Possible Bullish Outlooks For The Aussie

The market appears to be transfixed by recent developments, and quite unsure of which direction to favor. The structures that are developing are extremely complicated and as such the risk of error or misjudgement is much higher at this point. That this type of development is occurring now is rather unfortunate as we are in the process of base building for a stronger directional move but will need to identify the key waves to be able to identify future ones. Thus, the need for caution remains high.

If I saw any clue for today it comes from the GBP/USD that rallied above a level that should have held if it was to retain a bearish structure. This tends to suggest that as long as the Europeans remain correlated that we should see a general dollar bearish day. That tends to suit what I thought I unearthed in the EUR/USD while the USD/CHF still contains quite a complex structure. Hopefully over the course of the next day or two the structure will begin to become more clear.

The Aussie didn’t reach my downside target and broke above key resistance. This also suggests a bullish outlook although perhaps not too directly. This means there are a few alternative options, but I suggest looking for bullish trade set ups rather than getting caught with a short position.

The USD/JPY has confirmed an intermediate low at 101.77 and also seems to be floating in mid-air between a deeper correction higher and a resumption of losses. I have taken a more bullish view of this for now, but considering we’re in a correction higher it will be well to protect profits in case the larger decline resumes a little earlier than expected. Equally, this should give a lift to the EURJPY. Although note that it is in a similar situation as the USD/JPY, so for more medium term outlooks it’ll be better to be on the lookout for bearish reversal indications.

The messy development we have seen over the first two days of the week appears to be continuing, thus take care, and, if uncertain, take profit.