Well the corrections in the Europeans completed… but then decided to add another corrective pattern on top. This has made things just a bit more complicated, not so much that this is happening but there are some conflicts now arising with GBP/USD and potentially AUD/USD – although the latter followed its own route independently anyway. This tends to suggest that we need see some further divergence between the Continental Europeans versus GBP/USD – or the latter will trigger a far more complicated outlook. There should be room for GBP/USD and EUR/USD to deviate slightly but the entire situation does appear to have a rather delicate balance that could easily break down. I’d suggest that care be taken in this group and to place positions only when fully satisfied by a range of inputs.
Of those above, perhaps AUD/USD has the greater leeway for continuing on its own path. That could well maintain a certain degree of correlation with the Europeans but it will be well to understand the boundaries – both upside and downside – that could tell us more about the next development. I’d also point out that there is potential for an hourly bullish divergence but at the same time 4-hour momentum is trying to dig a hole in which it wants to furrow…
While EUR/JPY developed quite well although the expected correction much deeper than expected. This raises another discussion about boundaries and the need for understanding where the current outlook is confirmed … or breaks. The reason I mention this is because of the upside failure in USD/JPY. This does need to accelerate quickly to avoid the potential for a minor new corrective low. However, the structure that appears to be the most logical suggests a very strong projection to the first leg higher and I’m cautious that we could be getting too far ahead of ourselves. If the rally does make new highs we’ll have to deal with it. However, until then, perhaps some attention is required so control exposure risk until there is a more definite break.