With yesterday being the first day back there’s always a bedding-down process just to confirm I have caught the structures. Thus, my expectations were cautious - and to a degree - were at least pointing in the right direction so I was modestly satisfied. However, there were slight deviations in one or two pairs that began to open up the likely expectations. What conspired has actually begun to formulate a base for some pairs to develop foundation waves – although this wasn’t uniform across the majors. The key here is that, as mentioned yesterday, there is a risk of some modest volatility and this is where we need to be flexible within the context of a swinging market. Thus, we may need to control urges to look for trends a little too early and in some pairs this may imply some complex corrections.
Today, we should see some modest follow-through from yesterday. This appears to imply a general correlation across the majors. Once that follow-through is complete the risk appears to be for consolidation. It’s EURUSD that has the more volatile outlook triggered by the countless deep Wave b/iii’s and also the factor of alternation. When there is a deep Wave b/iii it can still see the Wave ii and Wave iv provide confirmation of alternation that can allow the Wave iv to fall short. Therefore, we’re going to need to observe very carefully.
Of all the pairs it was AUD/USD that took another day off – well kind of… Perhaps it was a case of too much of the Amber Nectar and hangovers but clearly there was no interest in pushing even limited boundaries. Hopefully, it will manage to provide a little more energy today.
I feel we also need to watch the JPY pairs carefully also. EUR/JPY appears to be close to a barrier and this is where the volatility can help. Both EUR/USD and USD/JPY are expected to continue to see some solid swings – so take care of these two – and how this will impact on EUR/JPY…