Basically, everything appears to be in order despite the broad swings we have been seeing. One development from Friday was the break above the 110.67 level that broke the downside – although the 110.85 high did not conform to the ratio structure. However, having seen the break higher I have to concede to an “outlier.” We seem to have a limited downside but having seen a Wave a/iii there is the risk of a complex correction.
Otherwise, EUR/USD and USD/CHF should maintain the dollar bearish outlook but we’re closer to a final reversal that should provide a firmer directional wave. This is going to need some patience to allow the development to … errr… develop.
In GBP/USD, I looked back in my charts and noted that on the 21st June we registered a 3-wave rally. We therefore have the duality of a potential limited pullback or an expanded flat. Thus take note of the break level that will provide the expansion.
The Aussie has to complete its expanded flat.
EUR/JPY should see EUR/USD provide the main boost for the rally. However, whether EUR/USD can take on the burden for the rally by itself is a bit of a stretch. Don’t rule out the possibility of USD/JPY providing support also…