Friday, August 30, 2013

TECHNICAL INDICATIONS FROM 29th AUGUST 2013

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. There are early signs of Dollar strength but with mixed momentum conditions currently due to the dull August conditions. USDJPY is threatening to extend higher but needs to make further efforts. EURJPY is extremely neutral at present.

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USDJPY
EURUSD
USDCHF
GBPUSD
EURJPY
AUDUSD
Good trading
Ian Copsey

Limited follow through today


An interesting day in the Europeans that brings us towards the outlook I have been presenting since last week and echoed in this week’s video outlook. In fact, the entire week has been interesting although not without its challenges. I say that as the correlation between the three has been a bit start and stop all week long. Two days back we had GBPUSD plummeting and then recovering even faster in a spike low while the Continentals sat and did very little. That even made me wonder whether we’d see the Continentals holding steady while GBPUSD could rally but we had the opposite – a static GBPUSD while both Continentals lost ground against a firm Dollar. Strange but as I mentioned above, the net impact is to reflect the outlook in Monday’s weekly video…

The Aussie seems to be doing the opposite to the Europeans and actually gaining against the Dollar. However, that is basically in line with expectations also. It’ll probably do its utmost to make the structure the most complex that it can manage but I suspect we’ll see steady losses today also.

Then finally to the JPY pairs. USDJPY extended higher and actually breaking above a level I had thought would confirm further gains. Indeed, so far it does look constructive but is at the normal extreme for this position if in a correction. Momentum does look firm so the risk does seem higher although there’s a deep correction looming at not too far above current levels. Thus, don’t get too enthusiastic and wait for the correction. Any upside failure at this point (98.52) would not be too healthy.

So what does this do for EURJPY? It spent the day walking along sideways and enjoying the scenery and within a very restricted area. I see potential for more of this so feel this one is probably not the best vehicle for a medium term position at present. I remain quite neutral here with both daily and intraday timeframes subject to rather choppy development and therefore it’s probably best to wait until there is a catalyst. I do see the risk of the Dollar making a stronger directional move quite soon so feel that’s a better focus rather that the cross at this point.

Good trading
Ian Copsey  

Thursday, August 29, 2013

Mixed outlooks


I approached yesterday with some caution with the JPY pairs under the spotlight in terms of the outcome of the battle between bullish versus bearish. They both did exactly what was planned in terms of probing the extremes. However, the outcome has yet to be resolved but hopefully should today. The bullish divergence in USDJPY at the 96.81 low was ever so minor and not something on which to base a bullish signal. However, I have seen these minor divergences work. Thus, we’re back to tests and probes but there will be a point where one side will break down. EURJPY is in exactly the same position so it really is a case of exercising patience. Once the outcome is known there should be solid follow-through…

GBPUSD may well have been the star performer although AUDUSD was close. The Pound stalled right smack dab in the perfect target area and reversed higher. The manner of the reversal, being so sharp, provides a bit of a headache. Even the 1 minute chart didn’t reveal too much either so in desperation I had to move down into the tick-bar charts. I can’t say it’s exactly clear but the strongest evidence I have seen does suggest further gains – and from what I’ve seen does imply limited follow-through before a consolidation before extending to its upside target. The issue with AUDUSD is that the current correction is rather too deep for limited losses and could turn into something more bearish...

And that brings us to EURUSD and USDCHF… both flattered to do nothing really. The lack of any real move tends to put the foot more on a consolidation basis. At least I think that’s probably the best approach until the range is broken. Indeed, if this occurs it may well avoid significant strength in EURUSD. As for USDCHF, while the recovery continues as it is, then it would still seem to be corrective and risk a final dip. Overall, I feel these two should be left to stew in their own juice until a stronger directional indication has been confirmed…

For today the August doldrums appear set to continue. A stronger directional move is due but don’t jump the gun just yet. Best look for short term trades rather than look for a home run at this point.

Good trading
Ian Copsey  

Wednesday, August 28, 2013

DAILY FORECAST FOR GBPUSD


BIAS: We should see 1.5555-65 cap for losses to 1.5455 and later to 1.5422-31

Resistance: 1.5555-65 1.5591 1.5611 1.5637
Support: 1.5519 1.5500 1.5481 1.5455

MAIN ANALYSIS: We've seen losses at last and, while slow, are constructive. This should now see the 1.5555-65 area cap for losses down to 1.5455 for a correction of around 35-55 points before then pushing back below 1.5455 to the ideal 1.5422-31 area. Allow for 1.5390. Anywhere below 1.5440 observe for bullish reversal indications. The first reversal should be back into the 1.5555-95 area.

COUNTER ANALYSIS: Only a direct break back above 1.5575-91 would risk a retest of the 1.5611 and 1.5637 corrective highs. Above there could trigger a retest of the 1.5717 high.

Only a break below 1.5372 would trigger direct losses…

MEDIUM TERM ANALYSIS:
22nd August:   This morning's losses are just not in line with the 1.5748 target and the depth we have seen is more indicative of the deeper correction that I have been expecting (albeit from 1.5748). Thus, while 1.5635-60 caps (or sees minor breach) we should see losses below 1.5570-90 and to 1.5520-25 initially. Overall this has potential to 1.5422-50 at least and possibly as deep as 1.5380-00 before recovering.

Good trading
Ian Copsey

The Dollar pulled from both sides…


It was a tale of two worlds yesterday. The first half of the day remained seasonally subdued but then we had a divergence between the inverse currencies (EUR and GBP) and the direct currencies (JPY and CHF.) In all charts everything went lower, EUR and GBP lost out against a stronger Dollar as expected while the Dollar saw losses against JPY and CHF…

Starting with EURUSD and GBPUSD the outlook remains the same and we should see follow-through and much in line with the underlying outlook explained in Monday’s video. Do watch for the target areas and check out momentum conditions as they are approached.

USDCHF has left me just a bit puzzled. The fact it didn’t break below 0.9130 came as a surprise and I’m open to that occurring later but the structure just seems a bit too ragged at the moment. It wouldn’t surprise me if it falls into a sideways consolidation. For now it’s probably one to avoid until a stronger structure develops.

AUDUSD extended losses yesterday and I suspect we’ll see more.

Now, USDJPY… Hmmm… Not happy. The push higher last Friday – along with the deeper move higher in EURJPY and the fact that the 95.80 low occurred at the confluence of the 48 week and 96 week cycle lows made me switch to bullish. Yesterday’s drop places a big question mark over my decision and does seem to have qualities that seem to support the resumption of the downtrend I had been following, the recovery to 99.14 being just a modestly deep correction. Having said that, I feel we’re due a correction higher today. Thus we’ll need to see where this ends – or if it ends – and then follow the subsequent move.

EURJPY… Dare I say this could still see losses? If USDJPY does confirm a new low after a correction and EURUSD breaks support then we could see some fireworks. However, I don’t expect this today although a marginal new low is quite possible. Keep an open mind with the JPY pairs…

Good trading
Ian Copsey  

Tuesday, August 27, 2013

Positive but not confirmed yet…


Another August day, another protracted correction… By the end of yesterday we did see the potential for the resumption of Dollar gains although technically it hasn’t been confirmed so this needs to be the plan for the day. Well, perhaps we can’t plan the break that would extend the recovery but we can at least know when that confirmation is triggered and then organise the rest of the anticipated move. It would be well to also understand that until that break is made there is nothing technically to prevent another minor new corrective Dollar lows. This observation is relevant for all the Dollar-currency pairs I follow.

Otherwise the general expectation is still as I outlined in yesterday’s weekly video. I still look for gains over the next few days but will then look for some more volatile development before the majors converge on a more uniform outlook. Again, this larger outlook is reflected in the daily charts and expectations discussed in the video and following the past few months of rather introverted range trading the next trend will probably last through into the 4th quarter.

It’s always tough generating the analysis at the start of the Asian day because until the European session starts the majority of days see corrective price activity. When this occurs after a trending move it is quite a simple process, depending on the wave in question, to work out the high risk areas for the limits to the correction/consolidation. Of course, today we begin the Asian session in the middle of a longer correction and this presents multiple options. Therefore, it’ll be best to sit tight until Europe comes in and then look for breaks that would confirm the Dollar upside … or not of course.

Thus, take care and wait for the early moves in Europe for clues…

Good trading
Ian Copsey  

Monday, August 26, 2013

DAILY FORECAST FOR AUDUSD


BIAS: This still seems to have potential to 0.9056-82 before lower again

Resistance: 0.9049-56 0.9082 0.9097 0.9117
Support: 0.9017 0.8990-95 0.8970 0.8951

MAIN ANALYSIS: Friday saw limited movement but hasn't really altered the outlook. I mentioned two potential resistance areas on Friday - the first is between 0.9040-82 (favoured) and the higher at as much as 0.9132. We shall need to observe momentum and any bearish reversal indications to signal the renewal of losses. The way the Dollar is developing overall I feel the 0.9050-82 area should cap and trigger losses back to 0.8971 and later to the 0.8931 low. Also note temporary support around 0.8915-20…

COUNTER ANALYSIS: 'Above 0.9140 would surprise for 0.9161 at least. Take care around here also but any further gains could risk a retest of the 0.9232 high.

MEDIUM TERM ANALYSIS:
23rd August: Support broken and I have to say I am not totally confident of the larger structure. For now it should be bearish and likely to retest the 0.8847 low and beyond. However, I need a little more information to gauge the wave count.

Good trading
Ian Copsey

The Dollar should get a boost


The Dollar took longer than expected to complete its correction on Friday than I had hoped. Perhaps there’s still a small chance that it may deepen a little more but there doesn’t seem to be much room for any significant losses so best prepare for the Dollar to firm up again. Indeed, this seems to be universal through the major currency pairs. Having said that I do feel there is an upside limit for this next move that is not a million pips away so while the Dollar does seem to have the bit between its teeth for now I’m still expecting a significant reaction thereafter. After all, August is not yet over and summer doldrums may still rule the roost for a while longer.

As we move into September onwards I do see potential for stronger movements and this seems to be echoed outside of the currency arena also. Metals look like breaking out from their recent slothful structures and by September probably in equities also. Therefore best keep things neat and tidy for now and look for stronger directional moves by some time in September onwards.

If I am to pick any currency pair that has any immediate directional bias then it’s most certainly USDJPY. Even then we will be due a correction to the current strength, possibly even a deep or complex one. This leaves EURJPY with some further puzzles to solve as the individual pairs develop. I have to admit this “does my nut in” trying to fathom out when and with what power – or lack of – will develop. The cross is still one that may well develop in fits and starts given that there appears to be evidence that the Dollar looks like developing more-or-less uniformly correlated against them all.

It looks like a quiet start to the day/week. It should heat up a bit later on.

Have a profitable week
Ian Copsey