Yesterday was a pretty decent day. While we didn’t get the marginal follow-through at the opening, the rest of the day went pretty well. This has been part of the foundation stage I mentioned yesterday but it isn’t yet complete. So, that’s the task we need set ourselves to identify the completion. Once that is done we can begin to increase position sizes for a more directional move. I can see the balance through the Europeans and also AUD/USD in this respect so it looks like an eventual coming together in a correlation move in the anticipated trend.
If there is any possible break of correlation, it may be from GBP/USD. It has mapped out a cobweb of trails over the past 10 days or so – with a lack of energy or thrust. To be honest, I can’t see that changing too much over the rest of this week and potentially into next. It will involve new extremes but not by large margins. This should retain the cobweb for a relatively long period of time until the consolidation finally ends. So for quick trades it’ll be decent but don’t expect a home run…
In the JPY pairs we saw both extend gains but with less thrust compared to the reversal from Friday’s low. USD/JPY has a rather difficult structure with plenty of lower degree noise that makes it tough to judge the correct foundation waves. However, it is tending to display signs of a lacklustre development, moving slowly, rather like a lumbering sloth. It seems to be broadly correlated with the Europeans in general – but without as much energy. This should imply that EUR/JPY will be more reactive to the development in EUR/USD. Thus, watch out for that expectation.
An initially slow day but could pick up in the second half.
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