Friday, January 31, 2014

The Dollar looks firm

With the directional moves we witnessed yesterday I thought the analysis would be plain sailing. How wrong I can be… It has been a bit like solving six different Times Crosswords in 2-3 hours… It may look simple on the charts but there were some tough puzzles to solve. Without looking very closely at the lower degree waves it would have been easy to get carried away and suddenly finding the projections getting way out of line in a manner that just doesn’t normally occur. Indeed, while I focused on the lower degree outlook the implication for the next higher degree (in the hourly charts) does hold some concern. That is something I’ll have to continue to review once this current move completes.

Basically the gains seen in the Dollar across the board should follow-through today. There are some near-term corrections expected but later follow-through. From that point we shall need to see how the reversal handles itself to get an idea of the larger picture. In particular GBPUSD is the one that surprised the most and may be pointing to a stronger move than I had expected, one that could shift the daily outlook. Keep an eye out for this one as this could be a game changer…

AUDUSD recovered and looks like it will extend gains. I’m slightly nervous about this given the expected negative correlation so take care. The Aussie / Europe correlation hasn’t been that hot recently so best keep an eye out for shifts that could change the outlook.

USDJPY recovered while EURJPY slipped… In particular I see the downside in the cross to be fairly limited and this makes the EURUSD-USDJPY-EURJPY balance quite difficult to manage. Keep this in mind and note where the breaks are so that advantage can be gained from the outlooks of all three. As far as I can see it will imply that EURUSD may need to recover relatively deeply after this decline. Of the two JPY pairs I feel that EURJPY has the stronger structure to follow.

While I think we’ll see further Dollar gains but the first half of the day should not see any strong moves. Those come later…

Have a great weekend
Ian Copsey  


Thursday, January 30, 2014

TECHNICAL INDICATIONS FROM 29th JANUARY 2014

Apologies for not providing these updates for this month. I have been tied up with presentations and other work...

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. Price development has been quite complex over this week. In general price equilibrium is being tested and there is a fine balance between bullish & bearish as the Dollar is pressing up to the weekly Clouds...

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


Complex structures

This morning’s analysis was quite a trial. I wish I could just return to traditional Elliott Wave and guess which are the wave endings and slap some numbers or letters according to my whim... Alas, the days of being able to so that have long gone. For me now it is imperative to ensure that the fractals all develop correctly... 

The Europeans were all at sixes and sevens with individual structures appearing to conflict with each other in terms of which direction they actually want to take. I have been looking for a base building development but it’s certainly not been clear and could even be considered as a corrective structure. I’m not quite at the point of reversing my outlook but I’m certainly very defensive and am open to breaks in either direction. However, we’re going to need a clear break – one way or the other – to set this off on a more directional move. For the moment it would be wiser to take a neutral stance until the situation is clarified.

Even the Aussie hasn’t developed quite as expected, but then not too far off. My main preference is for further gains although for the moment there remains a risk of a slightly deeper correction. It’s probably better to stay clear of this one also to establish a more defined entry opportunity. A break above the 0.8825 high would be extremely helpful.

If there are any pairs that seem to have greater clarity it is the JPY pairs. Yes, there are some complications in the decline but compared to the Europeans they are relatively limited. There is still more downside to come but there are signs of these losses being limited – more so in EURJPY than in USDJPY. Of all, I think these two pairs are a little more straight-forward and use a varied toolbox of indicators to help identify key (potential) trading areas. However, I have to say that I feel there is a risk of seeing some complicated development in the shorter term so that momentum can begin to support the outlook I have.

There are still no out and out clear trades today so continue to approach this market with caution and be certain of your trade set ups…

Good trading
Ian Copsey  


Wednesday, January 29, 2014

DAILY FORECAST FOR GBPUSD

BIAS: Care in the early stages but overall I feel we shall see a second rally higher

Resistance: 1.6590-95 1.6624 1.6638 1.6655-65
Support: 1.6557-60 1.6535 1.6509 1.6473-88

MAIN ANALYSIS: The losses I expected did not occur with the break above 1.6600 provided a move to 1.6624. This implies that we should see one more rally. It is now critical that the 1.6557-60 area remains supportive - and if this holds then we should see gains up through 1.6624 and to the 1.6655-65 area followed by a correction of around 30 points en route 1.6684 minimum and I suspect the 1.6600-14 area. This should cap and trigger a reversal lower. 
However, there is a chance that the initial rally reaches 1.6638 for a 30 point correction and then the high could be between 1.6670-90 before reversing lower.

COUNTER ANALYSIS: Only a break below 1.6557 would allow a dip to the 1.6509 (area) before seeing the rally above 1.6624 but then take care in the broad 1.6680-1.6714 area where I'd still expect a reversal lower.

A direct break below 1.6500 and 1.6473 would trigger more direct losses...

MEDIUM TERM ANALYSIS:
29th January:  Yesterday saw a move above 1.66 and thus we should see another push higher to the 1.6700-14 area max that should cap for a recycling lower back to the 1.6308 low and to 1.6260-90 minimum...

Only above 1.6720-25 would signal a resumption of the uptrend to 1.6956.

Good trading
Ian Copsey

Vulnerabilities remain

The market appears to be transfixed by recent developments and certainly unsure of which direction should be favoured. The structures that are developing are extremely complicated and as such the risk of error or misjudgement is much higher at this point. That this type of development is occurring now is rather unfortunate as we are in the process of base building for a stronger directional move but will need to identify the key waves to be able to identify future ones. Thus, the need for caution remains high.

If I saw any clue for today it comes from GBPUSD that rallied above a level that should have held if it was to retain a bearish structure. This tends to suggest that as long as the Europeans remain correlated that we should see a general Dollar bearish day. That tends to suit what I thought I unearthed in EURUSD while USDCHF still contains quite a complex structure. Hopefully over the course of the next day or two the structure will begin to become more clear.

The Aussie… didn’t reach my downside target and broke above key resistance. This also suggests a bullish outlook although perhaps not too directly. This means there are a few alternative options but I suggest looking for bullish trade set ups rather than getting caught with a short position…

USDJPY has confirmed an intermediate low at 101.77 and also seems to be floating in mid-air between a deeper correction higher and a resumption of losses. I have taken a more bullish view of this for now but considering we’re in a correction higher it will be well to protect profits in case the larger decline resumes a little earlier than expected. Equally, this should give a lift to EURJPY also, although note that it is in a similar situation as USDJPY so for more medium term outlooks it’ll be better to be on the lookout for bearish reversal indications.

The messy development we have seen over the first two days of the week looks like continuing and thus take care and if uncertain … take profit.

Good trading
Ian Copsey  


Tuesday, January 28, 2014

Still risk of early complications

We seem to have seen key breaks in EURUSD and USDCHF that should herald a stronger follow-through at some point. The problem I have right now is when that stronger directional break will occur. The wave development has been particularly complicated in the 5-minute charts with lots of overlaps and general noise that makes reading the structure rather hazardous. The base approach is to understand the underlying risk and when this is confirmed the follow-through should begin to develop with fewer complications. This is applicable to these two currency pairs at least. In GBPUSD the move higher from 1.6473 was very firm and is bordering on a break higher… but one that hasn’t been confirmed. Until then it’ll be best to keep an open mind…

AUDUSD corrected higher and quite deeply, indeed to very much the maximum that it could. I do still look for the downside to develop with a general target range on the downside. Be flexible as we push into that range and consider momentum across 4-hour, hourly and 5-minute charts.

USDJPY still has a sharply declining Price Equilibrium Cloud in the 4-hour charts but the way price has been holding up will allow the Cloud to flatten out. During the process there remains a risk of minor new lows. I don’t see this coming low to be the final low but may well be the penultimate one. This tends to work with EURJPY that seems to have found an intermediate low but is still due one more. These pairs could therefore be a little messy and choppy so I’d recommend observing first and reacting only if there is a clear trading opportunity.

Overall today has potential to remain rather difficult but continue to consider the main directional bias and prefer trades in that direction.

Good trading
Ian Copsey  


Monday, January 27, 2014

Could be a whippy day

EURUSD and USDCHF did prove to be the best vehicles on Friday, developing to plan extremely well. The initial Dollar lows and correction were caught perfectly. From this point there is some near-term risk, a little uncertainty but within quite definable limits. The favoured outcome today seems more skewed to breaks of swing highs/lows and a reversal in the opposite direction. Therefore we’re going to need to perform due diligence to ensure that the whip doesn’t go in the wrong direction. I’d actually suggest noting the break levels and working on those to establish positions.

GBPUSD rallied well and it too faces a similar outlook to the Continentals. I have my favoured view but it’ll be best to see all three Europeans confirm the same final outcome. From what I see, all three should be relatively well correlated. Thus, remain patient as the week starts as we should see ourselves set up for a more directional move over the coming days.

AUDUSD didn’t follow my favoured route and instead extended losses. That we didn’t see the recycling higher was a disappointment but the break level worked well and today should see follow-through. However, do take care as I can’t see this being a massive decline and more likely a correction higher before too long.

USDJPY continued losses and has forced an adjustment in the daily chart. There is probably more to come but the near-term is suggesting limited downside for the next day or two. With 4-hour & hourly momentum still pointing lower the bearish expectations do seem to match with the structure. Much can be said of EURJPY. Just take care as the risk of a more slower and ratcheting decline. 

Have a profitable week
Ian Copsey