Micron surges 16% after one of the biggest beats in U.S. semis history
Yesterday proved to be fascinating. I’m sure that isn’t how most would describe what happened but perhaps that’s down to the way I see wave relationships. So what made it fascinating? Well, I called the dollar lows against EUR and CHF correctly but I can’t say the internal relationships were that great. The sharp recovery and reversal was not so surprising although it does open a few options. The rally in USD/JPY was not quite what I was expecting but has impacted on the cross to suggest we saw an intermediate low at 96.16 and thus a deeper correction is possible.
With limited upside in GBP/USD and a push even closer to the 1.0329 high in AUD/USD makes things tantilizing… The deeper pullback in GBP followed by a recovery is lowering the risk of a break above 1.5777 and indeed, may require a sharp drop after the coming new corrective peak. Will that mean that AUD will remain below 1.0329? And if these two have such limited upside, how will that reflect on EUR and CHF? Indeed, if EUR has limited upside now, what does that mean for EUR/JPY?
Perhaps fascinating isn’t quite the right word. Perhaps it should be “puzzling” as the cross currency relationships are becoming a little skewed which can occur during corrections as positions are squared out due to the market beginning to lock in profits. Equally, once squared they have to renew positions and once that occurs we should see a stronger breakout that should still be dollar bullish.
Thus, we appear to be within a phase where we need to tread with care while the market sorts itself out and when price action becomes more volatile and erratic. Always remember the greater risk is dollar bullish but be aware of the potential for several options that would still allow further consolidation/correction. As I mentioned yesterday, there are no set retracements in EUR and CHF but there are in AUD and GBP. These need to be balanced with EUR/JPY.
More of the same seems correct for now but keep an eye on a potential resumption of dollar gains…
With limited upside in GBP/USD and a push even closer to the 1.0329 high in AUD/USD makes things tantilizing… The deeper pullback in GBP followed by a recovery is lowering the risk of a break above 1.5777 and indeed, may require a sharp drop after the coming new corrective peak. Will that mean that AUD will remain below 1.0329? And if these two have such limited upside, how will that reflect on EUR and CHF? Indeed, if EUR has limited upside now, what does that mean for EUR/JPY?
Perhaps fascinating isn’t quite the right word. Perhaps it should be “puzzling” as the cross currency relationships are becoming a little skewed which can occur during corrections as positions are squared out due to the market beginning to lock in profits. Equally, once squared they have to renew positions and once that occurs we should see a stronger breakout that should still be dollar bullish.
Thus, we appear to be within a phase where we need to tread with care while the market sorts itself out and when price action becomes more volatile and erratic. Always remember the greater risk is dollar bullish but be aware of the potential for several options that would still allow further consolidation/correction. As I mentioned yesterday, there are no set retracements in EUR and CHF but there are in AUD and GBP. These need to be balanced with EUR/JPY.
More of the same seems correct for now but keep an eye on a potential resumption of dollar gains…