Yesterday’s development had a mixture across the pairs, some corrective and others completing the tail ends of a trend. There’s even the risk of USD/JPY still to complete its rally. However, the main theme now is corrective and we all love corrections don’t we?
Nope…
Unless it’s a Wave (iv). For the most part, they are the easiest waves to judge as long as the Wave (ii) is not an extreme – but in this case we don’t appear to have any situations appropriate to Wave (iv)’s. Therefore, the risk is for some messy corrective behaviour and I suspect the worst rather than a short sharp correction. EUR/USD, USD/CHF and USD/JPY all have potential for deep corrections and that tends to suggest double zigzags or triple threes over a few days, perhaps as much as one week in some cases.
Perhaps there may be one pair that can develop in an impulsive manner – and that’s in GBP/USD … but… it’s uncertain whether it will do so today or continue with the consolidation/correction. This appears true for AUD/USD also that has taken a trip off the main road that could see consolidation – but has potential for losses to resume. These two pairs in particular are really quite complicated and it may well be better to let them decide on their next move to avoid making a wrong decision at this point.
Just to add a comment on EUR/JPY. It recovered well after developing a double bottom and has to decide what it wants to do. However, with USD/JPY and EUR/USD apparently generally correlated, the risk is for complications.
Probably it’s the EUR/USD, USD/CHF and USD/JPY group that has the better outlook but being corrective - take care.