Fifty-fifty could sum up yesterday. The three positive outcomes were in USD/JPY, GBP/USD and AUD/USD – although the latter two were triggered by the break of their respective downtrend channels. The other three – EUR/USD, USD/CHF and EUR/JPY were not the “definite outcome” I had been looking for…
Perhaps another complication is that GBP/USD – which I had been looking for a reversal higher – lagged behind EUR/USD, and by some margin. This generates a larger complication in the larger picture, and will therefore require some further observation. The basic issue is whether the 1.1466 high will hold or break. I had considered the downtrend to be quite a direct one, but following yesterday’s surprise, I’m really not quite so sure and will require more investigation and development. However, some further dollar weakness seems inevitable.
I can only draw comfort from the almost perfect reversal lower in USD/JPY. There is still risk of a noisy and whippy development – even with the potential for a minor new high, and frankly, the outlook for the coming days – potentially 1-2 weeks – does point to larger swings. That EUR/USD rallied so firmly clearly provided the fuel for gains in EUR/JPY. These gains still have further potential, although I do see less aggressive gains and more corrections developing.
AUD/USD also broke above the declining channel high – but was expected. This recovery should just be a correction (that may just have some influence on EUR/USD in terms of depth…) However, being a correction, it raises the predilection for complex corrective structures, which could complicate things. Thus take care.
I would suggest a defensive approach today as things settle down. With luck, we should soon see some more definitive structures.
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Time For An Adjustment
Published 06/02/2015, 11:52 PM
Updated 07/09/2023, 06:31 AM
Time For An Adjustment
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