Yesterday saw the early correction in the Continental Europeans. There was never a set retracement level and it actually stalled just as the 4-hour Price Equilibrium Clouds began to flatten out to permit a reversal. Ideally, I would have liked a price pattern to develop – but alas there were none. As the day begins we’re facing a small conundrum. USD/CHF has just touched a key resistance that provides a portal to the upside. It’s not quite so clear whether EUR/USD has ended its current decline. Ideally it has and would therefore provide the suggestion of dollar losses being seen. We’re going to have to work our way around this slightly uncertain structure…
Meanwhile, as EUR/USD drifted lower GBP/USD decided to win the race for losses… As suggested, once the 1.5629 low broke there was no going back… However, it should soon see a correction higher. So even if GBPUSD has had a head start, the correlation between the three seems relatively good.
The Aussie broke support also to extend losses. It’s not quite the beat it was a few months ago, but more a steady step-by-step decline. Look out for the swings but overall the downside seems more likely.
USD/JPY has taken its own route and rejected a deeper correction lower and has appears to opt for the upside. This should be a steady rally but with limitations. I suspect this will be a long-term sideways consolidation. As such, we’re likely to see a choppy outlook in EUR/JPY and for the moment bearish.
I also see the equity markets steadying themselves for a while... but only for a while. However, they are very likely going to witness some choppy development…