Watch key levels…

Due to the Xmas break I have provided a more visual expectation of developments in today’s report. There’s no real change to the outlooks but, because of the low liquidity, there is always greater risk of breaks of levels that were not anticipated. I therefore urge you to apply stronger than normal diligence at the areas where there is a line between bullish and bearish. In particular, because EURJPY appears to have gone into corrective mode, it does have implications for the balance between EURUSD and USDJPY. Do note that within these expectations, the risk of a deeper correction in USDJPY (as shown in the chart) is required and could perhaps absorb the potential issues in EURJPY.

Along with EURUSD and USDCHF, there is now a distinct possibility that GBPUSD could well join up with the Continentals in a correlated move. Therefore, as EURUSD reaches the key make-or break level, watch the key area I have outlined for quite some time.

While the Europeans have their own outcomes, AUDUSD seems to be still dead set on continuing to extend losses. There are several corrective areas to go through which could generate complex corrections, just as we have seen following the 0.8235 high. Therefore, while the direction appears set in stone, take care with the corrections.

As mentioned above, the move higher in EURJPY suggests a correction higher. Looking at this independently, rather than trying to imagine mind-blowing contortions of how the currency pair triangle will develop, I suggest taking a low profile in the cross but take more note of EURUSD and USDJPY in terms of whether one scenario breaks down that would then clarify the next move in the cross.

At this point, USDJPY has been gradually extending gains, I still have a mixed outlook although, at this stage, hourly momentum is still bullish but 4-hour momentum is beginning to build up a bearish divergence. It’s probably USDJPY that has potential to confirm the EURJPY triangle rather than EURUSD…

I wish you all a marvellous Christmas and a healthy and prosperous 2015

Ian Copsey  

UNHARNESS THE POWER OF HARMONIC ELLIOTT WAVE

OUTLOOK FOR THE DOLLAR IN 2015 AND BEYOND

The video provides a broad overview, using Harmonic Elliott Wave and fixed cycles across a range of currency pairs to provide a general outline and possibilities for the Dollar over 2015 and beyond.


I wish you all a great Christmas and a profitable New Year...

Good trading
Ian Copsey

Conflicting outlooks

I’m not too surprised with Friday’s developments, but then I never get surprised by the erratic nature of the markets at this time of year… There are some end-years that see a great trend and there are some like this year. Needless to say, I don’t like the type we are seeing this year… Having obviously pored over the charts and their structures I have come up with a range of conflicts that need resolving. In today’s and tomorrow’s reports I shall attempt to highlight the options that appear to be valid. However, there being just two days of minimum liquidity available I’m not sure we’re going to see the market really attempt to push too far beyond close boundaries.

In the Continental Europeans, I see EURUSD may have potential to extend losses more strongly, but in USDCHF I do not. I tend to go with the USDCHF structure which will imply upside limitations to the Dollar. The key to determining whether these barriers will hold will be to judge through momentum conditions as these barriers are approached. If these holds we could well see Dollar losses resume.

However, in GBPUSD there is an argument for it to extend losses more directly. There is still the support barrier I have mooted over the past week, and this should be judged in the same manner as the Continentals. A break of that support will see follow-through.

The Aussie has slowed once again and seems to be marking out a sideways consolidation. Even then, the next downside target is not too much lower, but then the corrective limits are also relatively shallow. This should see some slow development over the course of the 2 ½ days trading although the U.S. will be back in on Friday. I doubt they’d have any interest though.

That just leaves the JPY pairs with USDJPY edging higher on Friday and breaking the possible bearish divergences that had begun to develop. However, at this time of the year, momentum does become a little defunct with the market mind set not really in the mood. The upside area just above last week’s highs are very, very close and any break above could extend gains. That would likely destroy my expectations in EURJPY. Thus, treat these with care.

Best advice this week. If you can’t see an obvious trade… then don’t trade…

Have a profitable week

Ian Copsey  

UNHARNESS THE POWER OF HARMONIC ELLIOTT WAVE

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  

UNHARNESS THE POWER OF HARMONIC ELLIOTT WAVE

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  

UNHARNESS THE POWER OF HARMONIC ELLIOTT WAVE

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  

UNHARNESS THE POWER OF HARMONIC ELLIOTT WAVE