It’s all getting rather tedious, but we’ve begun the week with some gaps – not quite the gut wrenching ones we have seen over this Greek tragedy saga – but one that has stretched the ratios a little beyond where I feel comfortable. From that perspective there isn’t much sense in throwing in trades for the sake of wanting to gamble. From this point of view, as we have seen over the past few months, it has been a case of having to be alert to break levels and trying to envisage all alternatives that could allow the market to avoid a trend. The process of interpreting alternative complex corrective patterns has been quite challenging. Very challenging.
From what I can see, the underlying weekly trend in the dollar continues to be higher, perhaps now with the exception of USD/JPY. Overall, Friday’s outcome was pretty well achieved across all currency pairs with the exception of… yup… USD/JPY. I’d like to think that this morning’s gap may just represent a slight stretching of the structure in EUR/USD but we’re going to have to ratify that. Otherwise, USD/CHF and GBP/USD still seem in line with my expectations.
AUD/USD played its own game, all alone down in the bottom corner of the world, but basically behaved as expected and this still seems to be on the right track.
As for USD/JPY… I hadn’t expected such a deep rally but noted, when I went through the analysis, that a move back lower was likely on open. Well, that one was right. The slight issue here is that there is a duality to the structure in the rally that could be considered corrective – but also with a minor shift it could be considered impulsive. At this point, with the gap lower in EUR/JPY it looks more bearish but the cross could still be in a longer, complicated corrective phase.
So, as usual we’re going to have to be patient, let the market calm down and take the next step once some normality – or a final decision – develops…