The week ended with some surprises that I hadn’t anticipated. For the most part, they appear to have been rather stretched waves that normally don’t occur – but can still be valid. Probably only one pair, GBP/USD, has taken an alternative route, one that I had commented on last week, but felt that would likely not happen. Otherwise, Friday’s developments were rather gawky and clumsy valid structures. This tends to suggest that we need take care of potential short-term volatility today and perhaps into tomorrow as well.
This should, if I have read the market correctly, produce a slow start to the week and end with a bit more flourish. On second thoughts, the word “flourish” is a little too much considering the market appears so defensive. Perhaps I should suggest the description “confused and introverted” but frankly this has been the case for many months. That said I do see the potential, finally, of some stronger directional moves but this could still take a few weeks to develop.
Of note, the 4-hour price equilibrium clouds provide some interesting positions. They capped the deep pullback in USD/CHF with quite a sharp downward trajectory, similarly EUR/USD but the positioning is slightly different and could generate swings around the cloud. GBP/USD is also seeing whips around the 4-hour cloud and the aussie with an upward pointing cloud that may risk a recovery in price as the week begins. On the other hand, USD/JPY has poked its head above its 4-hour cloud but only just.
I expect a relatively slow start to the week but later for a more constructive development. Take care today. Keep trades short in duration.