Yesterday’s trading was a pretty messy affair. This was seen particularly in the two Continental Europeans and Aussie – and to an extent in EUR/JPY. Currently there is a gnarled and fragile consolidation developing in these pairs that look like extending into European trading at least. It will probably be better to let the market play around with this than try and make too much sense out of it until we begin to see a break. There are buffers around each side of the consolidation into which price can reach but maintain the higher degree structure. Thus, follow the break.
Meanwhile, GBP/USD was expected to see a deep recovery and this has occurred. This should be followed by losses to the next target highlighted in yesterday’s report.
The Aussie didn’t develop quite as expected, seeing a deeper pullback that now complicates its structure. It tends to do that from time to time… actually, quite often. It should resolve itself today and likely extend its move and still in line with the underlying expectation. It will alter the projection targets but shouldn’t cause any real issues in the larger picture.
USD/JPY was a bit of a nasty chap yesterday with the sharp dip in early trading to an extreme retracement that occasionally happens but it didn’t really need to move down to the 112.15 level. All it has caused is a stronger projection to be required to reach the same targets. Momentum appears to be positive but will be challenged at time with some modestly deep corrections. Clearly, it drove EUR/JPY higher – just above where I thought it would stall – but was a factor of a really complicated set of ratcheting swings on the way down. Hopefully, from this point it can begin to make better progress but there are some potential conflicts so do take care.