A Return To Two-Way Trading

Mixed results yesterday but developments that have brought some insights and potential clues. One was the new high in USD/CHF that took it above the old high at 0.8952. This tends to change the outlook considerably, although I wouldn’t suggest this provokes a massively bullish dollar; rather this tends to place it along with the alternative count I had in EUR/USD. Both of these continentals began their (dollar bullish) moves with a straight line – well, with a mini minor correction. This tends to make the job of being certain about the moves a lot more difficult. This new high in USD/CHF tends to conform with EUR/USD – quite a significant clue. I feel a similar sleight of hand in GBP/USD may well imply a similar outcome. Thus, I think we should approach the coming days with caution. There seems to be stronger potential for two-way trading.

I’ll also add that one of my students pointed out some fixed cycles in the Dollar Index, something I had not really plotted before. He was absolutely correct. This is suggesting that we shall be due for a very, very significant dollar low over the next 1-2 months.

AUD/USD performed extremely well again. It now has a more defined range and we’ll probably see some two-way trading here also.

The JPY pairs … well, EUR/JPY developed extremely well while USD/JPY took a longer detour than expected. However, the end result remains the same and, apart from the detour, I am very content with the overall larger structure that is suggesting the advent of some stronger swings and basic range trading albeit it with a general bearish outlook. Similarly, EUR/JPY is pointing out the same thing and over the coming week we should see the culmination of some of the recent moves.

Take care from here. The strong risk is for broadly whippy developments so best take note of limits and take profits within those limits.