Still Expect Limited Trading

Indeed, my mixed feelings I described yesterday came to pass. There was an oddball of structures that didn’t quite seem to align with indicators, which generated a mixture of some good calls and some wayward. It looks like there’s a stronger correlation across the major pairs today, but having said that, I can’t see that we’re going to see a clear directional move. The risks for further dollar gains will always be there, and more, it’s a matter of depth of corrections lower. We are at a stage where the projection ratios for the next section of the impulsive wave have variable retracement targets and they needn’t be too deep. Therefore, we’re going to have to be particularly observant to identify when the dollar continues its rally.

Indeed, the 4-hour Price Equilibrium Clouds are hovering close to price - while at the same time, the dollar has already cleanly pulled away from the daily Clouds. This is applicable to the two Continental Europeans and the Aussie.

In GBP/USD, it appears to be wandering through the countryside enjoying the twittering birds and the greenery, lost in its own world without a care in the world. In terms of structure, there is a sense of a bottoming, with momentum indicators beginning to display signs of bullish divergences. While the Continentals are promising the opposite, it may be well to be mindful of where the line in the chart is that would turn this round.

The break above 123.43-55 was enough to confirm the upside. I have to admit, when trying to resolve the structure from 118.32, I still – even in retrospect – find the bullish structure very difficult to follow. However, at this stage we’re fast approaching key targets. It should lead to a correction first, so basically matching expectations in the Europeans. Indeed, it needs to see a correction now to ensure that yesterday’s 135.01 high in EUR/JPY does not break (or by only a small margin.)

As for the Aussie… its walkabout has been rather haphazard, but really quite close to a projection target. The development has been slow and steady, and I suspect this will remain the same until the next correction has been seen… Thus, while we should see additional losses, they shouldn’t be too excessive from this point.