Friday, August 31, 2012

Third time lucky… or not...?


The market had a rush of blood to the head on Tuesday and then bottled it. I’ve been looking for this final dip in the Dollar for the past two days and had those calls fall flat. The market really does need to make a decision now… The structure from Tuesday’s Dollar lows don’t allow for an extended sideways consolidation so it does seem like it’s now or never… I even took time to see if the lows were seen but I can’t see a good impulsive structure within the strength seen on top of which the situation with GBPUSD doesn’t seem to fit into the picture. Thus, I’m sticking with the call for a new Dollar low. Nothing outrageous or extravagant. It could even be a break by just one point, although I do feel it will be by a bit more… Once it has been seen it should complete the sequence and generate a more substantial reversal.

GBPUSD performed close to expectations and appears to be back on its hind foot. There’s no change to its own requirement for a new high and involve a deeper correction in EUR and CHF but I suspect that will have to develop next week. That event should not see new Dollar lows in the continentals or the Dollar Index as described yesterday. Thus, GBPUSD should also extend losses into the first half of next week.

Now, there is one anomaly, that being EURJPY… It dropped again yesterday without having made a new corrective high. Unless I have totally misread EURUSD then yesterday’s decline has raised a smelly red herring. I am bearish for the cross overall so unless EURUSD just plummets directly, and with USDJPY seemingly requiring a firmer push higher, I have to raise the warning bell on not a simple deep correction that should remain below 99.18 but a firmer follow-through and reversal… This is going to require some care now…

Thus, I still look for the Dollar to make marginal new lows against the continental Europeans but the EURJPY and GBPUSD outlooks appear to be generating some conflict but which should be resolved within their own respective structures.


Have a great weekend
Ian Copsey 

Thursday, August 30, 2012

DAILY FORECAST FOR EURJPY


BIAS: We should see the 98.90-18 area cap for losses to resume more strongly

Resistance: 98.96 99.18 99.78 100.34
Support: 98.37 97.88 97.40 96.95

MAIN ANALYSIS: The deeper correction to 98.37 was a surprise but appears to be just that, a deeper correction. Thus, I still feel the risk is higher for one final rally to around 98.90-00 from where I feel a total reversal should be expected. Yesterday's 98.37 low may hold initially but once broken should then proceed down to 97.88 and 97.40... Once this lower support breaks the risk of further losses becomes much stronger.  

COUNTER ANALYSIS: While I find this more and more unlikely, any break above 99.18 could extend the correction to 99.78 but this is as far as price can go without suggesting further gains…

MEDIUM TERM ANALYSIS:
23rd August:  The drop in USDJPY settled the battle and should keep this on a downward track. Unless we get EURUSD pushing strongly higher while USDJPY consolidates the main risk does seem lower. Thus, if the upside does break higher then the 99.30-78 area should be the most we see. However, the evidence is slightly stronger on the downside as I can't see USDJPY holding up for too long before the next leg lower - below 97.40 would extend to 95.71. For further medium term downside targets please subscribe.

Good trading
Ian Copsey

That Dollar low that should have been… should be today…


Arrrgghh… Tricked by a simple wriggle that seemed to point to a shallow correction… Instead we saw deeper corrections across EURUSD, USDCHF and EURJPY… It’s the latter that cannot take any further deeper correction that suggests to me that we’ll see follow-through today. That and the Dollar Index which should make a new low today also. Further along the Dollar Index is probably worth watching as theoretically this low should not be broken. It can see a deep correction and retest the low we should see today but otherwise I think we’re just about done on the downside there.  

Well, that tends to make life just a little more complicated given that I feel there is a risk of a new Dollar low against the Pound. Yesterday I had warned of the potential for the Euro and Swissie to possibly do the same but this would risk a lower Dollar Index. The only alternative I can think of is that we see a stronger reversal in the continentals but shallow in the Pound followed by a deep correction only in the continentals while the Pound makes a (probable) minor new high… Anyway, this love triangle + 1 is something to keep tracking for a while…

Perhaps even USDJPY and EURJPY add to the mystery. The Cross made a very deep pullback yesterday but I still feel needs to make a final high before it reverses lower. Logical as long as the continental Europeans make new Dollar lows… However, the prospect then is for losses and while USDJPY made yet another push higher I can’t see this as anything but corrective so any stronger losses will also provide a minor drag on any reversal higher in the Dollar Index. Perhaps the

Just for today what I want to see is basically the same as yesterday… a final blip lower in the Dollar before a larger reversal. At that time we can then see how the Pound fares as it does appear to be the odd one out…


Good trading
Ian Copsey 

Wednesday, August 29, 2012

Still puzzles to be solved but we should see a Dollar low today


The core analysis was correct yesterday although there were a few blips here and there that confused within the individual currency pairs involved. Dealing with the Europeans first, the Dollar highs seen were in the right place and followed by a solid resumption of the decline to stall just above the recent lows (in the continentals at least.) EURUSD and USDCHF appear to be following the appropriate structure and while there is a risk of initial sideways consolidation the final leg lower should develop in the European morning session at least.

Now, this is where it gets a bit more complicated. The recovery in GBPUSD was as limp as a dishrag… However, I can’t see that it has completed the larger correction higher. Clearly this needs to be resolved and either by a sudden rush of blood to the head that takes it higher to target or something else is afoot. The rally in the continentals from last month’s Dollar highs has developed in what could be considered a completed corrective structure – or will from the new low I am expecting today. However, as far as corrective structures go there is room for one more 3-wave move after which no more 3-wave moves are “allowed.” This is beginning to ring in my ears when considering GBPUSD. Thus, all is not necessarily straight-forward.

Now, this has a knock on impact on EURJPY. Yesterday’s developments including the minor new low and recycling (that I pointed out as a possibility yesterday) worked quite well. There still seems to be room for one more minor push higher but that should remain below the 99.18 high. Thus, the only thing it can do is drop… This could be catered for by USDJPY that does seem as if it is pointing to a larger decline, and probably echoed by the expected reversal lower in EURUSD – whether that be a total reversal or just a correction. The question then is how the balance between USDJPY, EURUSD and EURJPY develops… At least, for now we can at least expect losses by the end of the day.

Thus, the day’s outlook appears to be fairly clear in terms of the Dollar rallying later today that should keep EURJPY on the downside. However, it’s the next few days that we need to watch for any shenanigans…


Good trading
Ian Copsey

Tuesday, August 28, 2012

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WEEKLY OUTLOOK FOR AUDUSD

DAILY STRUCTURE


28th August:

The Wave ^d is now confirmed at 1.0613 and thus overall we should continue to see losses in Wave ^e. The first ABC looks like stalling towards the lower half of the span of the last Wave b - around 1.0200-40 in Wave c. In terms of correlating this with the Dollar in general I wonder whether we should be expecting a complex Wave x. That needs to be assessed as the decline continues but overall I still have a lower Wave ^e target.



INTRADAY STRUCTURE



28th August:

I had been assuming that Wave ^e would develop as a zigzag but very clearly we're going to see a combination. We saw an initial Wave (a) at 1.0410 and flat correction to the 66.7% retracement in Wave (b) at 1.0545. From there we are in the process of seeing an 5-wave decline and later today we should see the 198.4% projection in Wave -iii- at 1.0307. With Wave -ii- at 38.2% we could get close to a 50% retracement in Wave -iv- ahead of losses in Wave -v- that look like reaching the 58.6% - 76.4% projection in Wave -v- at 1.0264 - or as deep as 1.0216. These also represent the 138.2% - 161.8% projection in Wave (c). Once seen we can expect a pullback higher. 

Good trading
Ian Copsey



Initially more of the same but overall working towards a Dollar low


It seems we saw the languid conditions I feared although the outcome does appear a little different than I had considered yesterday. Having said that it’s not a drastic difference but more one that suggests some minor new corrective highs in the Dollar before the current decline in the Dollar resumes. We’re probably still a day or three (depending on how energetic the market is during these final days in August) away from what I think will be a more crucial and longer lasting Dollar low that should spurn the resumption of the daily uptrend.

However, before getting too excited about the prospect of a stronger daily trending move we need to navigate the final stages of this daily correction. The prospects are for a dribble higher over the first half of the day and I suspect we should see a reversal, probably in U.S. trading to begin the final legs in the move from 1.2041 EURUSD and 0.9771 USDCHF. This general expectation appears to be echoed in GBPUSD. Probably the Pound is the more difficult to judge in terms of its upside potential. Yes, it is a larger retracement and we can look at standard retracement ratios but this has the potential to stall in-between levels and thus we’re going to have to wait for the last leg to fine-tune the target through common ratios.

I have a feeling we may see the Aussie recycling but not by too far.

USDJPY has remained as elusive as ever. Probably the stronger guide we can use is the cross – EURJPY – although this looks like being a rather rough guide given the recent erratic nature of its development. I suspect it should edge higher eventually but still remain below the 99.18 high. The problem in between is the depth of any pullback lower and by how far, whether it can expand then recycle higher or even just drop straight down. The latter will require USDJPY to lead the way but it’s not my favored alternative. Thus, the cross is probably best left alone and instead used as a barometer to the balance between USDJPY and EURUSD but with the underlying expectation for the cross to resume losses before too long.

Thus, another cagey day initially at least, but watch out for the Dollar to resume the current daily bearish correction.


Good trading
Ian Copsey 

Monday, August 27, 2012

Caution as we start the week


Friday didn’t produce the follow-through in the Dollar as expected. In terms of the structural sequence I have seen the correction higher in the Dollar has been rather on the high side against the continental Europeans but perhaps ironically not enough for the Pound. I had mentioned last week that I felt there was a slight mismatch in the structures between the two groups so the correction appears to have leveled the filed somewhat except the manner of the Dollar losses now required in each group are also different, potentially even the degree of extension also. This tends to point to the potential for the market to begin developing a more cautious approach to any further Dollar losses that now appear to have closer targets than I had originally considered.

What about the possibility of a direct reversal higher in the Dollar? Well never say never, but I feel the picture across Forex, U.S. equities and even precious metals even supports this overall expectation of one more Dollar low. However, even within these inter market correlations there appears to be room for some initial jiggery-pokery that could provide some challenging conditions before this settles down.

I’ll also add that I can’t see that we’ve seen any strong indications of an immediate reversal in the Dollar. What I can say is that price has begin to cling quite closely to hourly and 4-hour price equilibrium that could have potential to provoke some range trading. Hence my slightly more cautious approach to these final stages in what I feel is just a daily correction.

USDJPY has refused to budge from the last few days’ consolidation. I would much prefer for the downside to resume but this rising consolidation does bring with it the risk of a deeper correction or consolidation. I do find it difficult to consider a much stronger rally at this point so any further strength should be treated with care. The pullback we have seen already has already dented the maximum downside projection so we’re going to have to employ some care at this point. While the losses seen in EURJPY have been encouraging it still hasn’t reached the point where I can say the expected downside can develop. The way this has built up is actually suggestive of the eventual break lower developing in quite an aggressive decline. Thus the balance between EURUSD and USDJPY becomes even more critical.

Start the week with caution. Be aware of the preference for one more Dollar low but within the overall structure of the need for the Dollar to soon resume its larger downtrend.

Have a profitable week
Ian Copsey