Due
to the Xmas break I have provided a more visual expectation of developments in
today’s report. There’s no real change to the outlooks but, because of the low
liquidity, there is always greater risk of breaks of levels that were not
anticipated. I therefore urge you to apply stronger than normal diligence at
the areas where there is a line between bullish and bearish. In particular,
because EURJPY appears to have gone into corrective mode, it does have
implications for the balance between EURUSD and USDJPY. Do note that within
these expectations, the risk of a deeper correction in USDJPY (as shown in the
chart) is required and could perhaps absorb the potential issues in EURJPY.
Along
with EURUSD and USDCHF, there is now a distinct possibility that GBPUSD could
well join up with the Continentals in a correlated move. Therefore, as EURUSD
reaches the key make-or break level, watch the key area I have outlined for
quite some time.
While
the Europeans have their own outcomes, AUDUSD seems to be still dead set on
continuing to extend losses. There are several corrective areas to go through
which could generate complex corrections, just as we have seen following the
0.8235 high. Therefore, while the direction appears set in stone, take care
with the corrections.
As
mentioned above, the move higher in EURJPY suggests a correction higher.
Looking at this independently, rather than trying to imagine mind-blowing
contortions of how the currency pair triangle will develop, I suggest taking a
low profile in the cross but take more note of EURUSD and USDJPY in terms of
whether one scenario breaks down that would then clarify the next move in the
cross.
At
this point, USDJPY has been gradually extending gains, I still have a mixed
outlook although, at this stage, hourly momentum is still bullish but 4-hour
momentum is beginning to build up a bearish divergence. It’s probably USDJPY
that has potential to confirm the EURJPY triangle rather than EURUSD…
I wish you
all a marvellous Christmas and a healthy and prosperous 2015
Ian Copsey