The market certainly seems to be very reclusive. This is very evident from the type of structures that have developed over the past couple of weeks, possibly even from the start of the Crimea issue. The lower degree moves are very jagged and defensive with no free-flowing confidence in pushing the dollar one way or the other. It has required very detailed and intensive attention to each and every move in the 5-minute charts. Equally, this raises the risk of misjudgement.
Well, yesterday provided yet another example of a breakdown in expectations but unfortunately in a way that threatens further range trading and tight consolidation. We do, of course, have clues from the higher degree structure but the spider-like, scratchy development can extend the pain until eventually something, somewhere needs to break down. It’s not likely to do that today or tomorrow.
The Aussie should have a stronger day today as long as the support I’ve provided continues to hold. Potentially this pair could provide a decent move. I will add that I am a bit reticent if only because the market is hardly in the mood to sustain any move at all.
In the JPY pairs there is a growing sense that something else is developing. In the EUR/JPY I had been looking for a potential triangle but the long, ratcheting, sideways move has made that structure lose balance. Indeed, there could be signs of strength although I feel this will require the USD/JPY to fuel the rally. Thus, if this is to happen, make sure that the USD/JPY makes its intent known as I'm not that convinced that such a rally can be sustained. Thus, be aware that development could still remain a little groggy.
Overall, the Europeans are all at sixes and sevens but I think today the risk is for the dollar to provide more upside than down. However, I can’t see any home run. The same may well be probable in the JPY pairs. Therefore, take your profit when you can and take the trades that have more clarity. Even a small profit will add strength to the underlying capital.