The market extended its slow-motion introversion yesterday. It also added some puzzles with the euro initially losing out against the dollar – then gaining – then losing once more, while USD/CHF made gains. At the same time GBP/USD found a low and pushed up strongly as expected. It has therefore become a rather difficult market to follow without the general correlation between these three in particular. Of course, we can look at the higher degree structures to place them in context, but even that – according to the risks I see – suggests discord between the group. We also have the Europeans beginning to threaten oscillation around the 4-hour Price Equilibrium Clouds that, if it continues, will risk confusion.
For these three it will be best to treat them individually and note the general momentum and technical factors that could trigger corrections or follow-through. Certainly, the EUR - CHF relationship does have potential discord.
The Aussie hit the extreme in its correction lower – reversing 2 points below a 76.4% retracement – and has reversed higher. The lower degree structure has seen pretty direct gains but there are deeper swings coming at higher levels. Overall it should move above the 0.7045 high.
Having started out, some days ago, with the potential for an impulsive rally in USD/JPY, yesterday’s break of key support saw a deeper pullback that tends to suggest a more corrective recovery. In terms of the length of the decline from 123.75, this appears to be quite a brief correction higher… This allowed EUR/JPY to make further upward progress following a recycling. This tends to suggest some whippy moves from this point. It will be best to still sit out and wait for the required number of swings to develop.
Overall the outlook remains steady – and by that I mean that there doesn’t appear to be risk of a sharp move for the moment…