Recent trading has been terribly complicated – at least in terms of the structures. Bashing the keys trying to resolve these Sudoku-like problems can be terribly frustrating… I’ve noted some observations in the Europeans that tend to suggest a softer dollar today. There are still some higher degree Sudoku puzzles ready and waiting but I think we need to take them stage by stage.
Firstly, the dollar is pressing to break through the 4-hour Price Equilibrium Clouds. The initial attempts may not succeed but I suspect that by the time Europe and North America enter the fray after yesterday’s bank holidays that we’ll see those breaks. Even then, I feel there are relatively close dollar supports in EUR/USD and USD/CHF while GBP/USD may well have an attempt to push higher a little more strongly. Indeed, there appears to be quite some confidence that the Brexit referendum will keep the UK in the EU.
Meanwhile the Aussie has maintained a steady and relatively choppy decline. However, I don’t see a great deal of room on the upside and, more likely, we’ll see it resume losses over the course of the day. There is a quite convincing downside target so as long as we start to see a reversal lower, we’ll see the targets I have been suggesting.
As for the JPY pairs… USD/JPY did a great job of refusing to correct too low on Friday and then saw it rally strongly over the second half of the day – and follow-through yesterday. First we need to establish support in the current decline – and probably at the 4-hour Price Equilibrium Cloud. From there we need to ensure that this holds. What EUR/USD needs to do is push higher to avoid a complicated correction in EUR/JPY. Perhaps later USD/JPY can jointly assist…
It doesn’t look like a day of extensive moves but there should be a few opportunities for comfortable trades…