Friday, October 31, 2014

DAILY FORECAST FOR GBPUSD

INTRADAY CHART
BIAS: We should now see losses to 1.5915 minimum - maybe 1.5874…

Resistance: 1.6010 1.6026-38 1.6070 1.6087-05
Support: 1.5986 1.5965 1.5950 1.5931

MAIN ANALYSIS: As with the Continentals the downtrend extended more directly than I had expected to reach 1.5950. The 1.6038 high should now hold for losses to extend down to (around) the 1.5950 low and after a correction to 1.5910-15 minimum. From this point take care. There are valid projections at 1.5910-15 and also 1.5874. We will need to observe the development and judge through hourly momentum (maybe 4-hour also - but this isn't clear at this stage) to provide a signal that momentum is getting stretched on the downside - and possibly a bullish reversal pattern.

COUNTER ANALYSIS: Only a direct break back above 1.6040-45 would surprise and take price back higher through 1.6070 to the 1.6087-05 resistance at least. Also note the 1.6125-30 resistance.

MEDIUM TERM ANALYSIS:
31st October:  We are definitely seeing an irregular triangle but whether this stalls at the 1.5910-15 area - or as deep as the 1.5874 low - is something we need judge when the time comes. From there we need a correction in the final leg of the triangle before losses resume.

While I feel in unlikely, if there is any alternative then possibly we should also maintain observation in case we're still in Wave v - noting the 1.5857 and more likely 1.5764 and 1.5654 projections.

Good trading
Ian Copsey

Slower progress from here…

I was just a bit gobsmacked to see the Dollar gains extend directly rather than see a modest correction. It had the impact of requiring a stronger projection ratio but even then, the subsequent deeper correction we have seen has not satisfied alternation – if it had, then the correction would have breached a key prior intermediate wave (the one I had expected to see in the correction.) As a result there is a much higher risk of a choppy day today with deeper corrections in the next leg. Thus all three Europeans should experience this development and towards the targets I set around 2 weeks ago. It should be just for a correction but then down to the targets I set around 1 month ago. So quite happily, all appears to be on track.

The Aussie… oh… the Aussie… It has most certainly become lost in the Outback. The structure is crazy, haphazard and makes me wonder whether they made a batch of Aussie bank notes out of cannabis. It seems to be staggering one way and then the other without knowing where it’s going. The development is so outlandish that it appears to be an exceptionally complex corrective pattern and until it gets tired and lies down for a sleep, it’ll be best to avoid it.

As for the JPY pairs… I stated my reviewed thoughts yesterday and it’s still the preferred view. However, even USDJPY has quite a tough structure which I have found riddled with complexities. I’m looking at this along with EURJPY and the severe stretching of the move higher that I have considered to be a correction. The question is whether it’s a complex (and thus could move a bit higher) or a plain common or garden correction. Hourly & 4-hour momentum studies are not really laying out a bearish reversal yet. Therefore I favour gains but need to balance these with losses in EURUSD. Thus, there is a delicate balance between the trio and one of which we should be aware – and at the same time noting break levels…

Overall, with the volatility expected in the Europeans and the complexity of the JPY pairs, I feel it could be a tough end to the week…

Have a great weekend
Ian Copsey  



Thursday, October 30, 2014

DAILY FORECAST FOR USDCHF

INTRADAY CHART
BIAS: We should now see the 0.9479 - 0.9520 area support for further gains

Resistance: 0.9549-51 0.9558 0.9578 0.9587-96
Support: 0.9520-25 0.9504 0.9488 0.9479

MAIN ANALYSIS: Yesterday's low finally came in at the top end of the 0.9421-44 critical support area from where price shot higher. The 0.9449-51 area should cap for a correction and I suspect to the 0.9488-20 area but allow for 0.9479. From there we should see gains back above 0.9551 and to the 0.9587-96 area for a modestly deep correction before moving above 0.9596 to reach the 0.9628 target.

COUNTER ANALYSIS: A direct break below 0.9465-70 would risk a move back to the 0.9441 low and possibly 0.9415-20. Any break below would risk a retest - and probable break - below the 0.9397 low.

MEDIUM TERM ANALYSIS:
16th October:  Although we have seen a break of 0.9394, the 0.9359 low is still valid - just much deeper than I would normally expect. This can still support for a reversal back above 0.9520 and back to the 0.9628 target.

Only an earlier break below 0.9340 would suggest a firmer follow-through lower.

Good trading
Ian Copsey

Back on track

The statement by the Fed that the QE stimulus programme has now ended generated quite a stark comparison in the reactions in the Forex market compared to the U.S. stock market. Clearly the announcement was inevitable at some point and perhaps that’s why the indices barely reacted. It makes me wonder why the Forex market reacted with such vigour. However, from my perspective both markets reacted perfectly…

Focusing on the Dollar, the initial knee jerk reaction is just about done and from this point we should see more measured development. Typically in Asia we should see a pullback after the initial reaction. This being a correction we do have to be aware of the range of structures that can develop. However, this is probably the only area where there could be any possible complication – in the Europeans at least.

Now, the more complicated areas… The Aussie extended its gains and to a few points above the 0.8898 high from where the Yellin’ began and triggered the free fall. At this point it hasn’t made any clear break that would confirm additional follow through but because of the ferocity of the drop momentum has to be discarded as a useful tool and more we need to focus on break levels. Considering the expectation that the Euro should correct higher we will have to observe the relative performance between the two to judge whether the Aussie can retain any sense of a bullish outlook.

Equally, USDJPY has pushed higher as expected, but this has been accompanied by both hourly & 4-hour momentum also pushing the upside limits. Recently, it has tend to correlate with the Europeans and does have a structure since the 110.08 high that would allow a full gamut corrective structures. Therefore I think we’re going to have to tread with care at this point. That EURJPY topped out yesterday was good and it’s more likely that it will be EURUSD that drags the cross lower. So, if anything, we should see EURUSD outpace USDJPY.

Expect a slow first half of the day but then some better movement…

Good trading
Ian Copsey  


Wednesday, October 29, 2014

Poised for a stronger directional move

Corrective structures are always the bigger challenge compared to impulsive waves. They have more twists and turns, dead ends and often play tricks within a correction within the correction. It ends up requiring a suite of tools that can assist in warning that momentum is slowing at a time when key levels (whether given by natural support / resistance or my Price Equilibrium Clouds) are suggesting a resumption of the trend.

Why do I mention this? Because that’s the task for today although it will no doubt be provoked by tonight’s Fed’s Open Mouth Committee with Yellen yellin’.

In many pairs we are in the proximity of key levels. The European currencies have hourly divergences and are being courted by both hourly & 4-hour Price Equilibrium Clouds.  The combination of these along with tonight’s expected verbosity there is a strong risk of fireworks. However, as usual, running into that event is likely to be dull though the reaction looks strong.

This should impact on all currencies but AUDUSD has already made its break. I have had to make some judgement calls there due to the exceptionally volatile nature of the past two weeks, and there could be a bit more following “The Pronouncement” but the basic structure does seem to have already been set.

As for the JPY pairs, the upside in both does still seem to have legs but we are closing in on some key resistance areas and these need to be observed with care. Certainly, EURJPY has been stronger than expected but still within a broad resistance range. Really, we need to stand poised to jump on a potential ride. If anything, it will be USDJPY that could see modest gains during the day.

At the end of the day, the morning begins – at least for me because the yellin’ will come while I’m analysing first thing in my morning - and will probably have me pulling my hair out having to re-adjust levels…

Good trading
Ian Copsey  



Tuesday, October 28, 2014

WEEKLY OUTLOOK FOR THE DOLLAR INDEX

INTRADAY CHART
28th October:

We saw the minor new low in (navy) Wave ii before pushing higher in Wave a that stalled at 85.94. Thus we are now seeing the Wave b / iii that should remain above the 66.7%-76.4% retracement between 85.02-14. From there (or from just above) we should see the rally in Wave c / iii towards the 176.4%-198.4% projection between 86.43-64. The Wave iv should be between 14.6%- 27% to see Wave v to form (green) Wave a.

This tends to suggest that following the (green) Wave b that we're more likely to see the (green) Wave v reach closer to the 76.4% projection that needs to reach the Wave -iii- at the 398.4% projection at 88.15. 


Thus watch for a bearish reversal in Wave -iv- between the 23.6%-38.2% retracement area.

Good trading
Ian Copsey

Awaiting resolution

I get really frustrated when I make a forecast that works perfectly over the day, stalls within 1-2 points of my target and encourages me to look for resumption within the structure I have established – only to see the prior targets broken. That’s exactly what occurred yesterday but an option I covered in the weekly video outlook. The alternative I offered appears to be developing but even then there still remains some doubts with a variety of retracement targets. Momentum hasn’t really displayed any confident reversal signals yet and price has drifted to the Dollar bearish side of the 4-hour Price Equilibrium Clouds. Having raised that factor, it may not be too relevant while price is also sitting within some inconclusive, sideways moving daily Price Equilibrium Clouds.

So far I can’t see that my primary expectation has broken down but there are some closer limits in GBPUSD that I am watching carefully. An additional factor is the reluctance of the market to go out on a limb when the FOMC meeting is tomorrow (or for me Thursday in the early hours when I normally do the analysis…) However, overall we do seem to be approaching, perhaps at the point, where the structure soon needs to make some decisions.

This really refers to the spread of currency pairs, all of which have seen some complicated development, and makes the entire outlook rather difficult to judge in the short term. Even the U.S. Indices have suddenly slowed down into a rather slow & complicated extension of the upside but which should soon see a correction.

All this suggests, both technically and from the overhanging spectre of the FOMC, that the likelihood is for continued guarded trading, complicated structures and limited chance of a firm directional move. Therefore, don’t look for extended directional moves and prefer to take profits when presented…

Good trading
Ian Copsey