It was good to see some meaningful development yesterday instead of the creepy, crawly “I’m not sure… oh dear, what should I do” outlook. It looks pretty much that we shall see an early dollar downside. What we need to establish is that we should be heading lower in the dollar but we should look to ensure that the balance between the pairs is correct in terms of limits.
Take the example of EUR/USD. Yesterday it formed a Wave a/iii. So today we should see a Wave /iii, but the upside limit does have a limit in this correction. So, I tend to feel that the dollar losses will not be too deep. This should provide limits in the other pairs.
I have placed a (navy) Wave i and Wave ii in USD/JPY but there is a risk of a deeper pullback lower before any further gains. USD/CHF should also be seeing the same but, as I mentioned above, we do have limits. This is quite important to retain the balance across the pairs and even GBP/USD, having formed a Wave i, must see a Wave ii and there’s quite a large amount of room on the topside. Therefore, we should be looking for the Dollar pullback that balances across the pairs. At the end of the day, we should see a reversal to the Dollar upside.
EUR/JPY should see a second 5-wave rally to form a (cyan) Wave b/iii. From there we should be heading down to the Wave c/iii.
The Aussie… That was a difficult development. I’m still not entirely sure I have found the Wave I but like the other pairs, we should be seeing dollar losses in a pullback.
So, at the end of the day, I suspect that we’ll be looking to see back to the dollar upside.