Slow, slow… quick, quick… slow. The market danced a Foxtrot yesterday only with one leg progressing slowly and the other taking a 100 metre sprint. The margins between a correct wave structure and an incorrect appear to be very slim but what does strike me is that, whether we see new extremes or not, the risk does appear for some sharper reactions very soon. It’s the fine lines between bullish and bearish – or in other cases bearish and bullish – is where the risk lies. This will take some managing.
The Continental Europeans extended Dollar gains as expected but area approaching some resistance areas – or perhaps already have. These have a fine-line between making one more Dollar high and correcting lower. Thus watch for the key break levels beyond which stops should be placed. In both, the 4-hour Price Equilibrium Clouds are flattening out and thus take care.
If the Continentals played through in a gentleman-like manner, GBPUSD very quickly surrendered to the declining daily Price Equilibrium Cloud which hit the Pound with a huge cricket bat to send it way outside the boundaries. It has moved so fast with precious few deep corrections that it will imply a sharper reversal at some point. The problem is being certain of the structure, which given the mini-minor corrections, is a delicate task to perform.
And if to make a statement of solidarity within the British Commonwealth, the Aussie followed suit (or was it vice versa?) This too, seems to require a correction but here the depth is a little less certain but in the larger picture, the break below 0.9300 was rather damning…
Even USDJPY made a mad-cap rally that hit my lower target… then the higher target, shimmied, pretended to correct and then extended gains. I had been expecting a shallow correction but this one seems to have been the most shallow for the position I have ever seen. Having said that, it didn’t break any rules. Thus, cautiously, the upside still seems to be in favour and could maintain the rally in EURJPY – an event I had considered 2-3 weeks ago, but then began to think I was wrong. However, a correction is due but could be relatively minor. Momentum conditions remain firm.