Actually, perhaps I should have left the “quick” out of the heading… It’s hardly surprising though. As liquidity thins quite sharply towards the holiday season, the big traders will naturally reduce their positions just in case a dramatic catalyst generates panic. Thin liquidity would exaggerate the movement and the process of trimming/cutting positions would cause far greater losses than in normal conditions. Basically, there is no interest in pushing out the boat.
Hence, we have been seeing the type of trading over the past week and which will probably continue through to the New Year. Having stated this, I don’t think we’re going to remain in a sideways range through to year-end. The last few days, the Continental Europeans have actually followed my general template. That the targets are becoming less exact is more of an expected annoyance. However, if I have caught this basically correctly, it will mean a breakout quite soon. Once it does we should see follow-through but I’m not expecting a significant move.
Where there does seem to be room for a more directional trade, is in GBP/USD and AUD/USD. The Antipodean has been pretty consistently bearish. It has had its own periods of consolidation but momentum in the larger time frames does still point to the downside. Equally yesterday’s losses in GBP/USD (at long last… my patience was wearing thin…) do have the potential for follow-through also to my long-standing target.
As for the JPY pairs… well, not quite the result I had been hoping for – and my patience is beginning to wear quite thin. EUR/JPY puzzles me and I find it hard to get too bearish due to the structure running up to the recent highs. I do think we are approaching a period of Yen strength – but not quite yet. Indeed, I feel that we’ll see the Dollar weaken once we get into Q2 next year (approx) but it just seems as if we need some further strength following the current correction. Thus, the reluctance of USD/JPY to make further gains is rather frustrating. I have pulled back from this currently and await a stronger directional signal.