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Who Will Be The One To Force A Breakout?

Published 08/15/2014, 12:58 AM

I think it’s now or never. Well, I suppose the Continental Europeans cannot remain in their recent range forever. Ipso facto the range must break. The question is, who will be the gang leaders in forcing a breakout? Asia? That’s a very low risk. Europe? Quite possibly. But, definitely between Europe and North America we should finally move beyond recent constraints, and I still favour the outlook I provided on Monday. Thus, sit tight and enjoy the ride.

The GBP/USD, on the other hand, is still banging its own drum, a bearish one overall but I suspect a modestly deeper recovery. While I have started with the view of an impulsive decline from the 1.7190 high I am cautiously beginning to feel that the losses so far are more aligned to a multiple ABC structure. That’s a bit of a shame because impulsive waves have defined target areas while multiple ABC structures do not. This tends to suggest that while corrections will occur, they can be shallow or modestly deep. However, this is beginning to look more like a sustained dribbling decline.

This bearish outlook seems to match with the AUD/USD although it has an impulsive structure and one that is suffering deep corrections in the legs that traditional Elliotticians would never accept. There is a slight problem though, that momentum is picking up at a point where it should not be happening. There are alternatives – clearly bullish and bearish – so note the key break levels on both sides.

Finally, the JPY pairs: tne USD/JPY extended gains. When I began writing the report yesterday I was bearish but noted an alternative. That alternative looks possible now. Yesterday’s high was not a definitive breakout higher and still needs confirmation, but momentum does look more positive. This will clearly impact on the EUR/JPY and with the expected break of range in the EUR/USD we should begin to see further development in the cross.

As usual, treat the early part of the day with care and watch for the key breaks. We should see some modest follow-through later.

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