Time To Wait For Breaks?

Messy, very messy… Corrective ratios are being stretched in some pairs and projections in others. The risk is that they are beginning to push the boundaries where trends break down and in other currency pairs, corrections. The internal structures have become excessively noisy and really quite difficult to judge. What this does tend to suggest is that the risk of sharper moves appears to be rising as we go into the weekend. In several pairs I can point to limits, beyond which will confirm a larger reversal which is what I want in some cases and in others will make life a bit tougher. There are potential price patterns developing that could be useful to note. Some are close at hand and others need more work to have them confirmed.

All in all, the impression I get is that the market’s basic views are shifting to one of caution and with that, the potential for a capitulation in the Dollar strength… for now. Therefore the caution I raised yesterday was valid and should be carried forward into today. This definitely applies to all three Europeans face that need to make important decisions.

The Aussie didn’t reach its re-tracement target yesterday. It may have made a new low but in this position it has a strong risk of a recycling to reach the target I had suggested.

USDJPY maintained its strength and which has actually taken me by surprise. There has been an element missing that has caused a great deal of vagueness about the rally from 104.68. One key tool that I use – alternation – has been conspicuous in its absence which really makes the decision making process much tougher. I do think it could be quite vulnerable but I can’t quite confirm the outcome with any definite confidence. That EURJPY should extend gains may be a factor for a strong USDJPY, but I have my suspicions that EURUSD could provide a helping hand – as long as it breaks above yesterday’s high…

Hence, it’s a day for decisions by the market. Keep your ear to the ground and eyes keenly peeled…