Yesterday’s dollar strength was just as the doctor ordered and in line with the type of solid moves as I suggested. We are now approaching a series of projection targets that will begin to slow the move with a higher level of corrective activity. However, these projection targets are in the sections that normally have a greater accuracy in identifying both the projection target areas and also retracements. The only potential complications are the structure of the corrections – simple or complex. Thus, it’s more beneficial to note reversal indications towards the outer limits of the anticipated ranges.
The Europeans saw steady (dollar) gains although USD/CHF still proceeds within a rather claustrophobic manner. Still, it is developing within the confines of the structure I have been following and therefore provides confidence. GBP/USD accelerated lower nicely, perhaps a little more directly than I had expected, but certainly to the lower target projections.
AUD/USD has made its decision to join in with the Dollar strength although the structure has displayed a higher level of volatility, and something that looks like continuing. Therefore, take care as this does suggest a higher degree of risk in terms of stop losses being hit.
USD/JPY has baulked the bullish dollar trend but as pointed out yesterday the 102.13 high did satisfy the correction, the break below 101.72 providing the signal. This should see follow-through but only after completing a correction. This part of the decline should be watched with care as it’s one where there is no single target and therefore a lot of attention must be made to momentum conditions in the general target areas. This could have a knock on effect in EUR/JPY that is now approaching a series of projection targets, rather similar to EUR/USD, that will maintain the general downside but likely suffer a period of corrective activity.
Thus, this should be a different day compared with the past two days. Take note of anticipated range extremes.
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