Friday, December 19, 2014

DAILY FORECAST FOR GBPUSD

INTRADAY CHART
BIAS: We should see losses - but take care

Resistance: 1.5676 1.5695-05 1.5720 1.5740-46
Support: 1.5630-40 1.5603-10 1.5590 1.5570

MAIN ANALYSIS: The 1.5540-42 lows remained intact and price rallied into the middle of the 1.5640-60 and 1.5698-05 area. Thus, while allowing for 1.5698-05 the major risk does look bearish but we shall have to ensure that the decline is sustained below 1.5600 and back to the 1.5540 low. I note that the 4-hour Price Equilibrium Cloud provided the resistance at 1.5676 and therefore it suggests we have seen the corrective high in the triangle. A break below 1.5540 would see the 1.5490-90 expansion area but I'm not certain this is valid any more. Watch momentum carefully - if both 4-hour & hourly momentum remains bearish then watch for further losses... the minimum target should be 1.5406.

COUNTER ANALYSIS: Only a break above 1.5710 would risk a firmer rally to the 1.5825-50 area but then take care. 

MEDIUM TERM ANALYSIS:
19th December: It looks like we've see the 1.5676 high provide the triangle completion (Though allow for 1.5695-05) and therefore we should see losses back through 1.5540 - then take care at 1.5490-00 but I feel the next target will be at 1.5406 minimum - but more likely down to the 1.5346 area minimum - but then take care. There is as deeper projection at 1.5251...

Just in case .. should there be the 1.5491-99 area provide bullish divergences and a reversal signal, then we could then see the recycling to 1.5825-50 but it would surprise me...

Good trading
Ian Copsey

Finding a resolution

Not the New Year’s resolution, but more the answer to whether the Dollar resumes the current gains or … not… As far as I can see, the answer is probably “not”. Will we see a reversal today? Maybe. With the market not really wanting to push the boundaries before the weekend, and certainly the thought of sharp moves over the two-and-a-half trading days next week, the incentive is just not there. Shifting deals of any size become increasingly hazardous with a game of pass the parcel, large positions are generally considered as holding burning hot coals.

Therefore, it seems to be a matter of the alternatives that could provide traders with a safety zone. This basically implies further consolidation or a slow build up of base building wave foundations that can provide a later directional move.

In the larger picture, the depth of the decline in EURUSD and particularly the rally in USDCHF (to new highs) has much stronger implications in terms of the original Dollar downside corrections. Can we see a recycling? I think that is a very strong option. However, currently hourly momentum is not really displaying any Dollar bearish divergences in EUR and CHF and 4-hour momentum is very strong, but then we haven’t really seen a 4-hour trend. I therefore tend to feel we could see a relatively narrow range day today. GBPUSD tends to suggest the same. AUDUSD is still on track but the current downside is now limited, thus suggesting a limited range day like the Europeans, but should see a new low.

The JPY pairs… Now these may have a little more room for a directional move but very clearly, given EURUSD is expected to be relatively quiet, it will mean that USDJPY needs to lead the way. From the EURJPY cross the implication is bearish. Thus watch for signs of weakness in these two.

Have a great weekend
Ian Copsey  


Thursday, December 18, 2014

Surveying the wreckage…

Keeping to the Xmas theme, I can only say that the FOMC left a slew of wrapping paper that had been ripped from the gifts that Santa had brought. Scraps of paper, broken boxes and trampled rubbish left in the wake of a simple few words.

Has this changed the outlook? Perhaps from the point of view of what I had thought to be the count, but in the larger picture, I don’t think so. Clearly, we shall have to tread carefully from this point to confirm the larger Dollar decline will continue but from what I see of the Dollar Index, all that has occurred is an expanded flat. Thus, I think we can regroup and get back on with the job in question – planning the Dollar downside.

This should be a common theme across all major Dollar-currency pairs, more directly in the Europeans and USDJPY. The Aussie is basically the same except I feel it has limited upside, basically in a correction. Yesterday’s development in the Antipodean was actually perfect all the way down to the 0.8138 low and back up to the 0.8235 high. The downside targets are not too much lower but we’re probably due a correction higher first. So as we start the day, we’re very much mid-range. Best watch the extremes of the anticipated range.

EURJPY took the consolidation route as suggested and this looks like extending for most, if not all, of today also. This tends to suggest that EURUSD and USDJPY will probably have a relatively high correlation but note the next larger directional move in the cross should be lower and thus it suggests USDJPY will outpace EURUSD.

It seems that, day-by-day, the market is getting trickier and trickier as we move into the final, very illiquid days to Xmas. Take even more care now…

Good trading
Ian Copsey  


Wednesday, December 17, 2014

WEEKLY OUTLOOK FOR THE DOLLAR INDEX

INTRADAY CHART
16th December:

The Wave iii (slightly) exceeded the 661.8% projection to reach the 672% at 89.55. This should now see losses in Wave iv - requiring a 58.6% retracement suggesting the 85.60-65 area. 


We appear to have seen Wave (a) and Wave (b) and thus should see continued losses in Wave (c). The (cyan) Wave iii projection should reach the 238.2%-261.8% projection at 86.85-01. With Wave ii being 76.4% we should see Wave iv retrace by around 14.6%-23.6% before lower in Wave v. This seems to suggest a target around 86.00-50. This should form Wave (c). Take care there as having developed in 3-waves we could see a recycling in a flat or expanded flat.

Good trading
Ian Copsey

Pre-Xmas sales rush

There are still bargains to be found and Santa seems to have found himself short of gifts so the market has begun to shift a little quicker. My targets in EURUSD and USDCHF were met, but I have been surprised by the structure that tends to suggest that these Dollar losses are not yet complete… Of course, we still have to be wary of the corrective phases and the potential for complex structures, but it would not surprise me to see a relatively quick follow-through. Once this sequence is complete the risk of a longer correction is quite possible with just 5 trading days left before the big man tumbles down the chimney.

Elsewhere, the other currencies were a bit more complex. It almost seems as if GBPUSD has joined the irregular triangle club. Whichever way you look, the recent development has been like a gaggle of London traders on a pub crawl over lunch. If I’m right, it won’t be too long before it begins to take a more direct route. It’s one of the currencies that is best avoided at the moment…

AUDUSD stalled, looked back over its shoulder, and then decided to whip back for another glass of the amber nectar. However, it should now continue its steady decline with the cluster of projection targets not so very far away.

As for the JPY pairs… well, they’ve made their statement and appear to be generally following the general Dollar pattern in line the Europeans (excluding the London pub crawlers…) There has been a basic correlation for a while now and it suggests that we’ll see a relatively consistent development between the two groups. This hasn’t stopped EURJPY from losing out also but, considering the outcomes between the two groups, it looks like we could see some longer lasting consolidation in the cross – in the larger picture. This suggests relatively limited extremes to the current development and one that should see a stronger directional move develop early in the New Year.

EURUSD and USDCHF remain the pairs with the greater clarity for now.

Good trading
Ian Copsey  


Tuesday, December 16, 2014

Slow… slow… quick… slow… slow…

Actually, perhaps I should have left the “quick” out of the heading… It’s hardly surprising though. As liquidity thins quite sharply towards the holiday season, the big traders will naturally reduce their positions just in case a dramatic catalyst generates panic. Thin liquidity would exaggerate the movement and the process of trimming/cutting positions would cause far greater losses than in normal conditions. Basically, there is no interest in pushing out the boat.

Hence, we have been seeing the type of trading over the past week and which will probably continue through to the New Year. Having stated this, I don’t think we’re going to remain in a sideways range through to year-end. The last few days, the Continental Europeans have actually followed my general template. That the targets are becoming less exact is more of an expected annoyance. However, if I have caught this basically correctly, it will mean a breakout quite soon. Once it does we should see follow-through but I’m not expecting a significant move.

Where there does seem to be room for a more directional trade, is in GBPUSD and AUDUSD. The Antipodean has been pretty consistently bearish. It has had its own periods of consolidation but momentum in the larger time frames does still point to the downside. Equally yesterday’s losses in GBPUSD (at long last… my patience was wearing thin…) do have the potential for follow-through also to my long-standing target.

As for the JPY pairs… well, not quite the result I had been hoping for – and my patience is beginning to wear quite thin. EURJPY puzzles me and I find it hard to get too bearish due to the structure running up to the recent highs. I do think we are approaching a period of Yen strength – but not quite yet. Indeed, I feel that we’ll see the Dollar weaken once we get into Q2 next year (approx) but it just seems as if we need some further strength following the current correction. Thus, the reluctance of USDJPY to make further gains is rather frustrating. I have pulled back from this currently and await a stronger directional signal.

Good trading
Ian Copsey  


Monday, December 15, 2014

DAILY FORECAST FOR USDJPY

INTRADAY CHART
DAILY FORECAST FOR USDJPY

BIAS: I'd like to see gains resume, but prefer to have this confirmed by a break above 118.55 and 119.09

Resistance: 118.35-55 118.80 119.09 119.32-55
Support: 118.05 117.75-85 117.43 117.23

MAIN ANALYSIS: In a rather whippy pre-broker market we have seen a high af 119.09 and low of 117.77. In the larger picture we must see price hold above 117.43. We now need a break above 118.50-55 to encourage gains back above 119.09 to approach the 119.55 high. I suspect from this area (just above/below) we should see a correction before extending the rally to 120.61-86. However, the correction will likely be brief to extend higher to stall around the 121.84 high.

COUNTER ANALYSIS: If price breaks below 117.70 we need watch for bullish reversal indications, preferable above 117.43 and definitely not below 117.23... 

Obviously, the alternative risk is losses below 117.23. There is close minor support at 117.00-04. Below would extend losses down to 116.00-10 and possibly 115.45-70.

MEDIUM TERM ANALYSIS:
10th December:  The correction was much deeper than expected (85.4%) but, from the bearish structure, looks complete. Thus we should start the second leg higher develops and should reach above the 121.84 high area at least.

Only directly back below 117.43 would risk a move back to the 117.23 low - breach would imply losses to 116.00-10 and 115.45-70...

Good trading
Ian Copsey