I had no idea that that the FOMC minutes were to be announced. I guess that shows how much I rely on fundamentals. Basically, zero, zip, nil, nada, nadir, naught, nix... no way… Indeed, why would I want to skew a price indicator with such factors? I don’t suggest that traders should ignore economic releases but do expect them to consider the impact of any announcement along with a price indicator that provides a structure…
So now that we have got past the initial panic, what does that mean? At this early stage the price information remains a bit scant. Therefore, as the day begins I can only point to the parts of the structure that have developed and suggest where it points. There are only two real options and it is therefore a matter of identifying where one option breaks down and the other develops. In the Europeans, that means we shall either recycle to the most recent dollar high – or we’ll see losses extend directly.
The Aussie broke below a couple of supports and is tending to suggest we have seen a high. However, having said that, we have probably seen the bulk of the initial losses. Therefore, we may well see much of the day witnessing a return to the upside…
As for the JPY pairs, we saw the expected gains – and actually just a bit more. I am finding these two exceptionally difficult with continued direct gains that have seen only rare attempts to correct lower. Both 4-hour and hourly momentum have been strong and I can’t see a drastic reversal lower. If anything, the downside should be corrective only. However, the direct nature of these rallies, accompanied by a significant level of low-level noise, has made the process of identifying the significant wave endings very difficult to judge. Yesterday’s high appears to have broken above a projection I was counting on which - accompanied by the bullish momentum – continues to makes the outlook more bullish. We have already reached the minimum targets I indicated in September 2012. No doubt there is more to come. The same is true of EUR/JPY in terms of both complexity of the shallow pullbacks and upside targets.
Today, be cautious considering the complications triggered by the FOMC and take note of the alternatives.