Ian Copsey | Jul 20, 2012 07:26AM ET
Those triangles I mentioned Thursday… did you blink? They morphed… These complicated corrective structures tend to have a will of their own, slipping from one disguise to another just to make sure that we fumble around trying to second guess the next move. The interesting outcome is that the follow-through lower in the dollar and then correction seems to have left us with only one more corrective structure to come.
Or Am I Third Guessing?
It does seem that way. I look at higher time frame price equilibrium levels while we’re in a trend to try and identify the rough area where the corrections can stall. Particularly in EUR/USD and USD/CHF the equilibrium levels have caught up with the dollar’s move higher and are nestling comfortably below and providing a gentle cushion of support. Could that suggest we have seen the end of the correction already? Well, we have seen enough and could argue for the dollar to resume its uptrend but I’m not convinced, mainly due to GBP/USD and AUD/USD, both of which still seem to have quite bullish momentum but some signs that things could begin to get tougher in the not-too-distant future.
Thus, I still favor another attempt to try and edge the dollar lower so it should be just a matter of time before we finally see the corrective lows and for the uptrend to resume. There doesn’t seem to be too much room on the downside so I feel we’re going to need to be very observant to identify just where this correction will stall. Could it occur today? It’s possible… but it all depends on how complicated this last push will be. It could last into Monday. However, the signs are growing and therefore take heed of warning signals.
USD/JPY should see more of the same, still bearish but not directly. I envisage a choppy day but overall lower. This has complicated EUR/JPY but I suspect this will recover due to the EUR/USD outlook…
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