Treacherous Price Development

When I looked at my charts this morning I thought a group of dizzy spiders had been scampering around. Erratic, scribbling of infants is another description that would provide an idea of the scrawl I saw. This “noise” makes life a lot more difficult to be 100% confident of structures developing at this moment. Even the U.S. indices are going through a similar process. Therefore, do please exercise more than the normal level of care when trading. This type of “noise” can easily break above/below prior highs/lows, trigger stops and then resume the original direction. If in doubt, don’t trade. If you do make a trade, best take smaller positions.

However, despite the erratic development, what we saw yesterday was pretty much in line with the expectations for dollar gains. I can’t see that they are complete but I don’t see a huge follow-through. Thus, consider the estimated targets I have and take profits a little earlier than normal. The risk of stubby Wave v’s is quite high.

As suggested, the Aussie provided the most consistent move – bearish as expected and just a little more direct than I had thought but we’re not far from some corrective behaviour that should slow the decline. This could generate a period of corrective behaviour before the final follow-through.

USD/JPY was much stronger than expected and seems to suggest follow-through within the correction – and potentially to an extreme in this position. However, do be aware of bearish divergences at some point that should come after a modestly deep correction. This rally came as a bit of a surprise and has made the EUR/JPY cross to look as if it needs to trigger a marginal new high – preferably with bearish divergences. A combination of USD/JPY topping out and resistance in EUR/JPY would be very helpful.

Another day to take profits when seen…