Friday, March 30, 2012

DAILY ANALYSIS FOR USDJPY


BIAS: There is risk of a pullback higher today but within the boundaries of a larger bearish corrective structure

Resistance: 82.53 82.70-75 82.96-18 83.38-65
Support: 82.20 81.90 81.65-75 81.46

MAIN ANALYSIS: Yesterday's losses are more indicative of being part of a larger corrective decline. This shouldn't rule out the potential for a pullback higher today. Watch the 82.70-75 pivot resistance area and the balance between any rally in the Euro and the impact on the cross as I feel that should be bullish (barring a possible marginal new low.) The next resistance is at the 82.96-18 broad congestion/pivot area. If there is any stronger directional risk then it's lower but should need EURUSD to rally more strongly. 

COUNTER ANALYSIS: Only a break above 83.18 could possibly generate a move up to 83.38-65. I find that tough to be honest but maybe then it could retest the 84.17 high.
A direct break below yesterday's 81.90 low would encourage losses - watch the 81.46 area followed by the 80.80-06 range. From this point take care as we'd be approaching areas that could prompt a resumption of the larger weeky uptrend. Below is the 80.58 corrective low followed by 80.01-10.

Good trading
Ian Copsey

That was the week that will be…


Given I shall be taking a break over the coming week today’s report will provide both today’s outlook and an overview of the overall expectations for the next seven days.

The depth of the pullback in EURUSD has been a little concerning and I wouldn’t really want to see much more Dollar strength overall otherwise the balance of what I see as the underlying Dollar downtrend. Having said that, USDCHF saw a break above my pullback limit of only 2 points and GBPUSD remained quite buoyant. It does seem that we do really require losses to extend more directly now to maintain the bearish directional bias we have been seeing. Should this not occur the potential may well be for a longer sideways consolidation but clearly with the Dollar seeing further strength above what we have seen these past two days. Indeed, I feel that this Dollar weakness should continue to new lows today else begin to lose the luster and shine that it had displayed last week. Clearer signals will be implied once the 1.3585 high EUR, 0.9016 low USDCHF and 1.6000 high GBPUSD are broken. Failure will require more care and, as I mentioned, higher risk of a pullback higher / consolidation.

USDJPY dipped to new lows in this correction and thus places pressure on the EURJPY cross. Firstly, while I am quite comfortable with the downside in USDJPY and see current levels as a possible mid-point within the correction lower, we also need to restrain too much of a bearish outlook based on the cross which has effectively ruled out a recycling back to 107.51 but appears to now be locked within a sideways trading range, potentially a triangle, before the basic uptrend can resume with more vigor. I suspect the upside in EURUSD will battle with the downside in USDJPY and for what may be the coming week. Once that is complete the implication is bullish for a break above the daily 111.59 high. Therefore watch this 3-way battle as I feel it will provide an outline for the script the currencies following.

As an additional backdrop I still see the U.S. equities as having more room for gains over the coming weeks. The next move should be higher but there are closer projection areas that will provoke further pullbacks and thus the rather rampant performance we have see over the past month is likely to give way to a more 2-way market. This does seem to broadly correlate with the Dollar’s performance also.

Good luck and good trading for the coming week…

Ian Copsey 

Thursday, March 29, 2012

DAILY FORECAST FOR USDCHF


BIAS: This deeper pullback appears to suggest stronger losses 

Resistance: 0.9061 0.9081-91 0.9115 0.9136
Support: 0.9040 0.9016 0.8974-92 0.8938

MAIN ANALYSIS: The 0.9068 retracement area held for a while but then pressed higher to 0.9081. Also note pivot resistance at 0.9091. Overall I feel this should now extend losses below 0.9040 & 0.9016 to slip down to the 0.8938 projection. That should provoke a pullback of around 60 points before extending the downside below 0.8938 and to the 0.8857-86 area. Expect another correction from there. 

COUNTER ANALYSIS: Only an earlier break above the 0.9091 resistance  would see a recycling back to the 0.9125-36 area again, possibly even the 0.9178 high. However, if it gets back here then we'd have to be open for 0.9205-15.

Good trading
Ian Copsey

A slight detour in plans


I was a way from my desk for much of the afternoon and returned just after U.S. open, saw the Euro and Swissie had stalled precisely at my Dollar resistance levels and smiled, turned off my PC and went to the land of nod. Getting up this morning I saw those levels broken. Ouch…

First things first, there’s no change to the Dollar bearish view. The deeper pullback implies one of two things: either the downtrend will be weaker than expected or; confirms a stronger follow-through and given the earlier structure I favor the latter. It doesn’t alter the eventual targets but merely diverts the intervening structures into an alternative route. This is also supported by the deeper pullback in GBPUSD, something which I had warned would be probable before long. It just developed earlier than expected.

I had warned in yesterday’s U.S. Indices report that a deep pullback was probable and that’s what we saw. The implication is still upside in the Indices so the basic correlation holding intact. Next will be correlating the peaks of the Indices with the push lower in the Dollar. I’m pretty certain where the Indices will stall with several common targets ready to be tested.

USDJPY and the cross… Hmmm, the deeper pullback in EURJPY seems to have destroyed the directly bullish outlook. I still think it will rally, and quite certain about that but the implication from what I can see from USDJPY in particular but there does seem to be some risk of recycling. At this point I think the two are more likely to rally again as the cross still seems to require a retest of the 111.43 high but at that point we have to see whether it can push firmly above the daily 111.59 high or recycle lower.

In summary, favor the Dollar resuming losses against the Europeans with just the near-term possibly causing some temporary consolidation. Take care with USDJPY and the cross…

Good trading
Ian Copsey 

Wednesday, March 28, 2012

DAILY ANALYSIS FOR EURJPY


BIAS: While we need to be aware of a sideways consolidation, 110.62 should support for a rally to 112.80

Resistance: 111.25 111.43-59 111.82 112.09
Support: 110.53 110.34 109.80-85 109.40

MAIN ANALYSIS: The rally stalled 1 point above the low of the 111.24-59 projection area that then corrected lower to just below 109.75 but should not get lower than 110.36-53. It has already done enough to satisfy this correction so expect the upside to develop once again. I feel this is more likely to reverse higher to move back close to the 111.25 high and probably the 111.43-59 area for a pullback and then extend to the 112.80 projection target. This should provoke a much stronger correction lower.

COUNTER ANALYSIS: There is just one possible alternative that could see this correction hang around for a little more, still remaining above 110.34-53 but probably holding below the 111.25-59 area for a recycling back to 110.34-53 again. This would still imply an eventual rally to 112.80. 
Only directly below 110.30 would concern and suggest a decline down to the 109.80 pivot support at least. Also be aware of the 109.40 support - below here would provoke further slippage.

Good trading
Ian Copsey

Today should see the Dollar extend losses a bit further


With some minor glitches yesterday went close to expectation, the glitch being the marginal new lows while the overall deeper correction then ensued. Indeed, it looks like reaching the target correction areas early in Asia that should cap for the Dollar downside to resume. Having said that, I can’t see the follow-through being excessive at this point and more likely, once the new lows have been seen we can probably expect a deeper correction that should last into Friday at least I would think.

This still leaves the medium term structure as bearish and for the next leg lower to develop next week so best take advantage of the pullback to provide better selling levels – certainly against the Europeans that still have some way to go to their final targets.

USDJPY is a different kettle of fish. It has been a bit difficult trying to judge the structure of the recovery from the 81.97 low and just how far this can get. It is in a particular ambiguous structure that permits a variety of alternatives including a retest of the 84.17 high. It could even edge even higher and recycle. It could just cap below 84.09-17 and make a deeper foray lower. Perhaps the controlling factor is EURJPY. This reached its 111.24 intermediate target yesterday. However, the pullback is expected to be shallow and for the upside to extend. It’ll only be at the higher projection target that we can expect a longer lasting correction. This could well be controlled by EURUSD, may need some help from USDJPY, but I’m getting the impression that we could see a retest of the 84.17 high at some point. The “love triangle” here should be a core indicator to how USDJPY develops…

AUDUSD stalled just a touch short of the 1.0560-80 target range and has corrected lower. This has helped to solidify the structure. Like the Europeans the downside is limited and we should see the Aussie resume its rally quite soon.

In summary, there’s little Dollar upside left this morning in Asia and thus look for another drop in the Dollar.

Good trading
Ian Copsey 

Tuesday, March 27, 2012

WEEKLY OUTLOOK FOR EURUSD

DAILY STRUCTURE



26th March:

If I have counted the shorter term structure correctily I may well have to adjust the final target lower. Therefore, follow the intraday comments to ensure they develop as expected. We should now allow for a lower target in Wave ^E at the 41.4% projection at 1.3892 which is just a little below the 105.6% projection in Wave (c). 

In case this extends more robustly then retain the possibility of seeing 1.4150.



INTRADAY STRUCTURE


26th March:

If I am right in calling the 1.3293 high as Wave -a- (and it does seem to be a good fit in terms of ratios) then to achieve the original 261.8% projection in Wave -iii- at 1.3871 it would require a Wave -c- of 105.6%... That's not somethiing I'd like to rely on and therefore suggest a shorter 176.4%-198.4% projection between 1.3630-1.3692. This would then trigger a pullback in Wave -iv- that would allow a normal Wave -v- projection to reach the 1.3892-14 area. 

Only a recycling back to the Wave -ii- low would provide the potential for stronger gains to the original 1.4150 target.

27th March:

From the developments seen overnight this still could well reach the original Wave ^E projection at 1.4150. This will require a rally in Wave -iii- to the 261.8% projection at 1.3871.

Good trading
Ian Copsey





DAILY FORECAST FOR AUDUSD


BIAS: While 1.0490 supports I feel this can progress to 1.0560-80

Resistance: 1.0545 1.0560-80 1.0600-05 1.0636
Support: 1.0490-06 1.0458-65 1.0426-38 1.0410

MAIN ANALYSIS: The areas I outlined to look for a base - between 1.0390-25 - and resistance  - at 1.0526-55 - seemed to work well. I don't think this has completed the current intermediate move higher but the first thing we should see is a pullback to the 1.0490-60 area from where a further rally towards 1.0545, but this time a shallower correction and then to 1.0560-80. Expect a deeper correction from there.

COUNTER ANALYSIS: Only back below 1.0480 would risk deeper losses to 1.0435-55 before the uptrend resumes.
Only directly above 1.0590 would retest the 1.0636 high. Also note the corrective high at 1.0669…

Good trading
Ian Copsey

A correction seems due at this point but overall the Dollar remains weak


Yesterday was broadly as planned. The initial mini-recycling was a little deeper than anticipated but overall the reaction in sending the Dollar to new lows in this particular move is smack in line with the way I have been expecting. The structure hasn’t been plain sailing with some fairly direct wave-commencements that have made identification of the initial foundations quite tough. However, the losses continue to encourage and this should be seen as the underlying direction for the coming two weeks I would estimate, perhaps a little more.

As we start the Asian session it does look as if we shall see a modest pullback. At this point I think it unlikely to be a short & sharp correction, even if that’s not the normal manner of trading in Asia, but more a factor of the direct wave commencement with a very brief correction that tends to point to a longer, deeper and normally more complex pullback. Thus, make sure that we see this type of move and be aware of the expected retracement limits.

One currency I am still puzzling over is USDJPY. Yes, I do still think it’s in a bigger correction lower. However, the EURJPY cross has still some way to go on the upside and this tends to argue against seeing much weakness in USDJPY. I do think EURJPY should see a pullback but the depth is not 100% clear. I suspect it will be deep but this is not in the same area of the structure as EURUSD or USDJPY and therefore we’re going to have to watch this carefully. Overall this cross is bullish so I still favor looking for finding better buying areas.

In summary, the first half of the day could well be taken up with navigating the deeper Dollar corrections but by the second half the general Dollar weakness should begin to develop once again.

Good trading
Ian Copsey