A Waiting Game

Tiresome. That seems to sum up yesterday’s trading. The market appears to have become bogged down in the drudgery of indecisive short-term consolidation patterns. There is still a little more to go but assuming that we see the type of trading witnessed yesterday there’s a good chance we can achieve a greater level of freedom. Even then, we have to bear in mind that this consolidation is still part of a larger corrective structure and that continues to highlight the risks associated with an uncertain market.

This should keep EUR/USD and USD/CHF held in a range through Europe and potentially into North American trading, while GBP/USD is a little less clear. The Pound has dropped to new lows although does appear to suggest a more corrective development that would imply a larger recycling. It’s difficult to contemplate the larger decline will develop since it hasn’t appeared to provide a firm enough starting wave. Thus, it’s going to be best to note where the line between bullish and bearish lies.

The Aussie has gone on a Walkabout, apparently aimlessly wandering around in the Outback and not really providing any solid information. It has therefore joined the general listlessness and needs to begin to form a more definite pattern/structure to be able to have a firmer view on the outlook. As mentioned yesterday, I still feel this is worth sitting out until a stronger structure can be identified.

As for the JPY pairs… well, USD/JPY has remained on a slowing downward path but without any solid intent. It remains above crucial support but has clearly not made any key breaks with which we are able to take any advantage. However, the range for the break levels is getting tighter. The risk is that the 4-hour bullish divergence is being stretched and the hourly bullish divergence is not robust at this point. There is a suggestion from EUR/JPY that a recovery can be seen, with the aid of both 4-hour and hourly bullish divergences (although weak) but there’s a long way to go to confirm a reversal higher. Until then we remain in the same boat and have to sit tight and work on the short-term development.