Dollar Losses To Continue

Yesterday didn’t surprise too much. Momentum conditions together with multi-time frame price equilibrium tended to point to the development we saw. There is a risk that today could be even duller since daily and 4-hour price equilibrium will have to fight to determine the next move. At this point I feel daily momentum/price equilibrium has more clout than the 4-hour, and therefore the bias is still for dollar losses to continue, but we have to allow for any short term stagnation. More likely this could be a tale of two halves of the day. Asia is most unlikely to take any aggressive stance so it will have to be left for Europe or the States to make any stronger push.

Overall, when considering dollar losses there are some differences in the extent of any weakness between the Europeans. I had suggested in yesterday’s weekly video that the USD/CHF will need to decline quite aggressively, but I suddenly realised that there is an alternative. However, the structure I have in GBP/USD cannot be compromised at this point as we’re talking about a minimum projection target and this implies the need for solid gains. It’s possible but probably needs a catalyst to provide that booster. Certainly, it’s an issue to consider.

The Aussie corrected more deeply than I had expected, and therefore suggests a slightly stronger outlook, not by too much but actually in line with the daily retracement area mentioned in yesterday’s weekly video. Even that should not be the final high. Thus, the upside does still seem on track.

Finally the JPY pairs, the USD/JPY foiled the sideways consolidation and extended losses more directly. This keeps it on track and while the development has become rather clumsy and slow the downside remains the underlying direction.

The EUR/JPY also took a more direct route lower and tends to suggest the triangle ending had already been seen. This should limit any immediate losses with a correction back higher more likely. Overall this remains weak but beware of choppy development and a potential deep(ish) correction before further losses are seen.

The Europeans and Aussie look the better vehicles later today.