Constructive Progress

Yesterday saw dollar losses resume. It hasn’t really tested the lows with any vigour, but the progress has been constructive in terms of ratio projections. If nothing else the fact that we have these ratios enables a clearer picture of what is required to maintain these losses and, just as critical, where the structure breaks down within a fairly tight range of retracement levels. Additionally, I have found these moves very much in line with the higher degree targets I had estimated – and that provides more confidence.Generally, there’s a further positive condition in terms of the general balance of the larger wave structures across the currency pairs. I have made point of the fine balance in EUR/JPY, and the fragile nature of the impact of both the USD/JPY and EUR/USD. It remains in a critical condition, but I do see the potential for this triangle to play out quite well should my observations prove correct. The USD/JPY looks particulalry vulnerable on the downside. The next crucial requirement is how this decline develops. I do see the conditions for it to perform the requirements that are being asked of it…I’ll even make note of the AUD/USD that has recovered very well from the brink. It still has still a little way to go to break above the 0.9304 high and may find it a barrier at first. Again, with the ratios looking quite solid there are clear support and resistance areas that will define the next move and provide potential entry points.So that’s a general overview of the current lay of the waves. I feel that Asia will prove as quiet as normal, particularly in the Europeans. Much depends on whether the USD/JPY goes into temporary hibernation or makes a break.

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