From the FXWW Chatroom: 1. GBPUSD – The market has met and held an equality target from the July 15th high indicating that the decline was in fact a corrective one. The fact that the initial rally from July 6th formed 5-waves suggests the market is likely in a 5-3-5 ABC sequence. The next target area for wave C is 1.3550 (an equality from the July 6th low). Will gain added confidence above 1.3185. If/once the market were to reach 1.3550, this would be an interesting place to consider re-establishing downside exposure. It would need to break materially higher than 1.3550 to suggest potential to have put in a more meaningful base. View: Biased higher, corrective target ~1.3550. Will consider establishing downside exposure if/once reached.
2. USDJPY – USDJPY continues to hold critical support at ~99.17.
USDJPY Intraday/ Daily – Has met its minimum target for a 5th of 5-waves from the July 20th high at 99.17. While there’s a higher chance of the market stabilizing here, have yet to see any evidence of a true base. Any break lower than 99.17 allows for an extended 5th wave which in turn opens downside risks to 97.02 (another 2% lower). Need to see the currency back above 101.26 to gain confidence in its potential to have put in a near-term low. It’s worth mentioning that because the market is declining in 5th waves, it’s still in an underlying downtrend.
View: Watching for signs of a base ahead of 99.17. Break lower opens 97.01.
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