Friday, September 28, 2012

DAILY FORECAST FOR GBPUSD


BIAS: There is ambiguity here also and I'm not yet convinced we shall see follow-through higher.. yet…

Resistance: 1.6243-50 1.6265 1.6285-90 1.6309
Support: 1.6216 1.6194 1.6160-73 1.6137

MAIN ANALYSIS: First, I think we saw the final low at 1.6137. The initial foundation of the next move higher has developed but has a slight ambiguity here also in that there is still potential for a recycling lower. The break area that would confirm further follow-through higher is at 1.6243-50 and the 1.6265 corrective high could also play a part in this. Therefore, I'd only begin to feel that we're seeing direct follow-through higher should the 1.6265 level break and then we can expect a push through to the 1.6309 high. I suspect a correction from around here (just above/below will do) with the next push higher then expected to reach the 1.6333-64 at least.

COUNTER ANALYSIS: Failure to break above 1.6243-50 and a break below 1.6216 would raise the risk that we'll see a recycling back to the 1.6061-73 area. This should ideally support for the uptrend to develop as described above though the upper target may be a little lower (corresponding to the dip below 1.6173.) Thus, only below 1.6150 would send this below 1.6137 and into the 1.6070-93 area.

MEDIUM TERM ANALYSIS:
28th September:  It looks like we saw the final low at 1.6137 and while there is a risk of a second dip to the 1.6160-73 area the basic direction should have now changed to bullish and we should now be expecting extension to the 1.6330-70 and the mid 1.64's for a correction and finally towards its higher target. 

Only a break below 1.6137 and then 1.6070 would force a complete rethink once again and I'd estimate to around 1.58-1.59.

Good trading
Ian Copsey

Was that it... or wasn’t it?


Looking at the charts after waking this morning I saw the new low in EURUSD and sharp reversal and thought “ok, the low is in…” and then I started on the analysis. It could have been although it was a very marginal new low, shorter than the normal final leg but something that can occur at a key reversal point. Then I looked at USDCHF that didn’t make a new high and only matched the previous one. That looks more like it needs one more high… Also, counting that as the overall corrective high it only just about made the bare minimum retracement in the overall downtrend. Then I looked at GBPUSD and thought… wait, this seems to be a little strange… AUDUSD, but that seems more likely to be close to a high for a correction…

Having seen all these not-quite-so convincing developments I have begun to take a more balance approach. I won’t totally rule out the potential for the Dollar to have topped out but I feel it needs more development to truly confirm its intentions. I have seen situations on quite a few occasions where what had seemingly been a final stalling point that should spurn a reversal only to see a quick whip to a new extreme and then make the reversal. This situation seems to have that same air of trickiness so I’d rather remain balanced until there are stronger signs of a larger reversal…

Having written about price equilibrium zones and how price often reacts at reversal points, we have seen exactly as I had described. GBPUSD has just managed that so now the 4-hour price equilibrium should now support. In both EUR and CHF price has poked its head below 4-hour Dollar equilibrium but not cleared it. So again there remains an element of doubt.

I do think it’s imminent, maybe even possible directly but it’s not quite time to increase commitments.

USDJPY… still dragging its heels but I do see resolution soon. Both USDJPY and EURJPY are in need of a boost to confirm a reversal higher…

Have a great weekend
Ian Copsey 

Thursday, September 27, 2012

The long and winding road…


I have to say I’m happy that the targets I set for the corrections in EURUSD and USDCHF are close to being achieved but the idiom “patience is a virtue” has made me feel less virtuous… The entire decline from last Friday’s 1.3047 high has been tortuous. Having said that, in terms of the depth of the correction compared to the counterpart correction at the beginning of August we have seen the minimum requirement. Now it’s more a matter of fine-tuning the final stages – or if I’ve made a misjudgment along the way, the break level that will see the Dollar resume losses. The latter is actually very easy to identify. However, yesterday’s penultimate low at 1.2046 was just 2 points below the ideal (and penultimate) projection target I set. From that point of view and also USDCHF, there should still be one final extension higher in the Dollar. Yes, we could actually see the 10-day old retracement targets hit today. Hallelujah!

Interestingly, I recall mentioning in an earlier post that AUDUSD often posts a reversal ahead of the Europeans. I think it made that yesterday just about dead center between the two ideal retracement targets I had set. The 4-hour price equilibrium zones across the board have begun to flatten out and are poised just below current Dollar levels. This often has the impact of maintaining a dull day of range trading before sufficient strength has been mustered to challenge the price equilibrium zones. Already the hourly price equilibrium zones are being tested and should edge below but probably not beyond the 4-hour to permit the final Dollar corrective highs before reversal. Thus, the outlook remains for some dull trading ranges but hopefully some fireworks tomorrow.

What may provide a little more room for a more sizeable move (though don’t get too excited) is USDJPY. The description I gave above on how price reverses through the hourly & 4-hour price equilibrium zones is exactly what occurred yesterday in USDJPY. Price is now beginning a tentative exploration with a view to breaking higher. EURJPY hit what I considered to be the maximum correction level (plus 7 points) and is now testing the hourly price equilibrium zone high. Thus, I feel probability favors a higher USDJPY and its cross though the cross should lag from the continued weakness in EURUSD.

Good trading
Ian Copsey

Wednesday, September 26, 2012

DAILY FORECAST FOR USDCHF


BIAS: While 0.9355-60 supports we should see gains extend to 0.9420-24 and later 0.9456-74

Resistance: 0.9391-98 0.9420-24 0.9443-56 0.9474
Support: 0.9355-60 0.9320 0.9305 0.9284

MAIN ANALYSIS: The more direct route higher failed for a more circuitous one although the 0.9350-60 support did hold. We should now see gains through to 0.9391-98 for a minor correction before extending the the 0.9420-24 projection where a correction of around 30-50 points is possible. Once complete we should then see the final leg higher to the original target between 0.9456-74 (allow for 0.9500.) From there we should see the downtrend resume. 

COUNTER ANALYSIS: Only a break directly above 0.9500-24 would concern and suggest a break of the bearish structure and thus imply additional gains that should approach the peaks around 0.9600-30… There is also pivot resistance around 0.9670.

MEDIUM TERM ANALYSIS:
26th September:  Given the detour to take the scenic route the original 0.9456-74 retracement target is re-instated and should cap before the downtrend resumes to initially retest the 0.9238 low but later to the eventual target. Subscribe to learn the anticipated high.

Only an earlier break back above 0.9500-24 may suggest the final low has been seen and we'd need to be open for further gains.

Good trading
Ian Copsey

Round the houses and all the back streets…


Boy oh boy… There are six downward legs in a full, head-on multiple combination correction (a triple three in Elliott parlance.) Until the 1.2919 low we had seen five of them… This final leg looks like taking the same time as the first five… The twists and turns the market has managed (and quite creatively I have to admit…) have been astonishing… And it’s not over yet. When I sat down this morning I wondered whether we’d just fallen short, perhaps just managed to achieve the minimum possible correction that would balance with the corresponding earlier correction (to add another Elliott term, alternation, that in Harmonic Elliott Wave has a much stronger relationship in terms of combined depth.) However, nope… not yet… I have to say though, that it is a guideline and not rule, but we need the correct structure and on that basis I’m not convinced. No, I still think there’s more to go for the Dollar before it can resume its move lower against all Europeans.

Dare I say again that it should happen today? Perhaps even that depends on what devious route it takes… For now I remain looking for new highs before it tops out and the downtrend resumes.

I took a long, long look at GBPUSD yesterday afternoon also when preparing the weekly reports. That provided a fair few obstacles. Having broken above 1.6301 it had implied strength and thus corresponding with the picture with the Continentals. However, the structure I was considering (complicated by a nasty consolidation at the beginning of August) was pointing to just silly heights that would imply targets close to 2.00 I’d reckon. It would also have meant that while the Continentals were due corrections after the next (anticipated Dollar losses) the Pound would sill just go higher. I feel I have found a potential solution that seems to match the same core pattern of development. The short-term implication also suggests some minor slippage today before the rally resumes.

Finally, USDJPY and EURJPY: well, we’ve reached the sort of area where the cross should begin to bottom out - USDJPY also. Both have “double” bullish divergences (an initial shallower one followed by a second sharper one) that often provides price with a boost. I can’t say there has been a strong bounce and key break areas still need to be overcome but as long as that occurs the bias will turn to the upside…

Good trading
Ian Copsey 

Tuesday, September 25, 2012

Closer to resumption of Dollar losses…


It has been a week since the Dollar bottomed out and the correction has stubbornly taken its time in grinding out its multiple corrective pattern and this last leg looks like lasting almost half the entire recovery. It’s not quite there yet… but I can’t imagine it extending beyond today. In fact we seem to have a convergence of all major currency pairs indicating impending completion. There may be one exception in EURJPY and I have a few doubts about AUDUSD, but overall the underlying implication appears to be that by the end of today and into tomorrow we should begin to see the Dollar resume its underlying downtrend.

In particular, the approximate targets for this correction in EURUSD and USDCHF that I outlined at the beginning of last week should be reached today. The other currency pairs required a little adjustment, in particular EURJPY that broke an earlier support last week but yesterday stalled within 13 points of the adjusted target. I suspect we may still need to be flexible on this point as there’s no clear and obvious reversal indication in USDJPY. However, it wouldn’t take much to confirm but with 4-hour price equilibrium flattening out a short way above current levels the risk of a reversal higher is rising all the time. In the meantime we need to be patient should it choose to remain in a flat sideways consolidation before the recovery commences. It’s for this reason, with EURUSD bearish on the day, that I feel the need for flexibility in EURJPY.

That just about covers the major currencies but I’ll also add that the U.S. equity indices have been moving sideways for the past week also, putting the finishing touches on their consolidation with the view to see further gains. These have been hanging between two potential scenarios, both potentially valid but with quite opposing outcomes. During this period daily momentum has been rising although it could be argued to be provoking bearish divergences but very, very mild ones while intraday momentum has subsided into a general sideways mess. While being aware of the bearish alternative, the upside does seem to have a slight advantage and with the Dollar due to resume losses it may well be time for the indices to resume their upside… but don’t expect massive rallies. However, the correlation appears to be appropriate.

Good trading
Ian Copsey 

Monday, September 24, 2012

DAILY FORECAST FOR USDJPY


BIAS: I still tend to prefer a deeper correction but with the expectation of the rally resuming

Resistance: 78.36 78.55 78.71 78.85
Support: 78.02 77.82 77.61 77.43

MAIN ANALYSIS: There's no change to Friday's analysis and I feel we still need to be aware of deeper corrective support levels between the 77.82-92 and 77.61 retracement levels. There is pivot resistance around 78.55-71 that is likely to cap while there is still risk of a new corrective low. Once this has been seen I expect the next rally here to move above 78.71-85 to retest the 79.21 high and later towards (probably just under) the 79.66 high.

COUNTER ANALYSIS: Direct gains above 78.55-75 would raise the risk of an immediate push higher.
Only a breach of 77.61 would raise concern although this correction has no fixed ratios and could theoretically retest the 77.12 low. Only below there would risk further losses towards 76.02.

MEDIUM TERM ANALYSIS:
19th September:  Having looked at the weekly cycles yesterday I feel there may be a strong argument for a robust rally beginning to develop. There are still some potential factors that could keep this subdued for a further 24 weeks… but that seems a bit extreme. For now I feel the direction is higher and we need to navigate the initial foundation development that will likely remain below 80.62 (or only marginally above) for a correction. Once that is complete and confirmed the stronger rally would then have potential to develop.

Good trading
Ian Copsey

The last leg appears to have gone into slow motion


There was never any fixed retracement for the Dollar after Thursday’s high but I reckoned that GBPUSD would see only a minor correction that would probably lead the way for the others. That GBPUSD broke above its prior corrective high was not on my list of expectations and thus opened up the deeper corrections against EUR and CHF… So in the end we had quite a deep correction and it made me look at the minimum retracements for the entire move from the 1.3172 high in EURUSD and 0.9238 low in USDCHF. While I could possibly accept a slight shortfall in EURUSD the pullback in USDCHF has been nowhere close to the minimum and that suggests that as we start this week we should see the correction continue and is doubly confirmed by the fact I still feel there is one Dollar corrective high missing.

Now, where this places GBPUSD is a bit more of a puzzle. That it has broken above 1.6301 does point to stronger gains overall but a period of complex consolidation earlier in the sequence (around a month and a half ago) has made the overall outcome rather clouded in terms of structure. The problem there is twofold:- just how that consolidation fits into the current structure and also the eventual outcome once EURUSD and USDCHF meet their current respective (Dollar bearish) targets. For that I shall follow the Continentals as their structures are a lot more obvious. However, the near-term for GBPUSD does hold a certain degree of uncertainty and therefore requires a little more TLC when trading.

We’re also back in a similar situation with USDJPY and EURJPY as I had suggested earlier last week. That triangle failed last week but as far as I can see we have the same situation being that EURJPY appears to be heading to a corrective low from where it should rally quite firmly. I still point to last October’s 16.5 and 33-year cycle lows and the 24 and 48 week cycle lows seen at 77.12. Thus, while I am open (and favour) a marginal new corrective low in USDJPY, it does seem to imply another firm rally soon. I’m not quite at the point where I think it will rally as it did from the 76.02 low but I do feel we’re building a base for that type of move.

Thus, today I’ll still be looking for the Dollar bullish correction to extend but which should set us up for another round of losses…

Have a profitable week
Ian Copsey