GBP/USD Should Move Lower

On Monday I thought we’d have resolved the current development much earlier. Here we are with only one more day to go to the weekend and are still caught in a 100 point range in the EUR/USD and 60 points in the USD/CHF. When will this range break? Actually, hopefully today, but we may have to wait to the second half. This should see the GBP/USD move lower today after extending its gains to my resistance area yesterday. The combination of these three Europeans should enable key support and resistance levels to be identified. Once seen, we should begin to live a more normal life.

It does leave the AUD/USD in a slightly more complicated position. Its strength has been quite commendable but the structure has not been easy to decipher. There is a minor hourly bearish divergence but frankly I can’t say that we’ve seen a trend so perhaps this “divergence” is not actually of any importance. I would suggest taking a little care with this chappie as I can see the potential risk of a minor follow-through higher and then reversal. Certainly, I don’t see this flying away higher.

EUR/JPY rallied well and again to my resistance area, but really driven by the EUR/USD. The other constituent party in USD/JPY spent a day watching fluffy clouds in the sky and wondering about the meaning of life. This week has seen something like a 70 point range and a sheer dedication to doing as little as possible. Clearly the market seems to have an aversion to breaking higher so we have to be prepared for continued range trading and could provide some downside risk in the EUR/JPY. At this point the cross has found resistance and while yesterday’s high holds does seem to have a greater bias for the downside. Thus, the dynamics between USD/JPY and EUR/USD is going to be an interesting battle.

Out of all the currencies I feel the Europeans in general will have the greater impact and could/should impact on EUR/JPY. Through these combinations I think we can identify some good trading areas.