Friday, June 29, 2012

DAILY FORECAST FOR USDCHF


BIAS: I suspect a blip higher before a correction

Resistance: 0.9678 0.9704-20 0.9742 0.9768
Support: 0.9637 0.9619 0.9584-90 0.9543-50

MAIN ANALYSIS: While yesterday provided some early confusion this finally confirmed its intentions to move higher. There seems to be early risk of consolidation between 0.9645-70, the upper end of this small range being hit first followed by a pullback, before the upside extends to 0.9704 minimum and possibly 0.9720. From here we should expect a correction that should move back lower into the broad consolidation and I suspect the 0.9635-55 area should hold to trigger the next larger rally to 0.9768 but only for a small correction of around 25-35 points before heading higher to the low/mid 0.98's.

COUNTER ANALYSIS: Any earlier break below 0.9635 would risk a recycling back to the 0.9584-90 area before the next leg higher develops. Below 0.9574 would concern and suggest extension to 0.9543-50 at least and note the pivot support at 0.9495.

MEDIUM TERM ANALYSIS:
29th June:  The last couple of days provided more erratic development than expected but this looks to have settled and we should now see the upside extend beyond 0.9725 (after a correction) and to 0.9768 and then the low-mid 0.98's from where we should see a deeper correction. Overall the next larger target should be around the 1.0208 area and later to 1.0305.

Only back below 0.9580 and 0.9543-50 would see the 0.9495 pivot support. If that breaks then I'll need to review once again as this could imply a break of the uptrend.

Good trading
Ian Copsey

The Dollar is beginning to crank up the pressure


After the brief period of ambiguity over the past couple of days, the structures in EURUSD and USDCHF providing a rather confusing picture, yesterday’s rally has generated some positive encouragement and all round I’m seeing stronger evidence of this rally extending. It hasn’t quite been as direct as I had hoped and there could still be a trick or two up its sleeve to delay the process but I remain very positive for the Dollar and once it gets the bit between its teeth we should see some solid gains running through next week.

Could that process begin today? Maybe… There’s a minor risk of a recycling should the market decide to be perverse but I do feel it’s a minor risk. However, even my favored view of an extension higher in the first part of today should find a barrier and generate a correction. Quite how complex this correction decides to develop will have a major bearing on whether the Dollar begins to commence the strong push. Whichever eventuates the key is to spot the Dollar buying levels…

The one exception may well be USDJPY. It’s not set in stone but has set up the potential for a recycling higher. However, the more and more that this price pair fails to take advantage of the general Dollar bullishness the risk of deeper losses increases. This outlook also appears to be favored by the gradual whittling away of support in EURJPY. Before long this cross should find the support just too weak to even provide much in the way of bullish corrections and in turn will risk USDJPY being dragged down into the mire. I’ll add that I am most definitely a USDJPY bull in the long term but until we begin to see more sustained gains this insidious undermining of support seems set to continue.

In summary, there is still potential for today to be challenging but be aware of the Dollar ratcheting up the bullish pressure…

Have a great weekend
Ian Copsey 

Thursday, June 28, 2012

Unconvincing


Dollar gains were seen across the four majors as expected… but were the gains in line with the development that should have been seen? Now that’s a different issue… Certainly the gains weren’t uniform across the Europeans and virtually non-existent against the Aussie. Where we saw most progress was against the Pound but it wasn’t a straightforward move but one I can work with. The biggest problem arose in EURUSD and USDCHF. Yes, both saw the Dollar scramble higher in quite an erratic manner. I could make out a possible positive structure but neither of them could be considered convincing which really does leave the structure in the balance and possibly even between a rock and a hard place.

Does this mean the Dollar gains I had expected have failed? At this point there isn’t enough evidence but it’ll certainly be something to hold in reserve. If I look at AUDUSD there’s nothing to suggest the downside has broken down and is still more likely just seeing a deeper correction. Actually, as I mentioned yesterday, I would like to see EURJPY correct a little deeper. Of course this could be driven by USDJPY that made some conservatively positive gains yesterday, nothing to get too excited about, but positive nevertheless.

So… particularly in EURUSD and USDCHF, we’re going to have to tread carefully. I still have a Dollar bullish preference and one that I would prefer to see develop firmly ahead of today’s NY open, mainly because the U.S. equities stretched their own correction higher and to a point where I would prefer not to see any more. Equally, what is also needed is for the Dollar to push to new highs above Tuesday’s highs. That would begin to look a lot more constructive…

As long as this develops I’ll remain with the outlook for some solid Dollar gains. Until it does then we’re still going to need a healthy dollop of care before committing to increasing exposures…

Good trading
Ian Copsey 

Wednesday, June 27, 2012

DAILY FORECAST FOR EURJPY


BIAS: I'd prefer a pullback higher but see the main risk as lower…

Resistance: 99.45 99.93 100.18-43 100.78
Support: 98.74 98.24 97.59 97.03

MAIN ANALYSIS: While we saw some minor gains these came to a halt at 99.88 and price then proceeded to dip to 98.74. This development is causing me to feel that we're on the brink of some stronger losses. There is a minor risk that we could see a slight deepening of the correction to 99.85-100.20 (max 100.43) but either from there - or a break below 98.75 - I sense a growing bearish pressure that should extend down through 98.24 and 97.59 to the 97.03 low at least. Take care around here as it could provide a correction. However, overall I am more aligned to a retest of the 95.58 low.

COUNTER ANALYSIS: Only a break back above 100.50-70 would take price back from the brink and suggest further choppy consolidation. Note the 100.78 and 101.22 corrective highs ahead of the 101.62 high.


MEDIUM TERM OUTLOOK:

27th June: The way price developed yesterday provides a potentially ominous bearish outlook. While any correction remains below 99.93-100.43 the downside risk remains strong for a retest of the 95.58 low and eventually I have a target at 90.14… On the way I suspect a temporary base somewhere between the 91.25-92.25 area. 

Only back above 101.50-70 and the 101.62 high would break the bearish outlook.

Good trading
Ian Copsey

That correction was about as shallow as you can get…


The day started all nice and comfortable, the Dollar edging lower in a correction, but then rushed higher, flapping its wings, before reversing back lower. There are two ways to count this move… Either we’ve had the first leg of a new rally and completed the correction or; we are seeing a very deep recycling that could reach back to yesterday’s lows… If I have any preference between the two I feel it’s the first of the two alternatives because GBPUSD looks as if it has completed its correction.

However, either way, the final result will still be Dollar gains…

One thing I will point out is that once the Dollar resumes its uptrend the signals I am getting are very bullish. This is down to the deeper corrections we saw earlier that will imply that the latter corrections will be shallower. (For non-Elliotticians … and actually traditional Elliotticians – this is down to an observation that Wave 2 and Wave 4 alternate in complexity and in Harmonic Elliott Wave in depth which is something not considered in the traditional version.) Thus, the rally should be quite a sight to behold…

Next, USDJPY… edged lower again. Will it go lower? Well, it’s at one of those points where it could be argued from both perspectives. I have to say that yesterday’s developments in EURJPY do tend to point to a stronger follow-through lower so a negative impact on USDJPY is something we need to acknowledge. However, at this point there is nothing confirmed in either direction and I think we should approach this with due care and ensure that we understand where the levels are that will trigger follow-through in either direction.

Thus, for today treat the early hours with care until the European situation is clarified and also how USDJPY performs…The final result should be Dollar bullish against the Europeans…

Good trading
Ian Copsey 

Tuesday, June 26, 2012

Well, NOW the Dollar should correct lower…


Yesterday was “market slow motion day”. I’d warned of marginal new highs and these hit the targets I laid out yesterday perfectly in the Europeans. However, the correction made it look like the market was wearing lead boots… I think they’re still trying to even get the first foot off the ground…

First of all, I do feel the correction will deepen. However, there are some signs from other Forex pairs and also the U.S. Indices that suggest the correction may not bite as deeply as I had considered. In particular the losses in AUDUSD seem to lead the way and appear to suggest the 1.0077 high actually completed the correction there. Thus the downside is vulnerable, not that it rules out a correction to yesterday’s decline.  Looking at the U.S. Indices where I had also expected a deeper correction the dreary conditions in Forex, with the additional Dollar gains taking so long, made Friday’s correction look like complete.

USDJPY made a half-hearted attempt at extending gains yesterday but the limited will power saw price collapse. Clearly it wasn’t exactly as expected but did reflect the underlying risk. As long as we don’t see any lower we should see gains today and the question will be whether these will be direct and strong or whether it will lapse into a sideways trading range for a day or three. I tend to favor direct resumption of the uptrend but we’ll need to keep a close eye on EURJPY that does look rather vulnerable, but has possible close support if this decline happens to be a recycling only. However, this situation does require some care…

Thus, while I do feel we shall see a slightly softer Dollar over today I can’t see this taking much longer or penetrating the downside that much. Thus, the main focus for today should be to identify the Dollar lows and looking for a robust resumption of the uptrend.

Good trading
Ian Copsey 

Monday, June 25, 2012

DAILY FORECAST FOR GBPUSD


BIAS: We should be expecting a pullback higher today…

Resistance: 1.5596-10 1.5634 1.5655-60 1.5674
Support: 1.5557-62 1.5524 1.5498 1.5452

MAIN ANALYSIS: Friday's pullback was a bit deeper than expected, clipping above 1.5610-20 to 1.5634 and it was from there that we saw the move down to 1.5556 but instead of edging lower it stalled and price remains above Friday's low. Whether it can make one more dip is a bit uncertain. While 1.5696-10 caps there is a chance and then we'd have to allow for the 1.5524-30 area (max 1.5498) before the correction higher develops. Directly above 1.5610 would see a recovery to the 1.5634-60 area. I feel this will hold but allow for 1.5674, before the downtrend resumes.

COUNTER ANALYSIS: Any earlier break above 1.561.5680 would risk retesting the 1.5721-33 area and possibly then approach the 1.5777 high...
Directly below 1.5490 would see more direct losses through to 1.5423 and probably 1.5376…

MEDIUM TERM OUTLOOK
22nd June:  Well, cautiously as we are at the early stages, it looks like we have seen a cap and therefore risk the downtrend resuming. This must see the 1.5470 area break (preferably after a pullback from this area today) that should then extend to the 1.5376 area at least. It could even extend to an even stronger projection around 1.5296...

Only back above 1.5660 and 1.5777 would knock the immediate bearishness, potentially just for a deeper correction but I'll cover that only if we see stronger gains over the next day or two.

Good trading
Ian Copsey

Dollar to correct lower today


The week ended on a slow note, but developed very much in line with expectation with the Dollar highs against EUR and CHF both hit within 2 points. That raises the confidence in the next move that should see a minor new Dollar high today but followed by a correction lower.

I’ll focus more on the correction at this point. For those who are Dollar bearish this will be the critical move. As far as I can see it should just be a correction. The bigger uncertainty is just how deep it will be. It just so happens that GBPUSD is in a slightly different position and while the minor new low and correction matches nicely with the other two Europeans the correction shouldn’t be excessive and I think we’ll have to take our cues from GBPUSD.

Should I prove to have gotten this totally wrong then a retest of the Dollar lows will almost certainly see follow-through. I really do not favor this outcome having seen the Asian Indices reach expected retracement areas. U.S. indices could be similar to the Dollar but I really can’t see them breaking to new highs just yet though their time will come.

USDJPY slowed in its rally a bit and has either seen an intermediate high or, probably more likely, see a marginal new high before a correction. This has begun to develop very constructively but as with the Europeans the correction that is due will tell us a lot more. Thus, with the apparent correlation in the Dollar against both Europe and Japan the EURJPY cross still remains within a dangerous and erratic consolidation. Keep clear of this until a stronger break is seen.

Thus, today, concentrate on identifying the Dollar highs and then look for a correction lower.

Have a profitable week
Ian Copsey