Thursday, May 31, 2012

Targets close by… momentum stretched…

The Dollar had a positive day as expected and we close to the targets I set some while ago so the next task is to fine tune what should be the final stages of the rally. At this point I do have to say that an element of doubt has entered the proceedings with momentum stretching the limits and leaving precious little room for intraday momentum to provide a confident call for a termination of the current rally. The price limits can now be identified within fairly tight targets ranges so now the final task is to have these confirmed through reversal patterns/ momentum indications and for those using Candlesticks a good price reversal bar. Until these are clarified we’ll have to continue using a good degree of caution and observation.

One of the trickiest structures is GBPUSD. Since the 1.6301 high there have been no significant retracements, a development that always adds a lot more uncertainty due to the lack of confirmation between related corrective structures. The larger picture remains Dollar bullish but to slot this into a viable structure that will support the larger target I have we do require a pullback. Overall this is the general expectation across the Europeans and the Aussie. Assuming my projection targets spark a correction the next task is to identify how deep these will be. Some currency pairs require only fairly limited corrections while others are more flexible. Thus overall I am not expecting a massive pullback in the Dollar and more of a relatively minor one – but larger than we have seen over the past 2-3 weeks…

I pointed out yesterday the need for USDJPY to resume its rally directly otherwise we’d be at risk of a new low. Clearly the latter occurred. I still remain with the view that the decline from the 84.17 high is corrective. The depth we have seen is not unusual, although deep for the structure I have been using. There are two alternatives within the rally from 75.57, made unclear because of the sharp nature of the initial rally from 75.57. However, either way I do see signs of this pullback approaching its limits but what we do most certainly need is a stronger sign of intent that this will finally resume the rally within the new multi-year up-cycle.

Thus, today is a day to watch and identify potential patterns suggesting the Dollar is finding a high but given the momentum conditions it will be important to ensure these are valid and strong…

Good trading
Ian Copsey

Wednesday, May 30, 2012


BIAS: Losses should extend to the 1.5555-82 area

Resistance: 1.5647-56 1.5674 1.5691-16 1.5740-60
Support: 1.5627 1.5607 1.5555-82 1.5527

MAIN ANALYSIS: Losses did develop below the 1.5660 gap low and down to 5 points above the 1.5602 low. I don't think this has completed the decline. I doubt we'll see a return to 1.5647-56 but that is the upside barrier and while it cap the risk is lower for a break below 1.5602-07 and down to the 1.5555-82 area. This is the favored final target but do keep in mind the deeper 1.5501-27 projections. From this low we should expect a scrappy correction back higher.

COUNTER ANALYSIS: To generate any stronger push higher we'll need a break above 1.5656 to see extension to 1.5691-16 initially and later to 1.5743-78… 

Good trading
Ian Copsey

Edging its way to a high…

That seems to be settled… The Dollar creaked and bent, then decided to maintain the move higher. And thus it should come to pass. It’s certainly making a meal out of what should be the final stages and the indications so far are for much of the same type of development so don’t expect a sudden rush to meet targets as I can see further ratcheting strength through into New York trading at least. The positive note is that all Europeans and also EURJPY are all basically following the same basic template and most likely will reach targets simultaneously.

The bigger question mark hangs over USDJPY. Its inability to be upwardly mobile is just a bit concerning and reminds me of the awful snail pace development that occurred around the 76.00 - 78.00 area over a 2 month period running into the end of last year. It really does need something to bash it up the backside to prod it into a more sustainable rally. My concern is based on EURJPY that appears to be still only in a penultimate decline and not the final decline. If that is the case then either while the Euro recovers USDJPY declines, or after the Euro correction higher is complete and it extends losses then it could force the cross lower…

Well, that is something to be noted and observed over the next few sessions. If USDJPY cannot resuscitate its move higher soon then we may be faced with another dip although I find it a bit hard to get exceptionally bearish at this point – or if it does, then my longer term outlook may well turn even more directly bullish once the decline is over & done with.

So I’ll leave it at that today. It looks like a day similar to yesterday but with the outlook that we may well reach the point where the Dollar is forced back lower…

Good trading
Ian Copsey 

Tuesday, May 29, 2012


BIAS: Ideally this should extend higher again today

Resistance: 79.71-82 80.07-14 80.41 80.69
Support: 79.21-33 78.99 78.74 78.25-48

MAIN ANALYSIS: Friday saw the lower end of the 79.81-98 area cap and from there we saw a dip to the bottom of the key support advised at 79.33-50 which was reached yesterday. Overall, as long as yesterday's low holds I feel the stronger risk is back higher to the 79.71-82 highs and probably then the 80.07-14 area. There is likely to be a pullback from around this area before the rally can extend to the 80.69 and possibly 80.93 area. Even the correction from there should be fairly shallow - around 20 points - before the upside extends to the 81.40-57 area.

COUNTER ANALYSIS: Only a direct break below 79.30 and 79.21 would retest the 78.99 low and probably 78.74. Also note the deeper pivot support at 78.25-48.

Good trading
Ian Copsey

Two days of nothing… what next?

On Friday I suggested that until some stronger catalyst enters the market I couldn’t see any significant moves in either direction. Well, that was proven correct. Ok… great… but it doesn’t really help us too much and we’re left thinking “ok, what next?” Indeed…

As long as I have gotten USDCHF right then that still needs another boot up the backside to propel it to target – something I mentioned on Wednesday but the question still remains – will that develop directly or after a slightly deeper pullback? Daily momentum conditions for the Dollar have started to show signs of divergence, a warning only at this point, while intraday momentum has turned flat which shouldn’t come as a surprise. So there are no definite near-term signals except perhaps the potential for the boundaries of the past two days range will probably make the final decision.

If the Aussie can lead the Europeans then the risk may well be Dollar bearish since I still see the Aussie needing a slightly deeper correction higher and this is probably more appropriate in GBPUSD also. However, follow the first break to be safe.

Given that the Europeans remain somewhat mixed perhaps we should turn our attention to USDJPY. I can’t say there are clear and conclusive signals here too, but if this is to go higher as I have been waiting for then it certainly has the potential now. Yesterday’s low can be considered as a deep correction that can’t get much deeper without turning price lower. Thus, ideally the preference is for it to renew the recent attempts to forge its way higher, something that could benefit EURJPY also. Once USDJPY does begin its rally we should find it a little more direct in its intentions although even then it is still in the foundation stages of what I feel will be a bigger move higher and therefore still open to a subsequent correction.

Thus, with the Europeans take care until we have seen stronger signals while err on the bullish side in USDJPY – and possibly EURJPY if the Dollar weakens against the Europeans…

Have a profitable week
Ian Copsey 

Friday, May 25, 2012


BIAS: Ideally I'd like to see this higher… but take care

Resistance: 100.16-26 100.50 100.84-95 101.48
Support: 99.35-60 98.75 98.43 97.83

MAIN ANALYSIS: USDJPY has begun to display a more positive direction while EURUSD is rather balanced between up & down… Even if this is to dip further I feel we should see a correction higher but wait until the 100.26 high is taken out. If seen then look for extension through to 100.84-95 at least. Also note the 101.48 area... Only if this pushes above the 102.12 high would there be a stronger risk of more sustainable gains.

COUNTER ANALYSIS: Until 100.84-95 is broken I cannot rule out another push lower if EURUSD decides to make its final decline to its target areas. This could still force the cross lower and down through 99.35 to 98.75 minimum (and take care here) while there is a deeper projection at 98.40-45 below where a  drop down closer to the 97.03 low is possible although I do not think this will break.

Good trading
Ian Copsey

There should still be new Dollar highs… but will it correct lower first?

Yesterday didn’t go to plan… and has introduced some complications in some areas that make the next step a little more uncertain. Given that the Dollar should be close to a reversal point for a deeper correction lower we’re going to have to keep this in mind. It’s still at an early stage but even the daily charts are reflecting a sufficient slowing in momentum that provides a warning bell for a reversal. My preference remains for the Dollar to extend gains just a bit more but this is where I am balancing between a more direct rally to target or an earlier pullback… The long U.S. weekend adds an element of uncertainty also – squaring up long positions maybe, or perhaps a general lethargy in doing much at all while the European situation drags on and on rather like watching the world’s longest high wire tightrope walk…

My preference remains for a pullback before the next rally, partly because we’re close to some areas where corrections are not uncommon: GBP poised just above the daily 1.5602 swing low; CHF having hit the 0.9595 high; EUR having dipped just below the 1.2623 low; and the Aussie appearing to have more potential for the upside to deepen first.

Still, there is a fine balance between the two and unless some stronger catalyst enters the market I can’t see any significant moves in either direction.

USDJPY held the key resistance for almost the entire day yesterday, broken only towards the end of the day but hasn’t accelerated higher. However, it does now look more bullish and as long as we continue to see upside progress, however slow this can be, it is bending the bias towards the upside again and should move above the 80.14 high before too long. This keeps EURJPY in a delicate position having dipped again yesterday but equally seeing daily momentum slow and warning of a possible reversal if this cannot accelerate losses…

Thus, take care today and while I don’t think it’s going to happen today, keep in mind that the general picture all round does hold early warnings of a reversal…

Have a great long weekend
Ian Copsey 

Thursday, May 24, 2012

Correction today before the Dollar rallies again

Apart from USDJPY everything went reasonably well yesterday with the Dollar forging to new highs and breaking the 1.2623 EURUSD low though failed to penetrate the 0.9595 high in USDCHF. The latter will need to wait for the second attempt… That said, we’ve seen enough for now and a correction is underway. This is the tricky part as there’s no fixed or “normal” retracement ratio for this part of the structure so due diligence is going to be required in identifying this. There’s now real way of knowing how long it will last either. That’s what happens with Wave (b)’s that are notorious amongst the notorious…

So a little flying by the seat of the pants is going to be needed but once this correction is complete we should see the Dollar push more strongly higher again but note this should be the last rally within the current larger wave. Once complete we can sit back and enjoy the confusion of another period of correction, consolidation and confusion…

One currency pair that is bugging me is GBPUSD. Actually, it did well in reaching the lower target I had indicated yesterday – ending just 2 points below – and theoretically it should now see a deeper pullback. What concerns at this point is the expectation of the additional Dollar rally (probably tomorrow.) Ideally yesterday’s GBPUSD low should not break so it will perhaps need a pretty good recovery today else it will threaten a deep new low. We’ll have to see how it performs today…

Now, USDJPY… Just as I thought it was safe to step out and declare a larger rally it flopped spectacularly… It’s certainly one to lavish some caution with right now until the situation is clarified. I would still love for it to make a second stronger attempt higher but best wait for key resistance levels to break. Until then there is still risk of a minor new low though I don’t want to get excessively bearish at this point. It may even be best left alone until it has made a more decisive move that confirms the foundation is laid for the next move higher… However, it may have to wait until EURUSD is done with the downside.

Best concentrate on the Euro and Swissie today: look for the Dollar pullback and keep an eye out on any bullish sets ups for the final rally…

Good trading
Ian Copsey