Although on a break, I was working on completing an updated book on Fractal Forecasting. Therefore, I was watching the market and was quite perturbed by the development. It took me a great deal of effort to ratify the structures. I can’t say that I have been left with a sense of satisfaction because there were some baffling moves that I still have some serious doubts. I have had to look at the implications of the moves in all currency pairs to observe for the underlying direction in the dollar. I still can’t see this as anything but bullish although, until I can confirm this, I’d rather take this step by step. I may well be correct about the strong dollar – but there are still some potential shenanigans that could cloud the air.
My initial view for the Continental Europeans is that we could see some consolidation for a day or two, while GBP/USD appears to need to take advantage of this opportunity to extend gains to reach targets I set a couple of New Moons ago. So out of these three, it’s GBP/USD that appears to provide a decent move, but take care because it has hardly been a great vehicle for direct moves.
AUD/USD was the best of all last week and developed perfectly. That’s the good news. Having seen the low at 0.7215, it should now be setting up a longer correction and we all know what corrections can be like. There may be some opportunities, but I sense they could be few and far between.
The JPY currencies? Well, the rally in EUR/USD spoiled my EUR/JPY outlook. I am rather tentative now, although this does seem to suggest a bullish outcome, which could be quite scrappy. Obviously, much depends on USD/JPY too. What happened last week with the break above 125.05-10 was that it appears to have produced a more bullish outcome, but the entire structure has been pretty scrappy, and I’d only be confident of a rally if we make new highs. Even then, I sense this could be a tough development so a lot of care will be required…