The early morning collapse was just what the doctor ordered – except for the 300-point rally thereafter (in EUR/USD.) Cobwebs dusted, I now have to pick myself up and sort it all out. While this was a surprise detour it hasn’t changed the expected outcome I have had from the start of this year. That GBP/USD also followed the lead of EUR/USD was another pain in the proverbial backside but, at least, it is still fitting into the targets I have been pointing to – at least in terms of the maximum pullback.
Overall, I feel the vast bulk of the move is over and we just need a tail end move to complete the pullback. This will likely overlap with GBP/USD but the possible problem could be the identification of the expected reversal. In EUR/USD the rally was so sharp that momentum is not particularly clear and we may only see a limited hourly bearish divergence – although we do have a 30-minute divergence…
Even AUD/USD whipped back higher within a final zigzag in a triple three – well almost at this point – just to twist the knife into my stomach to show it was king. This should develop similarly to EUR/USD today.
Finally the JPY pairs… USD/JPY provided a decent rally but then a sharp pullback. It may deepen a little more – but it’s not a requirement. The only reasoning is the expectation in EUR/JPY that appears to need a pullback lower first.
So this could be a tricky day – at least for the first two-thirds of the day – but keep looking out for the reversal…