That was a tough old day. It was always touch and go but my outlook was based on what I had considered ‘a not deep enough pullback’ in the Dollar Index. To be honest, any follow-through in the Index would still have the minimum target that will complete its move. From what I saw yesterday, there’s even a risk that we’ll see the Index become slightly volatile.
It does look like EUR/USD and USD/CHF will follow a dollar bearish development now – and that is backed up by the unexpected strength in GBP/USD. The pound had looked bearish – until yesterday when it triggered a break level. This has given the pound several options – basically a sideways move or a recovery to a new corrective high. This is one to back off from until it confirms which option will develop…
Even if I feel the Continentals will likely gains against the dollar, both could still hold to a dollar bullish outlook but USD/CHF appears to have dipped a little too far to really feel confident about the bullish outlook. Even AUD/USD made further gains and has forced the market into a corner. However, at this point, it doesn’t seem to have any strong indication of a reversal – but could see a pullback.
If there’s any stronger outlook then it’s in USD/JPY if looked at independently. It dipped a little lower than I had hoped for yesterday but considering that this should be developing a corrective move higher, it can still generate gains. However, we have EUR/JPY that reached 121.71 – deep enough to complete the target from the 128.22 high – but has an ambiguous structure that could be taken as being bearish. Certainly, there is no hourly bullish divergence but it does have a great 4-hour bullish divergence. Thus, we need to confirm the structure from break levels.
Overall, there are sufficiently vague structures just about everywhere. Take care.