That’s my take on the market situation. We’ve seen the sell-off in the AUD and if we look around the market another noticeable factor is the extreme strength in the EUR crosses; EUR/AUD, EUR/CHF and EUR/GBP have all made big gains. EUR/USD is still lagging in my view. A base looks now to be forming and I expect support levels above 1.2400 to hold firm. A break above 1.2600 will trigger the really heavy stops and then we should expect the unexpected; I think 1.33/1.35 is possible on an extreme short squeeze.
It’s all about market positioning and liquidation and when conditions get like this, the moves will be extreme.
