Friday, February 5, 2016

Another spring coiling..?

I was quite happy about yesterday’s moves. USDCHF remains the key in terms of limits and we haven’t yet reached that point. This still warns of potential whippy development, particularly when we have to endure the Fed playing its monthly prank and forcing further self-flagellation. I sense the potential for a significant move out of this release…

So, yesterday saw further Dollar weakness, something that has forced me to re-evaluate the Dollar Index. It puzzled for a while, and adjusting daily counts are always fraught with risk of misjudgement due to the lack of information from the 5-minute and hourly movements that can be hidden from view within a daily bar. I have had my basic long-term outlook for the Dollar for around 4-5 years now and the structures I have seen in my workings yesterday do seem to still fit with the final outcome. I am therefore pretty comfortable with the larger grand cycle but it’s now a matter of what happens today.

On yesterday’s development, USDJPY reached the stronger projection target within 3 pips – and this suggests some decent swings – but with EURUSD reaching towards the targets I have, the impact on EURJPY was for a deeper recovery. This balance between the three pairs makes this a tough day to judge – which perhaps is pretty much as would be expected on NFP day…

In general, we are seeing momentum beginning to slow but that’s hardly a surprise before NFP but even then we shall probably face the gauntlet early in the European afternoon.

Be prepared…

Have a great weekend
Ian Copsey  

Thursday, February 4, 2016

Coiled like a spring…

The origin of this move came from the 1.0539 low. From there we have seen a long, long… err… long sideways move over three weeks. After the break of 1.0960 on the 28th January, I penned two intermediate target areas that should be met before rallying further. In my own conservative manner I thought the cumbersome development would continue, deeper corrections – maybe complex – and that we’d see this move into next week or the week after. Yesterday saw those two intermediate targets met within 3 hourly bars…

So much for being conservative…

However, it was the underlying expectation and the rush of blood has caused both some adjustments in one or two pairs and greater clarification in the others. In particular, I think that USDCHF will provide the target and should match with EURUSD. Equally, GBPUSD (which was the biggest adjustment) is in a position in the structure that normally has a relatively tight range for targets. These three Europeans tend to have a nice correlation for the next move.

Meanwhile, AUDUSD whipped back higher. The depth of this rally has been far deeper than I had anticipated but doesn’t really change the next outcome…

And as for the JPY pairs. Those highs we saw really duped me. It was clear from the bearish 4-hour & hourly momentum that we’d see losses – but I hadn’t expected the drop we saw that blew out the list of supports I normally generate in the analysis. However, in the bigger picture nothing has change in my views and I see this as constructive. 

Today should be steadier but don’t expect a repeat of yesterday…

Good trading
Ian Copsey  

Wednesday, February 3, 2016


BIAS:       I feel we need a decline to the 1.4240-70 area


MAIN ANALYSIS:     Well, that didn't work out. I did note uncertainties in the rally from 1.4148 and yesterday's deeper pullback to 1.4325 and followed by a new high - if by only one point - suggested an alternative I had in my mind - that of a 5-wave move. This will mean that today should be bearish and I suspect down to the 1.4240-70 area. (allow for 1.4218.) As this area is approached, watch for bullish reversal indications for gains to move back to 1.4445 and later - tomorrow or Friday - to around 1.4526.

COUNTER ANALYSIS:    Any break above 1.4480 would risk follow-through to 1.4526 - but then take care and note momentum conditions.

A break below 1.4218 would be concerning but not necessarily negative. Only a break below the 1.4148 low would confirm more direct losses. 

25th January:  While I still have lower targets, there appears to still be a risk of a correction following Friday's gains. The depth of the correction is not really known and much depends on whether Friday's move higher will retain an impulsive move... 

Good trading
Ian Copsey

Getting a bit messy

I found things rather disjointed yesterday. There were parts where things went well but in other areas it became rather messy… even weird. To begin with EURUSD, did at least extend gains but pushed above my favoured target but not beyond deeper projection targets. During the process, GBPUSD saw a deeper correction than expected but then poked up to a new high… by 1 point. This should mean that both EURUSD and GBPUSD should move in tandem today – much as I had been suggesting in yesterday’s report.

Out of the Europeans, it’s USDCHF that appears to be floating in the clouds without any real directional sense of where it wants to go, apparently detached from EURUSD at this point. I still keep a balance view on this pair – it has options on both bullish and bearish outcomes. This will be a “wait and see” project for now.

The Aussie provided a perfect outcome. This is quite an encouraging pair and may well provide a decent trend from this point. There’s risk of some early dillydallying early in the day but watch for the break…

As for USDJPY… well, I’m pretty confused with the losses we saw yesterday, breaking below my support and broadly maintaining a downward path and with both 4-hour and hourly momentum heading lower. It could be just providing a larger consolidation but we’re close to breaking support. The possible controlling factor is in EURJPY but there’s a fine line between bullish and bearish at this point in both pairs. This needs some stronger hold on the structure but which I find a little ambiguous – but in the larger daily picture the downside does look negative.

Good trading
Ian Copsey  

Tuesday, February 2, 2016

Constructive progress

I was slightly cautious about how things would go yesterday but I have to say that, on the whole, the moves we saw yesterday were pretty much in line with my outlook. There are one or two issues within yesterday’s development and enough to continue with a cautious approach from this point. Of all the pairs it was GBPUSD that pushed higher more robustly - confirming my suspicion that we’d see a new high following what appeared to be an expanded flat at 1.4148. With this, because of the messy sideways move, 4-hour momentum – even hourly – are not really helpful because we’ll not get any divergences. These aren’t even present in the 30-minute or even 15-minute charts…

This leaves the Europeans with further short-term complications that suggest the risk of some relatively tight range trading today. In particular, EURUSD and USDCHF look like seeing a choppy day today.

The Aussie was hardly a model of clear development although dipped into the area of the prior correction. I would have liked this to be a little deeper – and with greater clarity in the structure – but overall I’m basically comfortable with the structure we have now. This should soon see more constructive progress.

The JPY pairs also developed well – slowly. The risk does seem to be for USDJPY to see some stronger swings but still looking for a new high. With the combination of sideways ranging in EURUSD and a firmer USDJPY the risk is for EURJPY to extend gains also but without great power.

So it seems we’re back to relatively steady but complicated development. If I have to choose any pair that could generate a more directional move, then it’s AUDUSD…

Good trading
Ian Copsey  

Monday, February 1, 2016


BIAS:               This risks a down-up day

Resistance:      121.72-93 122.15-20 122.40 122.62
Support:           120.91 120.70 120.46-55 120.00-20

MAIN ANALYSIS:     Snafu… I felt we needed another rally but not from 118.41… Thus, the direct follow through after the BOJ announcement obviously came as a surprise. As today begins I feel we need an initial correction back to the 120.46-55 area. From there we should see a 3 wave rally that needs to reach the 121.72-75 area (allow for as high as 121.93). Here we will need a correction of around 70 points (approx). From here we will need another 3-wave rally that (depending on where in the range between 121.72-93 stalls) could stall as low as 122.15-20 or as high as 122.40-65. Therefore, make sure that the development I have described  develops in order to look for bearish reversal indications. This should be the final high before daily losses resume.

COUNTER ANALYSIS:    Only a break above 122.70 could see price extend to 122.85-90 and potentially 123.15-25 and max 123.40-50.

A direct break below 120.40 would see direct losses. There aren't too many obvious support areas but take care at 119.70, 119.10-30 and 118.95.


1st February:  Well, as described above, the second leg higher was far more direct than expected but should complete a 3-wave move from between 122.15 and 122.62. Take care, there are higher levels but I feel the follow-through will be limited. Because this has developed in 3-waves there is a risk of a longer sideways consolidation (triangle?) but I cannot rule out a more direct resumption of losses. 

Good trading
Ian Copsey

Twists and turns

What a blockbuster day Friday was… It has certainly changed the outlook, but probably only temporarily. Where do I start? Well, on Friday morning I called for a correction lower for another rally in USDJPY only to blink and find out that the BOJ decided to impose negative interest rates. Well, it turned out the correction was a mere 21%...

In the Continental Europeans we saw the Dollar push above key resistance levels but then reverse – particularly so in EURUSD. However, particularly in EURUSD the Dollar bullish structure has broken and USDCHF appears to have adopted a new alternative corrective structure. All this tends to suggest further complicated trading. If I add GBPUSD into the mix, there’s some ambiguity also. Have we seen a recycling or will the downside resume directly?

I shall note the areas in the report that will be critical to the alternative outcomes but I feel the mess that we’ve seen since the beginning of the year may well continue into the middle of February at least. In particular I have my favoured scenarios but need to have these confirmed.

USDJPY does not look to have completed its push higher but the rest of the move looks a little bit messy. It also confused the picture in EURJPY although, like USDJPY, momentum is still pushing higher. I tend to feel this will be a rather scrappy development from this point.

And finally, AUDUSD pushed up a little further but does look like it’s running out of energy. I was caught out late in the week but there are signs of a reversal before long. Price is testing the supports in both the hourly & 4-hour Price Equilibrium Clouds and there’s a good hourly bearish divergence – but not in the 4-hour. It won’t take too much to see it topple.

Have a profitable week
Ian Copsey