Correction Resolved

Thursday’s lack of upside progress in the Dollar had made further direct gains impossible. Friday’s developments, particularly in EUR/USD and USD/CHF, were perfect and resolved the problem we had faced. Equally, GBP/USD pushed higher in a deeper correction although it had no definite target. All in all, it should imply the outlook I had proposed earlier in the week should now be seen across the Europeans. Thus, while there is most likely to be limited trading as the week begins in Asia, we should begin to see more directional trading by the second half of the day.

The Aussie glided lower but was caught on the up current and glided straight back up. The result is inconclusive, a resolution that the Aussie masters very well by not committing itself when it’s not in the mood. This remains a currency pair that needs to be treated with caution until a firmer structure – and breaks – are witnessed. However, I feel that it should do so this week – and probably in the first half.

USD/JPY is a pair I can’t say did anything wrong, but hardly committed itself. I’m still slightly cautious of this pair because it has recovered higher than expected but it’s within the right area where the alternative count I proposed does provide some resistance. It still needs to be handled with the due care and attention. Some help may be afforded by EUR/JPY which is facing its own decision on whether to continue extending gains or resuming the downside. Currently momentum looks quite firm and is threatening a break above the daily Price Equilibrium Cloud – although some caution is provided by the weekly Price Equilibrium Cloud. This is going to require us to tread with some care and go with the eventual resultant flow.

In summary, we should see the Europeans develop more smoothly now and therefore suggests the better vehicles, but just be aware of the potential break in the Aussie – possibly even USD/JPY.