Yesterday began well but ended without the dollar rallying. This also required quite a significant adjustment to the structures of several pairs – in particular GBP/USD, EUR/JPY and to a lesser extent USD/CHF. Even after having made those adjustments – which in the end provided a clearer picture – I still feel that it would have been difficult to have followed them well because of several anomalies within the structure – extreme Wave C / III’s and one outlier ratio that does occur every now and then. However, as mentioned, these adjustments do seem to have brought the pairs closer together.
That said, we are facing another puzzle – although not quite confirmed – but the approach to the 1.1331 high is rather disconcerting. A break above this level would throw the general balance of all pairs out of whack once again. What is required to avoid this is another correction lower followed by an approach to 1.1331 – but without breach. Indeed, without having used this template, the adjustments in USD/CHF and GBP/USD tend to correlate. Therefore, I suggest observing carefully to ensure this solution develops and avoids a break above 1.1331…
The Aussie was the easiest of all yesterday with the outcome almost point perfect. As it happens, it seems to have the same template as in the Europeans – although the rally could be stronger. However, before reaching its high do allow for a relatively deep correction for the position. This could provide the clue to where the top will stall.
EUR/JPY was another market where price rallied even above my resistance. There are early signs of hourly momentum beginning to slow but 4-hour momentum still seems firm. Much depends on USD/JPY also. Yesterday’s weakness in USD/JPY was not as deep as I would have liked and this tends to push the upside targets higher. So the balance between EUR/USD and USD/JPY does tend to suggest early consolidation but further strength in both pairs does seem to be implied. However, these two pairs do have a less certain outcome.