INDEX

HOURLY CHART

21st May:

I have had to concede that the more complicated sideways move is unlikely now. As things have developed I have had to change the count as shown above and this tends to fit in well with the lasrger wave degrees. 

Thus, we should now see the 23.6% - 33.3% retracement in Wave (iv) hold between 83.49 - 70 and for gains in Wave (v) that should reach the 223.6% projection in Wave -iii- at 85.31 at least. Take care in case this turns out to be a firmer Wave (v) and reach the 238.2% projection in Wave -iii- at 85.73. 

We should then see the correction lower in Wave -iv- ...

RATIO TABLE

Good trading
Ian Copsey