During my week’s break I have been following the market, mainly because I had to organise my charting software that had some bugs due to an inadequate interface with a Windows software (TradeStation) and a quirk in the virtual hard disk that is required on an iMac.
I was particularly surprised that we didn’t see the reversal back to the dollar upside. It was clear that in many instances that the development hadn’t provided alternation, thus it carried through over the week. Indeed, it actually looks as if we shall see further dollar losses this week. With this morning’s huge spike that in EUR/USD reached within 3 points of the 1.0906 high. This is now a squeaky bottom time. Will it break above 1.0906 to continue the rally or will it turn straight back down?
Of all, it was GBP/USD that completely ignored all else and rallied well above 1.2705. This, it seems, implies that the Flash Crash on the 7th October last year actually completed a 5-wave move. The depth of the recovery last week is where I had expected on the pullback in the (brown) sequence that began from the Brexit vote on the 24th June. This now requires us to confirm follow-through or losses.
The Aussie is sitting in no-man’s land. It has the potential for a deeper pullback, but also we have to consider the potential for direct losses. This pair is a little tricky so take care.
Thus, it looks like a difficult outlook for the moment and therefore it’ll be best to take things cautiously. Once we have established how this will move forward it will become a lot clearer. For now, we need to be alert to both sides of the market.
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