Wednesday, November 26, 2014

The market appears indecisive

Well the corrections in the Europeans completed… but then decided to add another corrective pattern on top. This has made things just a bit more complicated, not so much that this is happening but there are some conflicts now arising with GBPUSD and potentially AUDUSD – although the latter followed its own route independently anyway. This tends to suggest that we need see some further divergence between the Continental Europeans versus GBPUSD – or the latter will trigger a far more complicated outlook. There should be room for GBPUSD and EURUSD to deviate slightly but the entire situation does appear to have a rather delicate balance that could easily break down. I’d suggest that care be taken in this group and to place positions only when fully satisfied by a range of inputs.

Of those above, perhaps AUDUSD has the greater leeway for continuing on its own path. That could well maintain a certain degree of correlation with the Europeans but it will be well to understand the boundaries – both upside and downside – that could tell us more about the next development. I’d also point out that there is potential for an hourly bullish divergence but at the same time 4-hour momentum is trying to dig a hole in which it wants to furrow…

While EURJPY developed quite well although the expected correction much deeper than expected. This raises another discussion about boundaries and the need for understanding where the current outlook is confirmed … or breaks. The reason I mention this is because of the upside failure in USDJPY. This does need to accelerate quickly to avoid the potential for a minor new corrective low. However, the structure that appears to be the most logical suggests a very strong projection to the first leg higher and I’m cautious that we could be getting too far ahead of ourselves. If the rally does make new highs we’ll have to deal with it. However, until then, perhaps some attention is required so control exposure risk until there is a more definite break.

Today could be as mixed as yesterday…

The next update will be on Friday.

Good trading & Happy Thanksgiving for tomorrow… 

Ian Copsey  


Tuesday, November 25, 2014

DAILY FORECAST FOR GBPUSD

INTRADAY CHART
BIAS: Cautiously, while 1.5720-23 caps we should see losses resume

Resistance: 1.5720-23 1.5736-40 1.5775-80 1.5796-05
Support: 1.5692 1.5670 1.5640-45 1.5619-25

MAIN ANALYSIS: We didn't see the triangle consolidation but a more ragged development that has pushed up to 1.5714 but should see one final push into the 1.5714-23 area. Ideally, this should come when EURUSD tops out. This suggests direct losses back below 1.5692 to see losses extend through 1.5670 & 1.5640-45 to 1.5619-25 initially and later 1.5572-88. This should see a correction of around 25-35 points (approx) before losses extend below 1.5572 to the (estimated) 1.5540-50 area. We should see a deeper correction higher from there.

COUNTER ANALYSIS: Only a break above 1.5750 would surprise and risk gains through 1.5775-80 and back to the 1.5796-05 and 1.5824-34 areas. However, then take care and at all times note momentum for signs of a bearish reversal.

Only a break below 1.5500 would risk losses extending to 1.5444…

MEDIUM TERM ANALYSIS:
17th November: We have seen a more direct decline. However, we are approaching the next higher degree target at 1.5509-43. This target should provoke a relatively deep correction before it can continue on its way lower.

Only back above 1.5800 area will whip us back higher...

Good trading
Ian Copsey

Completing corrections?

Broadly, the basic outlook for a corrective day yesterday has worked out well. Of course, the biggest problem in the majority of corrections is just how deep they will dig – and that is what faces us today. Already we have seen AUDUSD continue its losses and the recovery in EURJPY was quite encouraging. However, across the board there is room for some sneakiness that will not only need some attention but understanding where stop losses should be placed.

From the Europeans, the development in GBPUSD has been the most unusual, the normal structures that tend to develop failing in turn. It has ended up either as an extremely unusual irregular hybrid or there could be an alternative that I had considered, but find it rather incongruous.  For the Continentals there appears to be straightforward choice of resuming Dollar gains after this move – or we’ll see another set of corrective waves before the Dollar gains.

Of all, perhaps AUDUSD performed the best, finding a corrective high and followed by deeper losses. The directness of the decline from the 0.8700 high has made it a little difficult to be certain of having identified the right structure but does look as if it should continue to see losses, but more likely in a less direct manner and more frequent corrections.

Finally, the puzzle in USDJPY & EURJPY may well have been solved. Certainly, both reversed higher and look good. Still, there is an element of uncertainty but given the market’s general reluctance to hold any short positions – no doubt provoked by the plethora of calls for a major reversal lower just a few weeks ago – we should still remain alert for signs of a confirmed extension on the upside. Indeed, as mentioned yesterday, EURJPY was facing a critical support which has held. Therefore, focus more on upside development. However, perhaps this won’t develop in such a frenetic manner as before.

Best vehicle? Potentially USDJPY and followed by EURUSD if the downside is confirmed…

Good trading
Ian Copsey  


Monday, November 24, 2014

Surprising end to the week…

I thought all was developing well in terms of the correction lower in the Dollar before I laid my head to rest on Friday evening. Therefore, you can imagine my amazement when I saw the Dollar strength which I had not even dreamt of during my slumber. The reasoning behind my expectation for my call for a deeper correction lower in the Dollar was down to the Wave -c-. Probably 90% (or more) of Wave -c- projections are 85.4% or more. The Dollar low we saw in EURUSD implies a mere 61.8%-70% projection - quite a rare event...

However, we have some work to do before these targets are seen and it’s not going to be a one-way affair. Indeed, I doubt we’ll see a strong follow-through today. This is certainly reflected in EURUSD and USDCHF. That GBPUSD didn’t react as strongly to the other two Europeans is not too much of a problem. The general structure of the needs for all three, are basically the same but GBPUSD has a different structure to the other two. It could even maintain the sideways consolidation.

The Aussie, from this point, is beginning to suggest a more independent development to the Europeans. Yes, there is risk of consolidation but even this suggests some weakness today. It will be well to take care and note the structure in order to try and confirm which route it will take.

As for the JPY pairs, it was a tale of two currency pairs… USDJPY edged a little lower while EURJPY decided to dip more than its toe into the decline. That has made life a little more difficult in the cross and it may well be useful to hold off from holding an excessive position until USDJPY lets us know its intentions. It is in a correction but one that has a relatively large range given it’s correcting a rather large rally – but one which is paired with an earlier deep correction. Rather than playing around with the downside it’ll be better to observe for signs of bullish life stirring again. That will also be the trigger for EURJPY…

Nothing really stands out as a clear winner today. There is potential, but patience will be required to ensure the entry is at the right point…

Have a profitable week
Ian Copsey  


Friday, November 21, 2014

DAILY FORECAST FOR USDJPY

INTRADAY CHART
BIAS: There should be a correction higher - maybe consolidation - before losses resume

Resistance: 118.20-25 118.47 118.73 118.97
Support: 117.73 117.40-50 117.05-22 116.85

MAIN ANALYSIS: After two days of exceptionally direct gains we should have found an intermediate high at the top of the lower 118.73-96 projection range advised yesterday. The first reversal has been seen and should now see a correction higher courtesy of the rising 4-hour Price Equilibrium Cloud. How deep this will be and in which corrective structure is now the important issue. I suspect this correction shouldn't be too lengthy because the automatic first reversal target hasn't yet been seen - this being down at 115.45-116.00. For now watch the 118.47-118.73 range. Allow for a possible expanded flat complex correction that should remain above 117.39. 

COUNTER ANALYSIS: A break below 117.39 would extend losses down through 117.05-22 and probably down towards the 116.00-05 area. The 115.45-75 area is also possible. 

Only a break above 118.97 would see a minor follow-through to 119.43. There is a higher projection target at 119.86-120.08 but I think this is getting too high... 

MEDIUM TERM ANALYSIS:
21st November:  It looks like the 118.73-96 has done the trick and should new see a relatively brief correction. This could be restricted to the 115.45-116.00 area but we'll need to observe the lower degree structure to confirm this. Any lower than 115.45-75 could see losses to below 115.00 and at most 113.60 - 85. Once this has been seen the next rally should develop once the daily Price Equilibrium Cloud rallies to push higher.

It'll take quite a drop to reverse this uptrend - the 113.60 area is probably where I'd place the line - but there is a deeper 111.50 retracement although it would be very unusual. 

Good trading
Ian Copsey

Quiet end to the week

I have to start with the JPY pairs. They have seen quite a rally and yesterday was yet another roller coaster ride. Has this rally ended? For now - yes. With these runaway moves it’s always difficult to be absolutely certain of which of the projection targets would provide the high. The projection we saw at 118.97 was just 1 point above the precise target. Of course, it dragged EURJPY by the collar and carried on its back for fun but hasn’t yet reached its full potential. There is room for a minor new high but overall the prospect appears to be for some more (relatively) stable range trading. This tends to suggest a fine balance between USDJPY – that needs to see some deeper losses – and EURUSD that has a puzzling structure – but within an underlying move higher. Thus, the elements are there to allow all three to provide a solution but it looks like a fragile ménage à trois. It seems to suggest a relatively quiet day, the market probably reluctant to get too bearish in USDJPY considering the strength we have seen which should support EURJPY also.

Meanwhile, the Europeans have provided what looks to be a cardiograph of a none too healthy heart. When eyeballing the chart it loos as if they have seen 5-wave moves but the lower degree structure doesn’t seem to support that theory. I can make out a possible structure in GBPUSD – although this needs completion – but the Continentals appear to have made a right hash of a corrective structure. These two chums look as if they should continue the consolidation right into the weekend and possibly into Monday also. Broadly, the apparent mismatch between the Continentals and GBPUSD do seem to work quite well but it will be GBPUSD that should provide the firmer outcome over the next few days.

Initially, take care in the Europeans as there should still be some jiggery pokery but should then see GBPUSD leave the pack.

Finally the Aussie found its low where I suggested and should now extend its correction higher. However, from what I perceive from the early recovery, there is a risk of a period of consolidation. Thus, note the limits and the two types of complex consolidation patterns that are open to it in this position in the structure.

Have a great weekend
Ian Copsey  


Thursday, November 20, 2014

Walking a tightrope

I had no idea that that the FOMC minutes were to be announced. I guess that shows how much I rely on fundamentals. Basically, zero, zip, nil, nada, nadir, naught, nix... no way… Indeed, why would I want to skew a price indicator with such factors? I don’t suggest that traders should ignore economic releases but do expect them to consider the impact of any announcement along with a price indicator that provides a structure…

So now that we have got past the initial panic, what does that mean? At this early stage the price information remains a bit scant. Therefore, as the day begins I can only point to the parts of the structure that have developed and suggest where it points. There are only two real options and it is therefore a matter of identifying where one option breaks down and the other develops. In the Europeans, that means we shall either recycle to the most recent Dollar high – or we’ll see losses extend directly.

The Aussie broke below a couple of supports and is tending to suggest we have seen a high. However, having said that, we have probably seen the bulk of the initial losses. Therefore, we may well see much of the day witnessing a return to the upside…

As for the JPY pairs, we saw the expected gains – and actually just a bit more. I am finding these two exceptionally difficult with continued direct gains that have seen only rare attempts to correct lower. Both 4-hour and hourly momentum have been strong and I can’t see a drastic reversal lower. If anything, the downside should be corrective only. However, the direct nature of these rallies, accompanied by a significant level of low-level noise, has made the process of identifying the significant wave endings very difficult to judge. Yesterday’s high appears to have broken above a projection I was counting on which - accompanied by the bullish momentum – continues to makes the outlook more bullish. We have already reached the minimum targets I indicated in September 2012. No doubt there is more to come. The same is true of EURJPY in terms of both complexity of the shallow pullbacks and upside targets.

Today, be cautious considering the complications triggered by the FOMC and take note of the alternatives.

Good trading
Ian Copsey