EUR/USD: Uncertainty prevails. It still remains unclear whether wave 5 is in place or if there’s one more marginally new low left to complete the decline from the May correction peak. The short term picture is however rather clouded with repeated downside failures below1.2445 but also the falling top line (this morning at 1.2502) capping.
GBP/USD: Look for a false break lower. Given the bullish “pre”-divergence there’s a relatively high probability that a break lower will fail hence creating a bullish spring bottom (a spike below the flat floor at 1.5590). Our recommendation will hence be for shorts to take profit on a break below 1.5585/90 as the most likely outcome will be at least a 1.5826 bounce.
USD/JPY: Monitor the divergence(?) closely Today ~3mts After the 118.98 – 117.24 three wave setback the market was poised for a new trend high. Today’s marginally trend high, 119.03, fulfills the minimum criteria for a possible top which together with the bear divergence makes us extremely cautious with longs. Another new high or not, the end result should be a return to at least the recent reaction low at 117.24.
EUR/CHF: Should cover the weekend “Gap”. The weekend “Gap” on the Swiss rejecting the petition to increase Gold reserves had dual impact on EUR/CHF & Gold. But the high end of a 21day +/- 2 std dev band, a 127.2% Fibo extension ref and the 21day “Kijun-Sen” are seemingly adding resistance near a prior low of 1.2045. The best fit would be a “Gap-cover” and then extension with refs in a wider 1.2045\69-area working as overhead attraction/resistance. Key support is located at 1.2011/09.
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