Friday did not go well. Yesterday basically saw a stabilising process with the exception of USD/JPY that confounded with its continued losses. The result is a mix of complicated corrections that do not appear to have been completed and thus we’re still subject to a continuing period of choppy price behaviour in the European currencies. These should continue to see initial dollar losses but we’re not too far of yet another correction. Of the three it is GBP/USD that has more risk. The outlook I have been considering has been for a much stronger push higher and therefore it does need to play catch-up.
The Aussie dipped pretty low but remained above the 0.8642 low and that’s the way I’d like it to stay. However, having said that the recovery has been weak and is hard to fit into the overall expectation I have for the next larger wave degree move. It is therefore worth being aware of the alternative – a loss of 0.8642 – although I don’t see a massive decline. Equally, the catch 22 could be another high before that push lower which would tend to correlate with the Europeans.
The break below 107.52 was a massive disappointment for me and forced me into having to review the daily structure from the 100.75 low again. I can see a solution but given the complexity of the structures all-round I’d prefer to see a confirmation of a return to the upside rather than anticipate it. If the losses are too firm this would require yet another major review and one that I feel rather concerned about. Indeed, the losses in EUR/USD and USD/JPY undermined my bullish outlook in EUR/JPY also. Given the uncertainty in both intrinsic currency pairs I’d prefer to see them complete their respective corrections and from there consider the next move.
Thus, the Europeans and Aussie are definitely less stable and should be treated as short term trades only at this point. The JPY pairs are fragile and need some time to settle again following the break from expectations…