It was a case of the good, bad and the ugly yesterday. Well, not too
ugly. The deep pullbacks in EURUSD and USDCHF began to develop well. Actually
USDCHF was close to perfect ending only slightly above the retracement target.
Where things went a little wrong in particular was EURUSD where price retraced
all the way back to the 1.3077 low plus another point. GBPUSD sagged and USDJPY
wilted earlier than expected… Overall, looking at the general equilibrium of
all currency pairs it certainly looks as if we are at a crucial juncture
between marginal extension of Dollar losses and a longer sideways correction.
Even if we see new Dollar lows they’ll be limited and the long consolidation
develop.
The legacy of all these moves, if a team of lawyers got involved,
would be a long, drawn out case that would drag on and on until a crack opened.
Actually, I think that probably adequately describes the situation we face now.
The high in EURUSD could be considered a completed intermediate move; the low
in USDCHF doesn’t really fit into the normal projection ratios and would still
risk marginal new lows. Indeed, I think I prefer that. In fact it may even suit
the overall situation since the correction in USDCHF is expected to be much
shallower than EURUSD.
That sort of leaves GBPUSD hanging rather in the middle and doesn’t
seem to have any obvious structure to follow but perhaps that’s the reality
given we are, overall, due this period of messy correction… The Aussie appears
to be in the same boat. I’d much prefer this to extend gains and it must now or
suffer the same fate of messy consolidation.
However, taking up the strain is USDJPY that failed in the pullback
but extended losses more directly. I suspect we’re due a deeper pullback but
probably not before another bump lower. Overall, rather than the broader
consolidation I had been expecting to develop this now looks more like seeing a
retest of the 75.57 low… and I wouldn’t be too surprised to see 75.57 again…
Good trading
Ian Copsey
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