Gee, this extension higher in the Dollar is taking
it’s own sweet time… The early deeper corrections fell nicely in the right
areas for EURUSD and USDCHF to start building the foundations for the Dollar
strength. We have probably seen the initial foundation for the stronger move,
or it’s very close, and thus the day should spark some stronger directional
moves. If it’s fast enough it may just complete the rest of the wave but we’ll
have to allow until early tomorrow. When this has completed it does suggest the
correction lower I have indicated over the past couple of days.
It is noticeable that GBPUSD has bucked that trend,
the deeper recovery yesterday confirming the low at 1.4985 – just 7 points
above the target. I think it has rallied enough for now and thus the risk
should be lower today but clearly we shouldn’t expect new lows now. Therefore,
be aware that the decline in GBPUSD will have more risk of choppiness compared
to EURUSD and USDCHF.
AUDUSD is another that extended its recovery
yesterday. I’m a little more open to gains here although I can see two
alternatives. However, if it is to push higher then it must be directly else
suffer the same fate as the Europeans. I’m open to both sides – go with the
first break.
USDJPY behaved rather limply yesterday that
disappointed. The correction was much deeper than normal for the position it’s
in although it still held within the overall “requirements” for this wave.
However, I do think it is now time for it to press its case for another rally.
I can’t see it galloping higher at this point and the rally may well be fairly
sedate. This tends to suggest that EURJPY may well drift lower. I had begun to
think that it may suffer a deeper drop because of EURUSD but this seems to be
less likely now. I’d actually like to see it rally but find the circumstances
of EURUSD and USDJPY just don’t seem to support that outcome. Thus, it’s
probably another day to avoid the cross and focus more on straight Dollar-currency
pairs…
Good trading
Ian Copsey
Hi Ian,another insightful and lovely post...DOW made all time new high and it seems its continuing for the several months,based on HEW ongoing pattern.could this push the dollar index down and perhaps a period of consolidation for EURUSD from here?
ReplyDeleteMike
ReplyDeleteEveryone seems bullish for U.S. equities. That's good... Read:
http://harmonicelliottwave.blogspot.jp/2012/03/us-equity-and-dollar-major-reversal.html for an article I wrote a year ago although it has been my view since July 2010.
Although the shorter term development in the Dollar Index I remain with the underlying view I provided in the weekly report.