Pausing For Thought

My impression of the development at the beginning of yesterday’s trading began to develop as expected but the recovery from 1.2825 EUR/USD was not what was required for a recycling. This forced me to release an update early in the European day with perfect results. This has brought us on to a more direct dollar bullish outlook that seems to be reflected in general across the Europeans together with the Aussie.

Having said, “a more direct dollar bullish outlook” I have to add a “but” because we seem to require the correction I indicated in the update although the Aussie may have been a little further away from the loudspeaker. It would seem, therefore, that we could see some slow, ponderous development over the first half of the day, probably running into Europe at the very least. The problem with this position in the wave count is that it doesn’t really have any fixed target so we’ll need to be on our guard all the time.

In terms of lumping GBP/USD along with the Continentals, I have some doubts at this point. It is certainly a few steps ahead of the Continentals so quite how this develops is just a bit tricky. The correction we’ve seen to 1.6284 could have completed the entire retracement but it does have a rather wide range within it can move and still remain neutral, or even allow a deeper retracement lower. It would be well to note the nature of the structure in an attempt to identify the outcome. At this point in time I cannot see any clear indication one way or another.

The Aussie joined the mini-Wave (b) club. There have been a plethora of them over the past few weeks, the most recent being in USD/JPY. The problem with them is that they appear to be a minor correction within the lower degree but actually they are in the next higher. This places the emphasis still on the downside now.

USD/JPY… same story as yesterday. The balance between EUR/JPY and USD/JPY I described in the weekly video outlook remains valid. The fine balance between USD/JPY, EUR/USD and EUR/JPY is always a bit like juggling three balls with one hand tied – and that’s the hand with which you have to juggle… Which of USD/JPY or EUR/USD moves first and what needs to happen to see the cross decline – and whether it needs to rally first before declining… Best wait until the extremes are seen in the cross first.