All looked to be developing well… but then stopped. The bigger picture still looks intact but the lower degree development clearly defeated me yesterday. There are some clues, some enigmas and the rather curious case of the lost USDJPY.
I’ll begin with the Europeans as usual but will have to split them between the Continentals and Her Majesty’s sovereign (but wayward) currency. EURUSD and USDCHF seem to be a relatively simple case of an alternate development which triggered a deeper than expected correction. The only complicated part is the very short term that seems to suggest some initial push me pull you to correct a bad posture before the Dollar upside can continue. This seems to be a need for a limited swings on both sides of the market to allow a correct structure to develop. GBPUSD seems to suggest the same but with what looks to be a minor new corrective low and recycling higher before that can extend losses. This is the one that concerns as the amplitude of the swings appears wider than the Continentals. This could be a source of conflict so do take care in the first half of the day.
The Aussie… Still on a walkabout…
What really did kill me yesterday was USDJPY. I spent a long time trying to work this out, testing both bearish and bullish scenarios but really failing in terms of identifying an impulsive structure. The clue that should provide the solution is likely to be in EURJPY. I had thought that it was already on its way lower so yesterday’s reversals in both JPY pairs was like getting slapped round the face with a piece of rotten sashimi. My primary approach is to test out levels in the cross, knowing where the limits lie, and it should be this that spots the outcome. The secondary approach is an alternate count I feel is possible in USDJPY. This will require attention to whether the expected top in EURJPY and the emergence of bearish divergences in both to suggest a resumption of losses. The alternative appears quite bullish…
It looks like a challenging day. Take care.
Have a great weekend