Thursday, February 28, 2013

A bit closer to a higher Dollar


Not too many surprises yesterday, in fact maybe no surprises, but there were a few areas where things became a bit bogged down and messy. The continued gradual gains in the Euro did at least clarify the picture there and pretty well matched by the other two Europeans. Indeed, this general weakening in the Dollar should continue for a little longer today. How long is more a factor of how much hard work and effort the market puts into moving a relatively short distance. Once this process is done and dusted the outcome should be a quick burst of Dollar strength but one that should then see another round of corrective consolidation. However, there is one small risk in this scenario for the Europeans. While I can see EURUSD dipping and USDCHF rallying it looks like GBPUSD has a lot higher to move to satisfy its retracement target. I therefore feel that it may well suffer only a limited reaction lower – more in a correction – before seeing the general upward correction resumes.

Thus, best focus on EURUSD and USDCHF that have fairly well defined limits in this current correction and also very clear targets for the next rally in the Dollar.

The Aussie dipped pretty much in line with expectations – well 7 points more than anticipated. That doesn’t sound like too much but it actually clarifies a slight ambiguity earlier in the development from 1.0340. I'd suggest caution with this pair as it has a unique ability to make up things as it goes. Work with breaks.

The JPY pairs had fairly similar days, initially dipping lower but recovering. Particularly in USDJPY this bullish development from the 91.13 low has been very constructive and played through well as I was going through this morning’s analysis. As such, while there is a final hurdle to overcome the outlook is becoming stronger. This is worth watching since, as long as key support levels hold, we may well be resuming the larger uptrend.

If so then we’re going to witness a battle between a bearish EURUSD and bullish USDJPY. My feeling is that the upside in USDJPY probably has more umph to it than the downside in EURUSD and thus the general direction in EURJPY should be higher but most likely with a more stuttering performance.

EURUSD and USDCHF are probably the pairs with the most clarity followed by USDJPY and probably AUSUSD also seeing losses but take care with this one as recently its tendency has been to move in complicated structure.

Good trading
Ian Copsey  

Wednesday, February 27, 2013

TECHNICAL INDICATIONS 26th FEBRUARY


As usual, here are a few more observations from yesterday's developments. The charts display the day's support and resistance from the daily report issued around 2am-3am GMT and last for the rest of the day. 

Comments provide examples of integrating technical indicators and the implications. The Dollar remains bullish overall although with some short term lack of direction..

These indicators and daily support and resistance are available free of charge on the fast and responsive WorldWideMarkets MT4 platform. Contact me for more details or sign up here. (Offer applies to non-U.S. residents.)

USDJPY
EURUSD
USDCHF
GBPUSD
EURJPY
AUDUSD
Good trading
Ian Copsey


Another calmer day expected


A semblance of normality returned to the proceedings yesterday and very clearly the market has become more averse to the sharp spikes and whips that have been evident over the past week. Indeed, I think that a more measured approach will begin to dominate again, at least for a while anyway. Even the U.S. indices calmed yesterday so the broader outlook is one of watch and wait, a process that is likely to lead to more corrective development. That does not rule out further Dollar upside extremes but if seen should be limited in nature.

Indeed, that is the broad implication I see from the structures. Having said that I should also point out that in the larger structure the Dollar’s direction does still look bullish. More it is a matter now of knowing the limits on the downside (that are mainly identifiable) and where the next upside projections lie. That said, today’s developments don’t look like being extensive. Perhaps the one market that may have potential for a slightly larger follow-through in GBPUSD although it is in one of those situations where it has satisfied one projection target but also has the option of a second, lower target.

I’d like to say that USDJPY is likely to surge higher. Well, if it does I’m not so certain it’ll be a surge. I tend to feel that it is still setting up the foundations of another move that will still require two-way movement today. The only issue I have with it is the requirement for quite broad swings to retain the limitations of subsequent projections being too strong. This may well mean that EURJPY will revert to its often cramped and erratic range trading that can be so frustrating with its complex consolidations.

Thus, today is one where we can relax a little more. Marginal Dollar highs cannot be ruled out but broadly I am more in favour of corrections continuing. Thus, it’s not a time to hold onto positions but more to take profit when seen.

Good trading
Ian Copsey  

Tuesday, February 26, 2013

WEEKLY OUTLOOK FOR THE DOLLAR INDEX

HOURLY CHART

26th February:

The more direct rally has required an adjustment but one that seems to fit nicely into the larger daily wave structure. We do seem close to the Wave iii high that should stall between the 361.8%-423.6% projection at 82.03-29. I favour the lower 82.03 target. This should trigger at least a 50% retracement, may be a touch more , to hold above 81.20-29 for gains to the 176.4% projection in Wave (iii) at 82.64. That seems the most likely but keep in mind the higher 198.4% projection at 82.99.

From the 82.64-99 high the pullback in Wave (iv) should be around 41.4%-50% suggesting around 81.24-48 (from 82.03) before extending higher in Wave (v) to form the larger (blue) Wave -a-.


RATIO TABLE

Good trading
Ian Copsey

Scrambled Forex on toast…


The markets went haywire … and that’s not just Forex. Anyone using the Harmonic Elliott Wave spreadsheet in the 5 minute charts (forget 1 minute…) would have had a huge problem catching up with sheer speed of the moves. The overall development has probably not yet finished but I’m beginning to consider the potential for less aggressive extensions and in one or two cases for reversals. The risk in these situations is the possible lack of alternation in the Wave (iv) position. It’s a great tool but one that can confuse things when they don’t develop.

However, not every currency pair had such frenetic activity. GBPUSD and to a certain extent USDCHF and AUDUSD were relatively calm. More the damage was focused more on EURUSD and USDJPY.

The first half of the day disappointed in terms of EURUSD, the rally seen far above expectation but to levels indicated as possible in Friday’s outlook. I initially took this as potential for the downside to be restricted but it actually looks more as if it will achieve the targets I had identified. Thus, there’s still downside potential there. More, it’s identifying where the correction will hold.

During all this, the structure in USDCHF has become exceptionally confusing. I am suspecting one of its confusing and irregular consolidations may well be possible. At this point the upside seems restricted due to the lower wave degree target not really being able to reach the higher target… or it will finish at a shorter higher wave degree target. As for GBPUSD, it’s relatively nonchalant performance does raise a few concerns. I am quite aware that the 1.5071 low was a valid projection of a larger wave degree target. However, I’m not comfortable with that due to the depth of the correction risking a move too close to part of the structure that it should not actually reach. Thus, I do still have a cautiously bearish outlook but to a higher projection target.

In USDJPY, I found out late in the day that the early gap higher in Sunday night’s trading was not shown in my charts. That actually changed the risk entirely – having been the upper target I had indicated - and that was seen after break of the 93.80 area. It could still make another low but it’s currently treading a fine line between bullish & bearish. I also note that EURJPY may well not have much further space on the downside. This point is raising the risk of a reversal higher in both USDJPY and EURJPY over the coming days.

I think today will be less dramatic but note the extremes that are possible today and highlight the chance of a larger reversal/correction to yesterday’s moves.

Good trading
Ian Copsey  

Monday, February 25, 2013

DAILY FORECAST FOR AUDUSD


BIAS: While 1.0300-20 caps we should see losses to 1.0221-48

Resistance: 1.0302 1.0315-20 1.0340 1.0360-74
Support: 1.0280 1.0265 1.0235-48 1.0221

MAIN ANALYSIS: Price fell short of the 1.0367-74 highs - the high being at 1.0340 from where we have seen a break below the 1.0296 low. This looks more bearish. It could still just be a correction but the implication is for losses to reach 1.0235-48 and we can't rule out the 1.0221 low. While the downside is possible the 1.0315-20 gap high should cap. 

Only below 1.0221 would imply losses although at this stage there isn't much to owrk on in terms of downside targets. However, I feel such a break would be quite bearish.

COUNTER ANALYSIS: Only a break back above 1.0320 would retest the 1.0340 high and equally, above there would imply a retest of the 1.0367-74 highs. Take care in case we see a correction. Only above would risk extension to 1.0415 at least.

MEDIUM TERM ANALYSIS:
25th February:    This is always a currency pair that reacts differently. We have a minor bullish divergence but we'll need a firm break above 1.0374 to have any chance of this extending higher. Until then there is risk of seeing 1.0221-48 and only below 1.0221 would risk extension to the earlier target I had at 0.9860-0.9960.

Above 1.0374 would look a lot more bullish...

Good trading
Ian Copsey

The Dollar should continue to push higher


The week ended a little quieter than I would have liked but still seeing the Dollar holding broad supports against the Europeans and retaining the bullish structure that should follow-through today. It’s probably not too much of a surprise but there is a suggestion of a slow start to the day, well perhaps a small early flurry followed by the usual consolidation in the Asian session. However, overall the Dollar rally we have seen should extend further today. I note that while price played around the hourly Clouds it allowed the 4-hour Clouds to play catch-up and there’s a good chance it’ll be these arriving that provides the push for the next leg higher.

It does look as if there’s still some way to go in this rally and thus the bullish outlook will probably prevail over the whole week. Having said that the rally should be interrupted at some point for what should be a modestly deep correction. Therefore, it’s more a matter of how quickly the currently expected rally takes. It has been pretty direct up until now but of course there’s always the risk that it can begin to slow down as the market runs out of demand for new long positions. However, that is something we’ll have to manage when the time comes.

Interestingly the Aussie rallied strongly on Friday. It appears to have completed a constructive rally but is due a correction that I feel will be quite deep. The structure had some good ratios but with some internal structural elements rather weak. It would be well to have an open mind on this one…

Finally the JPY pairs had a quiet day and mostly sideways. Following this morning’s gap higher EURJPY will most likely be dragged lower by EURUSD later. From what I can see it shouldn’t be dramatic that suggests USDJPY should have positive day though slowing down after the gap higher. We just need to watch the key supports here. The only thing I should add about USDJPY is that it does have two options, the second one being a more direct follow-through higher. Just keep note of the key barriers that, should they break, imply a stronger extension higher.

The better, more stable, vehicles to jump on today should be EURUSD and GBPUSD… followed by USDCHF…

Have a profitable week
Ian Copsey  

Friday, February 22, 2013

VIDEO: DAILY FORECAST FOR EURUSD

As a change I am providing a video forecast for EURUSD that provides a visual look to how things should develop in EURUSD over today and an alternative should this break down.


Resistance: 1.3194-08 1.3231 1.3254-62 1.3282-01
Support: 1.3160 1.3136 1.3109 1.3091


Good trading
Ian Copsey