Tuesday, July 31, 2012

Planning the rally…


As expected, it wasn’t a stunning day yesterday but it was a rather workmanlike performance by the Dollar to achieve a few objectives I suggested would be required to raise the risk that the Dollar will resume its uptrend. I made mention of 4-hour price equilibrium that needed to flatten out before any significant Dollar gains could be seen against the Europeans. Well, that job was done. We also saw mild penetration back above the equilibrium zone although not to the point of cleanly breaking above. Thus, there remains the risk that we’ll see a correction lower but I can’t see it being too deep. Even AUDUSD is approaching a point where a deeper correction seems to be needed before pushing higher to its consolidation target.

Another point applicable to EURUSD and USDCHF is the fact that both saw the Dollar rally to above the last swing high that raises the probability that we’ve seen a swing reversal from its lows and thus the upside has greater potential overall. That GBPUSD didn’t quite manage the same doesn’t appear to be too critical. This is promising (but hasn’t confirmed) a head & shoulders and additionally there ideally should be limited upward correction before that breaks down. Indeed, this is rather confirmed by the 4-hour price equilibrium area that is now sitting on just below price so it should be difficult to see too much downside in the Dollar and a much stronger chance of a more sustainable follow-through later in the day.

Timing is going to be interesting. I bring this up as I called for the highs in U.S. equities yesterday but only for a minor correction. This market still has a new high to come but the confirming point is that once seen we should see healthy losses in equities also. The point that I wish to make however, is that we may find the Dollar moving sideways to lower into the N.A. session to allow the Indices to make their required new high…

USDJPY failed to move as high as I’d looked for and instead broke below critical support and has moved down towards the 77.94 low. When this pair moves into slow motion it’s very tough to be too precise as the noise in the development does make it difficult to be totally certain. However, EURJPY mimicked EURUSD in terms of breaking the last swing low and having done enough on the upward leg to satisfy a correction the clear indication is for losses to resume. I can’t help feel that USDJPY will be dragged down in its wake.

In summary, the common theme across all markets, including equities, is for a generally lackluster first half of the day, maybe extending into the N.A. session but the key is to watch for Dollar bullish signals…

Good trading
Ian Copsey 

Monday, July 30, 2012

DAILY FORECAST FOR EURJPY


BIAS: There appears to be more risk of a minor new high before reversing lower…

Resistance: 96.79 97.33 97.75 98.38
Support: 96.41 96.04 95.64 95.10

MAIN ANALYSIS: Friday's pullback lower wasn't as deep as expected, stalling at 95.64 and then rallying to a new high at 97.33. The key support for any reversal is at 95.64 and while this holds I feel there is more risk of gains extending above 97.33 to 97.75 at least. Also note the 98.38 retracement resistance. I feel that as price edges to new highs we should be looking for bearish trade set ups / bearish reversal patterns in the general 98.38 area. 

COUNTER ANALYSIS: Only a direct loss of 95.64 would suggest more direct losses through 95.10 and the 94.66 corrective low towards the 94.11 low…. 

MEDIUM TERM ANALYSIS:
27th July: The downtrend very clearly broke down. However, I feel it is only a matter of time that it will resume but in the meantime we may have to allow for this correction to deepen to the 97.75-98.38 retracement area. Allow for 98.96. However, once seen the downside targets remain intact and 92.75 and later 90.14...

Kind regards
Ian Copsey

Close to completion?


There were just too many permutations on Friday. I had the impression it could recycle and that clearly didn’t happen. However, Friday’s development has almost certainly taken out the recycling option and implies the risk of a resumption of the Dollar uptrend resuming. So we’re now (probably) left with just two options really – direct resumption of the uptrend or a minor new corrective low before the uptrend resumes. So which will it be? To be honest we’re going to have to be aware of the alternatives and perhaps look for some signs. There are hourly bullish divergences developing and the Dollar resistance levels are not a million miles away. However, it is still possible that they’ll still allow a minor new low.

Looking more specifically at currency pairs, for a start the Aussie still seems to still need to push higher but less directly. Here the risk is for a more choppy push to fresh highs seeing swings in both directions before the high should be in place. GBPUSD is touch and go. Even if it moves to new highs above 1.5777 I can’t see it extending too far.

Another influence that I feel will avoid direct resumption of Dollar gains in the first half of the day at least is the falling 4-hour price equilibrium along with hourly price equilibrium that is sitting right below current Dollar levels… In particular the 4-hour equilibrium zone needs to flatten out before there can be any penetration to trigger the resumption of the Dollar upside.

The above really covers Dollar-Europe and Aussie. When it comes to USDJPY the upside progress has been constructive. I still tend to prefer the upside extending although still within the boundaries of a correction and this does seem to fit better with EURJPY. The cross also made further upside progress but is not a million pips away from key resistance levels. When viewed along with Dollar-Europe the general the general outline I have given above tends to integrate with each other.

Thus, the general approach should be cautious for the first half of the day, observing the developments between Dollar-Europe and Dollar-Yen and then attempt to coordinate the results to identify the resumption of the Dollar rally.

Have a profitable week
Ian Copsey 

Friday, July 27, 2012

DAILY FORECAST FOR GBPUSD


BIAS: Slightly mixed - perhaps more aligned to the downside today

Resistance: 1.5697 1.5723-37 1.5755 1.5777
Support: 1.5663 1.5644 1.5619 1.5591

MAIN ANALYSIS: As with the other Europeans the key resistance here broke at 1.5566-82 and just shot higher to reach 1.5723. This is a bit more difficult to fit into a structure that's possible in EUR & CHF but if I have any preference then it's for a ragged decline down to the 1.5550-70 area. From here I could envisage a rally back to above yesterday's highs and indeed the 1.5777 high... 
COUNTER ANALYSIS: Any direct rally above 1.5737 and 1.5777 would risk direct extension to 1.5873 at least. Also note additional projections at 1.5906 and 1.5957. 

MEDIUM TERM ANALYSIS:
27th July:  With yesterday's sharp rally the entire bearish structure is so warped that I have to doubt it and feel that we may have seen a triangle develop but with just one more down-leg to come to 1.5550-70 before heading  higher to above 1.5777 and to 1.5873 minimum and possibly as high as 1.5906 or 1.5957. Once seen that should complete a deeper correction and the downside can once again develop.

Good trading
Ian Copsey

Correction or reversal?


Well, yesterday was an unmitigated disaster…  Very clearly I had been lulled into a false sense of security, the Dollar having developed very closely to expectations, only to see it reverse back lower and at such a pace it left no time to pause and consider…

So, what does it mean? Is it in a corrective phase or has it reversed totally?

Having reworked the recent rallies I can only still see this as a correction. Has it completed? Well, that’s always a difficult question to answer given that corrections can come in all shapes and sizes, can be very direct or can be so complicated I lose more of my hair on each occasion. That it has stalled and suddenly moved in a log tapering sideways line is not very helpful. However, I have a feeling that it hasn’t finished and this is partly due to GBPUSD and AUDUSD that have taken on a rather unusual course that seems to point them both higher… but not in a straight line.

That raises the chance of complex corrections in EURUSD and USDCHF – possibly flat corrections – and thus the potential for a retest of the week’s Dollar highs and a recycling. Certainly, in terms of how this will fit into the next Dollar bullish projection levels I’d prefer slightly levels for the correction so that the intermediate projections are in alignment to the larger projections. Along with what I perceive to be a risk of higher GBPUSD and AUDUSD it does tend to point to a complex correction and hence the potential for a flat.

I have had to make the same adjustments to EURJPY and feel this requires a deeper upside correction, Again, working with the assumption that GBPUSD and AUDUSD may require a higher high this tends to suggest that we could see the strength in USDJPY that would keep EURJPY supported should EURUSD decide to retest the 1.2042 low…

I should add a note that the main reason I had felt we were already on the way higher in the Dollar was down to the projection levels of the next larger rally. While yesterday's moves don't really change the projections materially in USDCHF the potentially ironic consequence of yesterday's correction appears to suggest potential for an even deeper target in EURUSD...

Thus, I feel that we need a little more development to provide a stronger picture of what’s happening and as such we need to watch initial trading closely to identify what it wants to do…

Have a great weekend
Ian Copsey 

Thursday, July 26, 2012

Recycling seen… Dollar gains should now follow…


Recycling ruled the day yesterday – evident in the three Europeans and also EURJPY. Therefore, being complete the next risk is logically a resumption of the Dollar uptrend. The end of yesterday’s trading has tended to taper off into a flat sideways move just above yesterday’s Dollar lows and that hardly generates confidence at the start of Asian trading. Could there be a marginal new low? Well, from a retracement ratio point of view, yes there could be but frankly there’s only a slim margin before the potential for a deeper correction lower and a slight change in structure develops. All I can say is that the sooner this rally gets under way, the easier I’ll get back to sleep…

This Dollar bullish outlook appears to be the same across all Europeans, EURJPY and AUDUSD so unless some other mysterious and inscrutable influence is entering the fray this remains the underlying outlook. The coming rally promises to be steady, if not robust, with still a long way to go before any serious correction.

USDJPY had a very lackluster day, clearly lacking in any direction. I would normally look for it to move lower along with EURJPY but I sense the general downside impetus is slowing quite considerably and even feel that the call for a deeper correction higher is still a viable option. Equally, EURJPY is homing on a target I suggested back at the end of June but as we get closer to target the room for more frequent corrections rises. However, the main direction in USDJPY is lower… don’t fight it if the 77.94 low breaks…

Thus, maintain a Dollar bullish outlook… today should see new highs…

Good trading
Ian Copsey

Wednesday, July 25, 2012

DAILY FORECAST FOR USDJPY


BIAS: Quite balanced but would prefer to see a deeper correction higher…

Resistance: 78.30 78.46 78.64 78.95-12
Support: 78.10 77.94-00 77.80 77.66

MAIN ANALYSIS: Yesterday saw a long drift lower but without too much power and having reviewed the structure later in the day I feel that a move higher would be better to balance the structure. This will need a break above the 78.30 high to extend gains to around 78.64 for a minor correction before heading to the 78.95-12 area.. I expect this to cap and trigger losses back below 77.94.

COUNTER ANALYSIS: Any earlier break below 77.90 would extend losses to the 77.66 low with stronger targets at 77.44 (favored) and at most 77.08 before a correction of around 40 points. Also note projections at 76.84 & 76.48 and what I feel may provide the final low at 76.19.

MEDIUM TERM ANALYSIS:
24th July: Although the short term has become a bit complicated I still tend to favor losses to 77.44-66 and possibly 77.08 for a correction and later down to the 76.03-20 area. Ideally this should hold and cause a reversal higher.

Only directly above 79.25 would risk an earlier reversal higher  - initially to 80.09 and 80.62...

Good trading
Ian Copsey

Finely Balanced


The day was predominantly a sideways ranging day until North America came to the table and pushed the Dollar higher again. It hasn’t exactly taken off and actually stalled at areas where it would allow a recycling back to yesterday’s lows so we can’t say that the underlying rally has resumed. Add to that the Dollar bearish divergences in the hourly charts of EURUSD and USDCHF and it adds a tantalizing balance between further gains versus a recycling. 4-hour price equilibrium continues to rise but could still absorb a recycling so there’s a fine balance between bullish and bearish as we start the day.

Any other clues or pointers? Well, I reckon EURJPY is due a limited correction. However, it is really very limited but also has the potential for a shallow sideways consolidation (alternating with a deep and sharp correction earlier in the sequence) and thus there is an indication that we’re going to see a quiet day today…

Well, that does appear to point to a fairly dull day. However, do note that there is a fine line before the Dollar upside is triggered and only a few points above yesterday’s Dollar highs. Therefore don’t fight any strength since, when it occurs the impact could be quite substantial. With the correction over the past day being relatively shallow it does tend to point to deeper projection areas being targeted and I can’t see this being a slow, grinding move.

USDJPY had a lackluster day. I have a stronger feeling that we’ll see it strengthen today and if the Dollar rallies against Europe then a stronger USDJPY could well keep EURJPY under check for a while. It should be noted though, that the cross still has much further to go on the downside also…

In summary, take care and be prepared for a quiet day unless the Dollar pushes through the upside barrier and then don’t fight the rally…

Good trading
Ian Copsey