Phew, I began the analysis around 1 am and was steadfastly attempting to generate a valid development in several of the currency pairs. Tough? As old boots… Then came the cavalry under the name of General Yedlin and there was blood across the streets.
At that point it actually became a little easier. It wasn’t a pretty picture because, from the lows in USD/JPY and USD/CHF, I had been struggling with the number of combinations that needed to be covered. Thus, because we had seen an obvious sharp move, it was easier to make sense of the development – at least in most pairs. However, the sharpness of the dollar losses is the now the issue in hand. I am expecting to see this reverse but due to the velocity the structure it doesn’t really have a structure and we’ll need to see some dollar bullish divergences to provide the base.
One concern is GBP/USD that has approached the 1.31251 high within 0.00003 points… This could be a double top – and I jolly well hope so – but we’re going to need a dollop of caution until this is confirmed. If not, then we’ll be looking at a stronger follow-through. However, I sense it should be the double top outcome.
EUR/JPY was basically unfazed by all the noise going around and has basically worked out well. Ideally, this should mean that EUR/USD has very little more upside because it will need to provide the downside acceleration. Yes, USD/JPY may provide some downside but I’m not expecting too much lower…
The Aussie – it was a complicated correction but has now followed through higher and should be looking for the 0.8075 target (area) for a pullback.