The Good, The Bad And The Ugly…

Life as an analyst is a no-win situation. Yesterday the Europeans worked pretty much to perfection. The JPY pairs were a nightmare and despite the success in the Europeans, the overwhelming emotion is one of failure due to the JPY pairs.

Let’s start with the Europeans. I mentioned yesterday that the GBP/USD and USD/CHF had probably seen their extremes, but I felt EUR/USD required one more high. We haven’t seen the new high yet, but the development of the two sets was perfect. The depths of the reversals in GBP/USD and USD/CHF were too deep to suggest they were just corrections, while the EUR/USD stalled perfectly in the support area I offered yesterday. This should make a new high and then reverse to join the other two… As a point to note, the 4-hour Price Equilibrium Cloud in EUR/USD is supporting, and with a fairly firm upward slope. In the other two, while still providing Dollar resistance, the 4-hour Clouds have flattened out more and are thus more vulnerable to a reversal of the recent moves.

AUD/USD. It stalled somewhere in the middle of nowhere and no-man’s land. In the longer term outlook it remains correlated to the Europeans, but has been displaying some dissent recently. I do remain bearish in the larger picture, ,maintaining the basic downtrend. At this point there is a lack of valid projection ratios that is clouding the short term moves. There seems to be a maximum upside, while the daily target should be achievable. I’m working with this outlook but looking for the right projection ratios…

Finally, the JPY pairs that provided me with so much grief … yesterday’s low came within 30 points of the Wave -b- of Wave -iii- (the Wave -iii- at 103.30) and I feel that this is just too close to suggest that we have seen a deeper Wave -iv-. We also have some pretty bearish cycles for the coming two months. While the depth of the correction yesterday obviously caught me out, I do still prefer the downside. There is just one snag and that’s the EUR/JPY that seems to have only a limited downside window that tends to conflict with a bearish USD/JPY and EUR/USD. Of course, we could have a very shallow correction after the next drop, and potentially this could be right considering the amount of consolidation we’ve seen in the cross – areas that have a strong tendency to provide barriers.

The Europeans should be the ones to watch today…