Monday, March 31, 2014

Ambiguity as the week begins

Dollar resistances broke in the Continental Europeans but not by too much. It has left me a tiny bit puzzled in determining whether we have seen a total Dollar reversal or not. Certainly it appears to have done so but will also imply that the Dollar Index has fallen significantly short of its downside target. I still can’t reconcile the bearish structure there and I could argue an ambiguity in EURUSD. If I am to find a solution that implies EURUSD has topped out then the run up to 1.3966 would require an unusually deep correction in a lower degree Wave (iv). However, if I look at Friday’s 1.3704 low as a current Wave (iv) it is actually less deep than the prior one… Having said that, it’s difficult to argue that USDCHF appears to have broken higher… In addition, there is also a scenario that could see some recycling lower in the Dollar… Therefore, we have a few conflicts that require management.

Even in GBPUSD the outlook does seem to remain bullish, not by a huge margin at this point, but nevertheless it should imply another positive day and to a level that seems to suggest subsequent follow-through… Likewise, though often not correlated, AUDUSD still remains on a bullish track and I expect further highs today.

USDJPY rallied to current levels a lot more directly than I had earlier expected and hauling EURJPY higher in the process. Friday’s low in the cross held above the key support that, if broken, would have sent it much lower. The rally was therefore in line with the recycling of which I had warned but shouldn’t make massive gains today.

Thus, as we start the week the Europeans still need some care and attention due to their rather ambiguous outlook. I would therefore suggest following USDJPY in particular that could provide the best outcome.

Have a profitable week
Ian Copsey  


Friday, March 28, 2014

DAILY FORECAST FOR EURJPY

BIAS: Take care until the 139.80 area is broken - or breaks back above 141.03

MAIN ANALYSIS: We have seen losses down to just above the 139.92-12 support area. Given the nervousness in the market I feel perhaps the 139.81 level should be watched also. For there to be stronger losses obviously one of USDJPY or EURUSD must break support. Until then the expansion level at 139.81-92 is critical support. A break below would extend losses down to 139.43 and later to 138.36 and possibly even 137.77.

COUNTER ANALYSIS: A break back above 140.70-75 is positive but above 141.03 will help more. If that is seen then we could be within a recycling higher and back to the 141.88 - 142.20 area… 

MEDIUM TERM ANALYSIS:
28th March:   We have, at long last, seen a break and to the downside. I am still just a little wary of the 139.81-12 support area that must break to maintain losses down to 138.36 and possibly 137.77... If seen it would provoke a correction but then lower.

A break back above 141.03 and 141.30 would risk a recycling back to the 141.97 high and probably 142.20-40 before the downtrend resumes. 

Good trading
Ian Copsey

Standing on a tightrope

There were some telling developments yesterday that did not surprise, some that did surprise. This has brought the Europeans into focus. As I mentioned yesterday, it does seem to me as if the options open to the market are getting more limited but would suggest a clearer direction by noting break levels on both sides of the market with a preference for Dollar bearish as mentioned.

We’re there. Right on that point. Well, ok… in EURUSD it wasn’t on that point but one below. Will it suffer from vertigo or clamber itself back by its nails and make an amazing recovery? At the same time USDCHF decided to remain where it was, spurning the chance to break above 0.8878 but otherwise doing very little. Perhaps the most telling was GBPUSD that repeated the negative correlation with EURUSD and soared way above my resistance. Has it decided that the water below was too cold and took the opportunity to turn itself around? Maybe… but it has stalled just below a key swing high.

It is going to be a close thing… In EURUSD and USDCHF Price Equilibrium remains Dollar bullish – both 4-hour and hourly. If they are to reverse then we’ll need to see a very tight range day with a breakout to the Dollar downside probably developing only towards the end of the day. Until then we shall have to sit on our hands and observe…

The Aussie developed perfectly… but momentum remains strong...

USDJPY was another one that provided a surprise. The early part of the day was mixed but basically bearish as expected but the deep recovery has set itself up for a longer period of range trading. Thus, continue to expect this to remain in choppy corrective price action for a while. This will have a knock on effect on EURJPY although arguably it’ll be EURUSD that is likely to make the bigger calls. Certainly the cross has not broken below a threshold that would confirm stronger losses at this point…

Probably a tense and frustrating end to the week…

Have a great weekend
Ian Copsey  


Thursday, March 27, 2014

A mixed bag of nuts

Why nuts? Because the market is driving me nuts…

EURUSD drifted lower, GBPUSD drifted higher, USDCHF drifted because it couldn’t decide what to do and the Dollar Index looked at them and laughed so much it couldn’t move. Disjointed is probably an appropriate adjective to use at this point… I guess it’s hardly surprising given the socio political backdrop but it sure makes the process of forecasting a wee bit more than difficult.

Base preference remains Dollar bearish for now and this seems uniform across the major currency pairs except, perhaps, GBPUSD. There are some definite limits to this and not a million points away but before committing to a direction we’re going to need some stronger catalyst. And from where might this come? I don’t know… However, it does seem to me as if the options open to the market are getting more limited as every day passes and that suggests a clearer direction before too long. Therefore, at this point I am looking at break levels on both sides of the market with a preference for Dollar bearish as mentioned.

The Aussie bounced from 2 points below my support but the upside exceeded expectations yesterday and appears to suggest a more direct rally towards my target. Given the shallow nature of all corrections from the 0.8994 low the risk of a more volatile tail end will be much higher. Today should see a little higher still.

USDJPY has made its move and should provide the best opportunities for today. Opposite to the Aussie that has seen shallow initial corrections that will provide deeper ones later, USDJPY has seen deep initial corrections that imply a more direct decline with shallower corrections. Thus, this should be a sell on pullback day… The knock-on effect should influence EURJPY that also looks like it has finally decided to extend losses. There is just one key support area that should be observed that could cause a problem. Take note of this area in order to be able to manage this risk.

Good trading
Ian Copsey  


Wednesday, March 26, 2014

Fall back… regroup…

I called for a mixed day yesterday but the individual pairs seemed to have panicked and ended up running around like headless chickens. At first sight the biggest conflict is between EURUSD and USDCHF. The former reversed Monday’s whip higher by whipping back lower to break the previous low by one point. (Has the dominatrix returned?!) The latter actually broke above its previous high in what appears to be an irregular flat correction. The problem here is the conflict between expected outcomes. The first can still be considered just a minor adjustment (remaining Dollar bearish) while the latter has a far more critical outcome of completing the corrective pattern and then revert higher (therefore Dollar bullish.) So somewhere in this there I have to decide whether this implies we have seen the high in EURUSD or I have made a mistake with USDCHF… Meanwhile GBPUSD pushed to new highs that I had not expected but could still be considered as a much deeper correction. So there’s another puzzle to solve…

Meanwhile, AUDUSD formed its own complex correction before it resumed the uptrend as expected. This does look bullish although there is some way still to go. So linking this to the Europeans, does this imply that we should still be looking for Dollar losses?

Let’s add in USDJPY. Well, it topped out extremely well in the right resistance area and does seem to be pointing lower. Thus the weight of evidence does suggest that I may have misjudged USDCHF… I do see USDJPY more on a bearish path although it is unlikely to take a direct path. Much depends on the depths of any correction. Certainly EURJPY has been of no help whatsoever and behaving like the Keystone Cops running frantically one way and then reversing back again. For the cross we need to remain patient and note where this wretched consolidation will break.

So is there any other indication that can help? Well, certainly the Dollar Index has displayed the same volatility over the past two days but does still retain a more bearish bias. Thus, while employing a healthy dollop of TLC, the expectation is still Dollar bearish but perhaps we need take cautious steps until the current confusion is resolved.

Good trading
Ian Copsey  


Tuesday, March 25, 2014

HARMONIC ELLIOTT WAVE PRESENTATION

I shall be making a presentation of Harmonic Elliott Wave tomorrow at 10AM GMT. It is being held by Forex Magnates and organised by FXStreet. It will outline the deficiencies in R.N.'s impulsive structure and how the modification eliminates extended waves, diagonal triangles and failed fifths along with a matrix of ratios that enable some pretty accurate forecasts. The structures provides greater discipline and reduces the "art" side to a more logical, disciplined approach.

You can register on: http://www.itraderexpo.com/register?utm_source=FXStreet&utm_medium=COM&utm_campaign=iTraderExpo 

IAN COPSEY

OUTLOOK FOR SILVER OVER THE COMING WEEK

INTRADAY CHART
25th March:

We are close to completing a triple three as expected although we may need to allow for a slightly deeper drop to the 66.7%-76.4% retracement in Wave [ii] between 19.47 - 19.80. I have an approximate target in Wave v around 19.66. As this declines watch for both hourly & 4-hour bullish divergences to be present. It would be useful to match this with the expectations in Gold. 


Once the low is seen the resumption of the rally should continue and move back to - and above - the Wave [i]. The first target will be the span of the last Wave b and after a correction back to the Wave x swing high...

RATIO TABLE
Good trading
Ian Copsey



A mixed day expected

The Dollar suffered losses as expected but not quite in the manner I had been looking for. It does give a certain amount of concern, not in terms of whether they’ll continue but more because of the potential for more complex corrective activity that would extend the current development for a longer period. That said, looking at today I feel we should see the Dollar lose out a little more but probably not by a huge margin. This seems to be implied in EURUSD and USDCHF in particular. Therefore expect a more guarded day today. In comparison GBPUSD developed well and reached the upside target extremely well – within 1 point. This suggests the potential for a new low here but like the Continental Europeans (but in the opposite direction) only by a limited margin.

The Aussie shocked once again. From what I can see the gains to new highs yesterday should be corrected thus echoing, to a certain degree, a similar outlook of more corrective activity. However, with yesterday’s new high it does tend to return us to my original bullish outlook. It’s just today that needs a bit more care.

USDJPY also topped out in my resistance area and has made some downward progress. I’m not convinced it will extend losses directly and more likely to correct higher. The only problem will be to know how deep it will be. Thus, the downside remains the larger overall risk. That leaves EURJPY remaining in the range of the past 11-12 days and confounding us with its intent. I have advised to leave well alone and that remains the best approach until a stronger break is seen.

Note the key levels today and don’t look for home runs unless those levels are broken…

Good trading
Ian Copsey