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Hard To Ignore The Effects Of Crimea

Published 03/03/2014, 11:26 PM
Updated 07/09/2023, 06:31 AM
I am a technical analyst. I ignore fundamental input when it comes to providing a technical price indicator. I see no sense in trying to combine the two because it will merely corrupt the integrity of the respective methodologies. I prefer technical analysis, of course Harmonic Elliott Wave, as the alternative is far more nebulous. However, it is impossible to ignore the impact of the events occurring in Crimea. This does not mean that I’ll change my outlook. What it means is that I need note the structure and what will constitute a breakdown of that structure, then attempt to identify the alternative. That alternative may be a total reversal, but could merely be the recognition of a larger but more complex structure.
Well, that’s the issue I am facing now. We are now approaching the extremes of the corrective limits I outlined yesterday that, on a break, would turn the structure around. So, is that what should be done? Should we just turn around now? I’m not sure it’s that simple. Currently we’re hearing rhetoric from both sides of the conflict. Rhetoric is another word for covering the true intention of the words or to garner more time. In this situation it’s just not that simple. So, basically the outcome is largely unknown. As I mentioned above, the key element is to know when an impulsive structure breaks down. However, in terms of having an open risk at this point it may be better to remain neutral until a resolution becomes apparent. Currently the dollar remains in a larger bearish structure across the majors while the Aussie is sitting on its own fence, but in a dollar bullish structure. Perhaps that’s the effect of standing upside down on the bottom of the world.
I’ll add that the USD/JPY is basically in a similar situation. I misjudged the lower degree structure, but the underlying analysis remains constant. While there is a cushion either side of the current price I don’t see today’s action likely to provoke any significant moves. Whether this can be a proxy for the Europeans I’m not quite so sure. Taking into consideration the situation in the EUR/JPY I actually see initial potential but I’m not convinced that it will follow-through lower in any significant manner. At a minimum I suspect we’ll get a correction higher although the depth of any recovery does have significant uncertainties.
Thus, take it easy. As an observation I tend to find the extremes of a correction will tend to provide a reaction, an almost instinctive baulking by the market in making a critical break that would trigger a stronger follow-though. Watch for those areas, and take note of the intensity of the move.
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