It wasn’t a day for swingers after all, although the way price developed did produce rather strange excesses from time to time. Indeed, I feel this process is going to continue for the first half of today and considering that we’re going into the Asian session, there’s every reason to consider the idea of consolidation. However, once this current process is complete we should find a stronger directional move should be the result. Even then, from the balance between USD/CHF and EUR/USD there is a hint of a period of almost sideways trading – that is to say that there should be some minor breaches and reversals over the early period.
GBP/USD made some steady gains. I still haven’t made up my mind whether it’s going to rally directly or following a deeper correction again. It has both choices so it’ll be important to recognise the levels that would point it in a particular direction. Best remain a little cautious until this is clarified.
The Aussie also did relatively well, retracing higher as expected. However, the main risk does remain lower and at some point we should see new lows. I am undecided over the larger structure but currently I am watching the bearish development and will look for this to develop first…
As mentioned in the weekly video outlook, USD/JPY broke free from the consolidation quite early in the day and has seen losses to the next price target. This should see a period of corrective behaviour. However, note that EUR/JPY is getting stretched on the upside. Therefore watch the relative balance between EUR/USD and USD/JPY and see what the implications of breaks in the individual pairs.
In summary, the first half of the day looks a bit whippy but I suspect some movement towards the end of the day.