Confirmations Required In FX Majors

The sudden (dollar bearish) rushes in the Continental Europeans produced a puzzle on Friday, a puzzle that took a while to resolve and perhaps surprised in USD/CHF in particular. This had me having to go back to the Brexit day and check the structures due to the 1.0951 low in EUR/USD and the 30th May in USD/CHF.

It involved an unusually large expanded correction (although not excessively) otherwise the logic in the structure would have broken down. Still, on such a significant adjustment there is a need to confirm my changes to ensure that I haven’t botched the analysis.

The positive outcome was that the relative expectations in both the Continentals may well allow GBP/USD to catch up with the others. The lonely pound has reacted far less than the other two and suggests that today could see it continue to do its own funky stuff in a more bullish way compared to the others. Well, that is what is required…

Even AUD/USD broke from my expectations in the same way. This obviously wasn’t what I expected and appears to be running with the Continentals and could push closer to the 0.7834 high. However, I suggest, rather like the Continentals, that the outcome I feel should occur is confirmed.

As for USD/JPY… well, that did work as expected on Friday and is encouraging. I don’t think the downside is complete but we need a pullback higher first. This is where the surprises in EUR/USD impacted on EUR/JPY that equally required some creative accounting with what looks to be an unusual triangle.

It was a horrible mess and makes the balance between the three pairs really quite difficult to judge. I know what I want to happen – or more appropriately, what needs to happen to keep the status quo intact but, once again, we need to have confirmation.

This is a day to take care to be able to ensure there is a stable platform from which to work…

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