Tuesday, February 7, 2012

Conflicts and confusion

I can’t say yesterday was close to expectations. I wouldn’t say “just the opposite” either, at least in some cases. The overriding interesting point I noted was that all three Europeans pushed the extremes of the maximum retracement areas I have been outlining. The bigger problem for me is integrating those retracements with the manner in which they were approached. GBPUSD and USDCHF are more straightforward but EURUSD does raise a question mark in my mind as does the implications of the next move from all three.

That’s the key – the implications for the next move… In terms of retracement levels USDCHF could just resume its downtrend. However, both EURUSD and GBPUSD don’t seem to share that immediate outcome although I still feel they have the capacity to make minor extensions before a correction. If there is any potential for them to correlate then it’s more that USDCHF can begin its move but with a deep pullback while the other two can make their minor new highs and see a shallow correction. Then all three can extend their underlying moves.

So while I feel we need to take this cautiously it probably provides a template to work with to judge whether the required developments occur. It is something that would fit into the outlook for AUDUSD also. Certainly, right now the market is demonstrating a good deal of confusion and indecision that tends to generate chaotic price development.

Failing that the alternative is for the correction to painfully extend just a little more...

Just to cover USDJPY… The ideal is still for another minor new high but overall the downside looks imminent here and in the cross…

Good trading
Ian Copsey

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