Thursday, October 31, 2013

Complications

The day started off very much in line with expectations but ended seeing break levels triggered in several currency pairs – but not all. That this raises question marks is obvious. The main complication I see is that EURUSD has done exactly as expected, also AUDUSD, but USDCHF and GBPUSD have broken levels at which I feel were required to hold to maintain the direct Dollar downtrend. I can see alternatives for these two but the problem is how all these differences can work together. So, today should tell us a little more about how these conflicts are going to play through.

The ideal should be for Dollar losses to develop today. This does look like the common theme through all currency pairs. The question is how deep these Dollar losses develop across the currency pairs. If there is one pair that needs to shine then it’s EURUSD which really needs to make a new high… though seems rather a steep expectation.

The Aussie developed extremely well, stalling just 2 points above my ideal target. This needs to show its mettle too. There is one difference with this pair in that the decline it has seen implies the potential for a long sideways consolidation. However, that does also mean that it needs to make initial upside progress. Beware of this one as it will mean some choppy and unpleasant structures.

USDJPY made further gains. I have taken an alternative approach with this pair and can see a potential solution to the outlook I had since the beginning of the week. It will still imply losses today but should be corrective. The retest of the 135.50 high has been interesting and could imply direct follow-through higher when considering the larger picture. However, as with USDJPY there does seem to be room for an initial correction. The question is how deep.

Today take care and there are several options open and a rather strange set of conflicts…

Good trading

Ian Copsey  

Wednesday, October 30, 2013

DAILY FORECAST FOR AUDUSD

BIAS: We should see losses extend to around 0.9439 before higher again

Resistance: 0.9486 0.9500-08 0.9530 0.9546
Support: 0.9460-65 0.9439 0.9403-17 0.9392

MAIN ANALYSIS: We're close to the final low now and feel we should be looking for bullish reversal indications in the0.943955 area. Also note the 0.9391-14 area.To confirm a reversal higher we shall need a break back above 0.9500-08. Once seen we should see further upside progress back above 0.9530-46 and to 0.9560-70 at least and into the 0.9595-0.9623 area. I suspect this will cap for a correction. 

COUNTER ANALYSIS: Only a break below 0.9430 would risk losses to 0.9403-17 (max 0.9392). I'd still watch this area carefully also for any bullish reversal indications. Thus, only below 0.9385 would extend losses to 0.9349 and 0.9333.

MEDIUM TERM ANALYSIS:
29th October:  We're seeing the losses expected and I estimate these could reach the 0.9439 area though make sure there are good bullish reversal indications. There are deeper retracement areas at 0.9391-14. From here we should see constructive gains again.

Only below 0.9380 would begin to cause concern.

Good trading
Ian Copsey

Close to retracement completion

Not too many surprises yesterday and mostly minor ones. The Europeans lost out against the Dollar, the Aussie also. These corrections have been quite deep, particularly in USDCHF, GBPUSD and AUDUSD. The Euro made a more sedate decline but actually quite within the expectations set out in yesterday’s report. So the next question is whether they are complete or not. Some seem to have found Dollar resistance targets, others not and I shall detail the expectations for each currency pair in each section of the report. Therefore, watch out over the first half of the day for any final twitches in price.

Basically the Dollar downtrend is still in force and I shall be looking for further losses. What I should add here is that recent development, the shallow depths of a series of second waves across several wave degrees, implies that we’re probably in for a choppy time as we reach respective third waves and therefore corrections that will be relatively deep. Therefore expect a bit of a roller coaster ride for the coming month and potential also for some complicated corrective activity.

What did spoil the day was the more direct recovery in USDJPY. It dragged EURJPY to minor new corrective highs but not to new price highs. This has complicated the outlook somewhat. What’s more, the rally in USDJPY is not as expected and looks more corrective. We therefore have a little conflict here in terms of the balance between USDJPY and EURUSD and I think it’s going to be best to sit back and watch what happens to the cross. This should give us a better idea of the more medium term outcome and whether it’s in line with expectations or not. Right now it seems more like a coin toss…

Focus on the Europeans and Aussie today.

Good trading

Ian Copsey  

Tuesday, October 29, 2013

Conflicts remain

The U.S. Cavalry failed to show up and left the market to their own devices that appear to have been totally non-market related considering the development we saw. Absolutely nothing was concluded, decided or signed, sealed and delivered to leave the conflicts between the Europeans remaining in place.

So what next? Well, while there could be two outcomes I’ll approach this on a multi-layer basis looking for clues elsewhere. In the group of currencies I cover the backdoor route that may well provide the answer. This “backdoor” is EURJPY. The upside stalled in the right area and should now decline. USDJPY could well be the catalyst but unless it becomes aggressive (which is not favoured) it will mean that EURUSD must contribute the bulk of any losses in EURJPY.

The next question is how that impact will affect GBPUSD and USDCHF. The Swissie… I am not a great proponent for the upside here and this is a sticking point for me. As I mentioned in yesterday’s video outlook there could be an argument for mild gains. However, I think that’s more of a distraction when considering this puzzle. I could argue for the decline in GBPUSD to have completed yesterday but that was an exceptionally choppy decline. It would be safer to see key resistances break to confirm resumption of the uptrend. Until then there is room on the downside that would have little critical impact on the underlying bullish structure. Therefore, watch the levels in the report and note the relative development of each of the Europeans.

Maybe I should add that support in AUDUSD has been undermined. That it didn’t complete a double bottom does raise the risk for additional losses. On that basis it does lend some support to the idea that the Dollar could be firm today.

Thus, watch the relative movement across relevant currency pairs to spot the breaks and implications. Preference is for Dollar gains but not too deeply…

Good trading

Ian Copsey  

Monday, October 28, 2013

DAILY FORECAST FOR USDJPY

BIAS: We need a correction first before another rally

Resistance: 97.83 98.15 98.30-48 98.70
Support: 97.26-33 97.13 96.94 96.77-82

MAIN ANALYSIS: This morning's gap higher has broken above the 97.61 high. It hasn't been by much and as such we still need to be cautious in case we have seen a recycling higher. However, I do feel there is a bullish case with the hourly bullish divergence and therefore suggest considering the 97.13-30 area for any signs of a reversal higher. Back above 97.83 would extend gains to 98.30-48 at least but take care until price breaks above 98.50 as a second correction lower does appear to be implied.  

COUNTER ANALYSIS: Below 96.94 should see losses towards the 96.56 low but take care there. Only breach would extend losses to 96.35-40 and to the 95.92-06 area at least. Also note the 95.60 projection target.

MEDIUM TERM ANALYSIS:
24th October:  This does look more bearish but yesterday's decline developed in a way that could imply some consolidation. Therefore, until the 96.56 low breaks it may be prudent to take a more neutral stance until the outlook is clarified. I am beginning to feel as if we could remain in a longer daily sideways consolidation that could last towards the end of the year. I'll update on that depending on how this develops but right now there is no strong momentum on either side of the market...
To retain any bullish potential we are now going to need a break above 99.00 and if seen it could resurrect the 99.70-80 projection target but that could be a key resistance in the consolidation.

Good trading
Ian Copsey

Conflicting development

Indeed, a relatively dull end came to last week with Friday seeing the market choose to retain the status quo and revert to corrective price activity. From my point of view of assessing development the balance between the Europeans was also rather unusual in terms of structure and depths of their respective losses against a firmer Dollar. Obviously, what I like to see is each pair setting themselves up for the same outcome a.k.a. correlation. That means not only in direction but also that each will imply a subsequent move that should imply the same degree of follow-through. It’s that part that seems to be rather at odds with each other.

From that perspective I feel that the follow-through that seems to be implied may well be limited or even that we see extended sideways consolidation. The day has begun on a neutral basis in the Europeans at least and I feel that we need be aware of the key levels that would constitute a break or reversion back into range. Stronger follow-through will require breaks and if there is any one of these three that may be able to break the status quo it’s probably GBPUSD.

Even the Aussie is finely balanced. Ideally I’d like it to recover higher although I can’t see this running away. It does seem to be in a balanced position that needs further losses. I’m just not convinced this will occur directly.

Now, USDJPY is an interesting one. Friday saw a minor new low but then a reversal higher that has spiked higher on open. This places it in a balanced position also. I’d look at EURJPY as a guide also. The gap higher in USDJPY also generated a gap higher in EURJPY also but that’s approaching key resistance. Thus, we have the common triangle battle between the three in terms of which moves first and in what manner. Overall I’d like to see EURJPY move lower again but which of EUR or JPY will lead? Again, I’d prefer to watch the individual reactions of each and note the implication of breaks.

Thus, it promises to be a complicated day unless the Dollar can call up the cavalry and make a more defined break…

Have a profitable week
Ian Copsey