The caution I outlined on Friday was justified. There’s something that doesn’t seem to add up and from one or two pairs and I get the feeling that the start to this week could be slow, potentially ending up in consolidation. In particular, GBP/USD (which hit my 1.5136 target within 1 point) is in a position that needs to react in a manner that is related to an earlier correction. That reaction has a mild risk of generating a consolidation. There is also a chance of USD/CHF doing the same.
However, not all the pairs have the same clues that would lead to consolidation – but I’m not sure that will make much of a difference except the potential outcomes in GBP/USD and USD/CHF have a more defined pattern to follow while EUR/USD could just follow a corrective route. What we should be looking for over the course of today is how GBP/USD and USDCHF develop, confirm the suspicion of a consolidation pattern and match those endings with EUR/USD – perhaps even AUD/USD. Of course, if the basis for a consolidation fails, then we need fall back to Friday’s outlook.
Even the Antipodean found itself trapped, looking to one side and then the other and deciding to stay put. It may well develop similarly to EUR/USD – corrective rather than in a consolidation.
For these 4 currency pairs we should be able to make out what can happen on the breakdown of any of the consolidation patterns.
Meanwhile USD/JPY, having completed its own consolidation pattern, moved higher as expected and should do so again today. Whether it will be quite as straightforward as Friday is doubtful but needs to catch up – having been the laggard over the past week or three. This could have the potential to move sideways but basically should be more bullish than not. This should brush off on EUR/JPY although its development is not quite so easy to judge. Thus, best be cautious of the cross until the current confusions break down.