Tuesday, April 30, 2013

Dollar momentum remains weak


And the market decided Dollar bearish… There’s no real rabid hate of the Dollar by the look of things but certainly a weakness that has maintained a modest bearish momentum and no real sign of any reversal at this point. However, at this point there is a slight balance in the market between a deeper correction and direct follow-through. The implication of this is fairly simple – that a shallower correction generates firmer projection targets. Which is it to be? To be honest I can’t tell at this stage but I do note that GBPUSD met targets that could provoke a reversal lower except there are no real signs of a reversal. Even here momentum is still pushing the higher extremes in both hourly and 4-hour charts that normally implies follow-through. However, it would be useful to see a slightly deeper correction but that’s something to treat with care, particularly because both EURUSD and USDCHF do still seem to have some way to go.

The Aussie joined the Europeans in seeing Dollar weakness. Here we seem to be close to a high. Whether that’s a temporary high and will be followed by further strength after a correction is something to be observed. However, for now I’m not convinced we’re going to see significant strength today.

That leaves the JPY pairs, neither of which set the world alight. Actually, that’s a good sign that points more to continued consolidation which I’d expect at this stage. However, both have drifted lower and closing in on their respective consolidation targets that in turn will allow the drift lower to be a drift higher. Well, some sharp moves are possible but I doubt sustained at this point. This should keep the sideways consolidation extending for some days more and probably into next week. I still maintain that we need new highs but any deviation from the consolidation could force a change in view.

Thus, today has potential to be quite dull depending on whether the Europeans see extended consolidation themselves. Through all this do retain the expectation of Dollar losses which is the side of the market that should see any more sustained movement when it finally develops.

Good trading
Ian Copsey  

Monday, April 29, 2013

Time for the market to make a decision


Many of my expectations fell apart on Friday. Only USDCHF and GBPUSD developed as expected although the latter was not something that I had contemplated earlier in the week and more of a resignation to Thursday’s break higher. EURUSD failed miserably to generate any upside at all. Perhaps that implies that with GBPUSD (apparently) close to a high and USDCHF pointing higher that the Dollar is about to extend the gains of which I had been in favour at the start of last week. That may be the case but the flip side is that all three are at different stages of development. GBPUSD must kick start the downside again, EURUSD can be argued to have constructed a foundation for further losses while USDCHF is almost half-way through a bullish sequence. This mishmash of where each is within a sequence of Dollar strength is rather unsettling.

I considered the potential for new corrective Dollar lows within the move from the Dollar highs in March. Without taking into consideration that I felt the corrections developed in a completed corrective structure (in EUR and CHF) it would imply stronger gains in GBPUSD and that gives me more problems, particularly as I had specifically caught the GBPUSD low at 1.4831 within 6 points that represented only part of the decline. Having said all that the clear indication is that the Dollar does now need to make up its mind. It may not be seen today but should over the first half of the week.

Friday also saw my long standing expectation of extending strength in USDJPY fall around my ears, possibly in the same fate as had befallen EURJPY. There had been, for quite some while, a fine balance between EURUSD, USDJPY and EURJPY in terms of my firmer views on USDJPY. I can see an alternative for USDJPY that is very similar to EURJPY but what is happening in EURUSD tends to muddy the waters. At this point I feel that an extension of the sideways consolidation in the JPY pairs is now implied. Thus the critical element is EURUSD or perhaps more appropriately how the Dollar is going to perform and the impact on the Europeans as described above.

Thus, I feel that we need take more caution as the week begins and wait for the market to take our cues from the next break. Either way, something in the bigger picture that has been on my mind is going to break down – either GBPUSD or USDJPY…

Have a profitable week
Ian Copsey  

Friday, April 26, 2013

DAILY FORECAST FOR EURUSD


BIAS: Price is finely balanced but the upside seems more logical

Resistance: 1.3020-25 1.3055 1.3075-83 1.3112
Support: 1.2988 1.2954 1.2920-30 1.2900

MAIN ANALYSIS: The break above 1.3040 did indeed trigger a retest of the 1.3083 high. Logically this would actually tend to imply a move back to the 1.3128 high. The drop from yesterday's 1.3093 peak has been drastic and the 1.2988 low MUST now hold to retain the upside risk for a move back to just below 1.3093 (1.3075 most likely) followed by a minor correction (20-30 points) before extending to the 1.3112-28 range. Again, this should provoke a much shallower correction - probably 20-40 points - before heading higher to the 1.3130-54 area to complete the rally. This should imply a total reversal lower.

COUNTER ANALYSIS: The risk will be a direct break below 1.2980 that would then retest the 1.2954 low. This would generate a much more complicated structure and care will be required. However, the 1.2920-30 and 1.2900 supports seem very weak and therefore the first chance of a temporary bounce should be around 1.2875-80. Below is 1.2843 but overall this should point lower to approach (but not yet break) the 1.2744 low.

MEDIUM TERM ANALYSIS:
26th April:  The break higher looks like a recycling to the 1.3128 high and could reach as far as 1.3134-54. As long as that caps we should then see the losses I had been expecting.. 

Only back above 1.3201 and 1.3230 would imply that we still may be seeing a deeper correction higher.

Good trading
Ian Copsey

Indecisive markets


One of those days… I had really thought the JPY pairs would take the limelight yesterday but instead it was the Europeans… While USDCHF did well, both EURUSD and GBPUSD took the alternative view yesterday and shot higher. I suspect they haven’t finished this rally either. I have to say that EURUSD is a pretty volatile, whippy move and one that may continue over the course of today and perhaps into Monday. Probably it’s EURUSD and USDCHF that will see the swings while GBPUSD may see a slightly less frenetic day but should still make further gains. I see these moves as part of a correction only and once complete the Dollar still has more upside potential over the coming weeks with the current developments more of an unwelcomed distraction rather than the start of a stronger move. Today could still see risk of more whippy moves.

The Aussie also followed the Europeans strength. It stalled just a few pips above my favoured resistance but in this process has caused the structure to become really quite strange. The fractals aren’t displaying too much tendency to integrate with each other, or if they do then it’s in a way where it doesn’t seem to fit in with the daily structure. I’m therefore more in favour of holding back and allow more development before making further judgments.

USDJPY went nowhere very speedily though drifted lower instead of higher which provided a neutral impact on EURJPY once EURUSD pushed higher. This entire situation with the JPY pairs is becoming somewhat frustrating although I still cannot see anything but a bullish outlook. This is something that will need close attention to spot the break and therefore provide a break for a stronger move higher in both. The upside targets in both USDJPY and EURJPY remain intact but it would sure be encouraging to finally see the rallies develop. Thus, do keep eyes open for the decisive break when it happens.

Have a great weekend
Ian Copsey  

Thursday, April 25, 2013

JPY currencies look like being the focus today


Yesterday was a strange day. The consolidation part was right but otherwise very little moved with much intent. Having said that I do feel that the JPY pairs could well provide the stronger move that I had anticipated yesterday.

I’ll cover the JPY pairs first as I feel this has a stronger basis. Yesterday’s early follow through higher in USDJPY looked promising but the rally couldn’t sustain itself to lapse into a sideways trading range. However, this seems to be close to completion and as long as it breaks higher the impact could be quite strong. Ideally it should be higher as it needs to drag EURJPY up behind. This does look critical for the cross to complete the rally to target. On this front it is touch and go because of the potential weakness in EURUSD. Thus, this does appear down to timing of respective reactions in both USDJPY and EURUSD, the latter also appearing to be poised to break lower. Thus, watch for USDJPY to make its move first and note the key projections that will provoke a make or break situation in the cross.

EURUSD itself looked as if it had broken lower only to recycle higher. This looks complete and therefore once the rug is pulled away from beneath its feet the risk is for losses. Just how quickly the decline comes is perhaps more the key. The same can be said of GBPUSD that made a very strange sideways consolidation. I remain bearish there but not as strongly as EURUSD.

While the EURUSD and GBPUSD had there own sweet way of doing things yesterday, so did USDCHF… but in a different way. While the other two had down-up days USDCHF maintained its uptrend. However, what I do notice is that this correction still has to deepen and possibly in sideways consolidation. Therefore it does still need to be considered de-linked for now…

AUDUSD failed to dip and corrected higher. However, I cautiously remain more bearish than bullish and would much prefer to suggest that the target I highlighted yesterday may well be possible today.

Given the risk further consolidation in the Europeans I’d suggest looking more at USDJPY today and possibly EURJPY.

Good trading
Ian Copsey  

Wednesday, April 24, 2013

DAILY FORECAST FOR AUDUSD


BIAS: I suspect a day of limited moves but with my overall view switched to bearish

Resistance: 1.0270-75 1.0290 1.0307 1.0330-35
Support: 1.0220 1.0192 1.0165 1.0136

MAIN ANALYSIS: The hourly bullish divergence provided no impact at all. Having reviewed the daily charts I feel we are back in the larger down-move. For today this should imply a dip to the 1.0192 level from where a correction back to 1.0330-35. This area should cap for losses back to 1.0192 and below. 

COUNTER ANALYSIS: Only a direct break above 1.0358-68 would concern. Then consider 1.0396 and above.

Any earlier breach of 1.0180 would imply further losses through 1.0165 and to the 1.0115-36 area.

MEDIUM TERM ANALYSIS:
24th April: Failure to see a firmer recovery and absolutely no impact from the hourly bullish divergence warns of further losses. Having reviewed the daily chart it seems more likely that we had a slightly irregular flat corerction to 1.0581 and thus the deeper triangle projections down between 0.9880-0.9980 are more likely over the coming weeks.

Good trading
Ian Copsey

A mixture of Dollar gains and consolidation


It was a good day, my thoughts proven correct in terms of the broad based Dollar gains. Supports held and gains progressive though not outstanding except perhaps in USDCHF. However, there were some slight differences in performance. USDCHF followed through directly while EURUSD held back. GBPUSD maintained a stiff upper lip and decided to trade in a range, and one that does seem destined to continue today also. While obviously preferring that all three Europeans tend to move in alignment I can’t see this being a major issue right now. It is something of which to be aware and it would be helpful for EURUSD to play catch-up with USDCHF over the course of today. As for GBPUSD, its performance is about right as it has less overall Dollar upside compared to the other two. This should all be reflected in today’s moves.

I was going through the Aussie yesterday afternoon trying to slot this into the larger structure. The daily/weekly charts have been stifling in terms of the refusal of the Antipodeans to make a break. As soon as it looks like it will push the extreme it holds back. Having checked this out I feel this looks more like we’re going to see further losses and more directly than I had first thought. The hourly bullish divergence has had virtually no impact at all. Further slippage to come but at this point I don’t see excessive losses.

Then onto the JPY currencies: USDJPY stalled just about in the right place, in fact 4 points below the range I had suggested. I do find the recovery rather strange with the rather large spike lower and recovery but as long as it now makes consistent gains we do have potential to finally see a break above 100. Having said that I don’t see a massive follow-through at this point with the risk of a deep correction then raising its head. The target areas have been clear for some while. It has just taken a longer and more circuitous route than I had hoped for.

The impact on EURJPY is a little uncertain and depends more on the performance in EURUSD and how quickly it declines. The cross has been a bit frustrating as I feel it needs a new high and with EURUSD threatening to extend losses I’d feel a lot more comfortable if the cross takes that final step now rather than after the deeper correction in USDJPY – which, with USDJPY expected to see a deep correction following the current rally, would complicate things considerably.

I think USDJPY and EURUSD could well be the better focus today.

Good trading
Ian Copsey