Tuesday, September 16, 2014

Searching for a catalyst?

Oh my goodness, that was a painful day. It’s almost as if the market needs a dose of Prozac to counter the almost depressive development. I can’t say the Europeans went quite as I’d planned, a recycling in EURUSD and USDCHF and a lackadaisical GBPUSD that couldn’t quite wake up all day long. Despite the very forgettable day, I still feel the basic expectation I have been carrying still tends to look more likely. We just need a little more enthusiasm from the market. However, we appear to be stuck in slow-motion so quite how this will all play through is a little difficult to judge.

Thus, the preference is on the Dollar downside in general. This covers the Continental Europeans and maybe Aussie although the Antipodean, following its grudging (but expected) recovery, does have its own agenda. The puzzle we have is whether the correction is complete. Should today develop in a similar way to yesterday, in terms of almost non-directional momentum, we could be in for another similar day.

GBPUSD appears to be the one that could buck the Dollar bearish preference. It did make downside progress, but as slowly as a sloth… I suspect this will still edge lower but I wish someone would poke it with a sharp stick.

On the whole, USDJPY did very little also although to the latter half of the day did lose out somewhat. It hasn’t really stated its intentions yet and remains in a tight range that still provides options on both sides of the market. In terms of any potential downside, the sheer lack of interest on the downside does seem to suggest a new high but I’d rather remain neutral at this point. That EURUSD dragged EURJPY down was useful given the cross needed to lose out. It should make further gains today but in the slightly larger picture the risk is more for two-way trading. Once it has satisfied the current bullish expectations we should be expecting losses to resume.

Like yesterday, we’ll probably be feeding off of scraps but a scrap is, at last, better than nothing at all…

Good trading
Ian Copsey  


Monday, September 15, 2014

DAILY FORECAST FOR AUDUSD

INTRADAY CHART
BIAS: See more two-way trading developing but expect a deeper correction higher now

Resistance: 0.9030-40 0.9055 0.9075 0.9087-93
Support: 0.8996 0.8970-82 0.8960 0.8923-41

MAIN ANALYSIS: The direct break below 0.9065 surprised but could mean that the rest of the decline will be choppy. At this point I see support around the 0.8995-00 area that should allow a correction back to the 0.9025-30 retracement but later extend up to 0.9075-0.9093at lesat and then begin to take note of potential bearish reversal indications. At most the 0.9120-35 area (approx) should cap. 

COUNTER ANALYSIS: Only directly break below 0.8970-80 would extend losses to 0.8923-41 at least. Take care here also. Below extends losses…

MEDIUM TERM ANALYSIS:
15th September:  The more direct losses should see a temporary correction from around 0.8995 and back to 0.9030-40 and 0.9075. From there take care but allow for 0.9125-35. From this area we should see losses back to 0.8995 and later the 0.8850-00 area seems to be implied but will need to be confirmed once it develops.

Only back above 0.9150 would confuse and risk a move back above the 0.9217 corrective high.

Good trading
Ian Copsey

A cautious start to the week

There’s a certain staleness in the Europeans, a lack of inspiration, a bit of indifference, a ponderous outlook, sterility, boredom, humdrum and sleepy. Having said that, while going through the analysis I was struck by a disconnect between EURUSD and USDCHF which forced me to take a second look at the latter - and this has brought some clarity to the outcome that appears to now point to a more correlated outlook. It suggests some Dollar losses today but at this stage I don’t want to get too fixated on moves in either direction with a general outlook of limited moves. I’m not sure how long this status quo will last. It really depends on how energetic the market will be but if it’s anything like Friday then I don’t think it will be resolved today.

I am separating the Continentals from GBPUSD, clearly its fate the subject of the mid-week referendum. I think I know the outcome of the referendum… However, as far as I can see, it will take its own route today and in contrast to EURUSD, more likely settle for losses. Obviously, this week has a high risk of a sharp reaction once the result is known.

The Aussie refused to follow my advice… and instead took the larger wave degree direction but one that seems to promise a more volatile route after the next low is in place. We are coming to some support areas from where I am expecting an outcome that will generate broader swings that should begin to develop into more two-way trading.

The rather enigmatic USDJPY extended gains again on Friday, dragging EURJPY along for the ride, although now having EURUSD also providing some upward risk. However, the cross should now soon begin to face some barriers and the risk of a correction – which in turn will make the outlook in USDJPY a little less favourable. I can’t see this being too aggressive but will mean that we shall have to be more on our guard. Certainly, today could be relatively quiet in USDJPY given the fact it’s a bank holiday here in Japan.

Thus, the overall outlook across the board appears to be for much steadier trading, probably a bit choppy and with a buffer on both sides of the market.

Have a profitable week
Ian Copsey  


Friday, September 12, 2014

Time to wait for breaks

Messy, very messy… Corrective ratios are being stretched in some pairs and projections in others. The risk is that they are beginning to push the boundaries where trends break down and in other currency pairs, corrections. The internal structures have become excessively noisy and really quite difficult to judge. What this does tend to suggest is that the risk of sharper moves appears to be rising as we go into the weekend. In several pairs I can point to limits, beyond which will confirm a larger reversal which is what I want in some cases and in others will make life a bit tougher. There are potential price patterns developing that could be useful to note. Some are close at hand and others need more work to have them confirmed.

All in all, the impression I get is that the market’s basic views are shifting to one of caution and with that, the potential for a capitulation in the Dollar strength… for now… Therefore the caution I raised yesterday was valid and should be carried forward into today. This definitely applies to all three Europeans face that need to make important decisions.

The Aussie didn’t reach its retracement target yesterday. It may have made a new low but in this position it has a strong risk of a recycling to reach the target I had suggested…

USDJPY maintained its strength and which has actually taken me by surprise. There has been an element missing that has caused a great deal of vagueness about the rally from 104.68. One key tool that I use – alternation – has been conspicuous in its absence which really makes the decision making process much tougher. I do think it could be quite vulnerable but I can’t quite confirm the outcome with any definite confidence. That EURJPY should extend gains may be a factor for a strong USDJPY, but I have my suspicions that EURUSD could provide a helping hand – as long as it breaks above yesterday’s high…

Hence, it’s a day for decisions by the market. Keep your ear to the ground and eyes keenly peeled…

Have a great weekend
Ian Copsey  


Thursday, September 11, 2014

Getting more complicated

When approaching turning points, or perhaps a temporary stalling area, the market seems to always get edgy. Perhaps that’s an incorrect perspective. More accurately, the wave development begins to churn up a bit that makes life a lot more difficult. Momentum slows, provides the promise of multi-timeframe divergences but then edges slowly onwards, final corrections get a little deeper than normal and somehow adds confusion to the correlation between related pairs. Why do I mention this? It’s probably pretty obvious… it’s happening.

Therefore, at this stage, I’d rather note the outer boundaries of what should be the immediate range and also the final expectations. One such example is between EURUSD and USDCHF where I find a growing mismatch between the two. It’s not a huge mismatch but is one that appears to make the final outcomes much harder to judge. I’d therefore prefer to sit on the fence (sideways rather than astride… that’s a bit painful…) If I add GBPUSD into the fray also, there is still a way to go – not excessively but there’s work to be done. However, following a rather broad swinging move in the Pound, it is beginning to look like it is making preparations to make its final landing approach.

Meanwhile, the Aussie went totally berserk, boomerangs flying, koalas sheltering in branches to keep out of the way. It actually reached a projection ratio I rarely see – and when I do it’s more likely in the U.S. indices. It should be a bit calmer today but there’s still downside to come later.

And in one corner USDJPY, as warned, didn’t do enough on the downside to confirm losses and maintained it’s upward trajectory. Both 4-hour and hourly momentum are beginning to show shiners of bearish divergences with both hourly & 4-hour Price Equilibrium Clouds approaching its underbelly. Let’s just say, at these heights, it’s beginning to look vulnerable. It’s strength dragged up EURJPY above the key resistance levels to maintain the upside – totally opposite to my outlook. It’s close to a temporary peak but as this continues we’re going to see both EURUSD and USDJPY begin to yield to their respective structures that should provoke some greater volatility.

Take care… the market is becoming less directional.

Good trading
Ian Copsey  


Wednesday, September 10, 2014

WEEKLY OUTLOOK FOR THE DOLLAR INDEX

INTRADAY CHART
9th September 2014

Price has accelerated more than expected and we appear only now to be approaching the (green) Wave [iii] that should stall around the 423.6%-438.2% proojection in (green) Wave iii at 84.44 - 58 but note the 461.8% at 84.81. This will require a deep Wave [iv] of between 53% and 58.6% before higher again.


First reversal should be to the span of Wave (b) of Wave (v) between 83.60-90 and following a correction the larger decline should develop. As mentioned in the daily section, this should be quite long - a sharp decline would risk a possible complex (flat/expanded flat/triangle) or we could see a long, long slow grind lower to the 53%-58.6% retracement area. 

Good trading
Ian Copsey

Mixed trading still likely

That corrections should develop over yesterday was my expectation. These have developed, some for deeper moves while some should just be temporary. We do appear to be at a stage where we are seeing the market beginning to reassess their positions. After all, we have seen some pretty dramatic Dollar gains over the past few weeks which, compared to the first half of the year, was a grateful bonanza for the market which had been forced to toil hard for scraps. I don’t see any massive breakouts at this point, but more one where we see a return to some tentative tests of either side of the market. As mentioned above, I think some tests will provide more results than others at this stage but this is down to individual currency pairs.

The Europeans still appear to be broadly Dollar bullish but the sting has been taken from their tails. Certainly I see more two-way trading today for them. While the Europeans were more subdued, the Aussie went totally berserk, breaking the 0.9262 low easily – and as mentioned this would trigger follow-through. However, it does seem to be at a stage where two-way trading is more likely for the moment. Certainly, I don’t expect a repeat of yesterday.

EURJPY rallied to the higher retracement target – to within 2 points. This should now begin to test the downside again and this time it should be USDJPY that drags it lower although within the 2-way trading we should see EURUSD provide its support for those losses. Probably, of all the currency pairs, I think it will be the cross that will have the strongest move today…

Good trading
Ian Copsey