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Make Or Break

Published 10/20/2014, 12:22 AM
Updated 07/09/2023, 06:31 AM

Clearly the market had little or no desire to end the week with a bang. However, there’s a growing chance that this week will provide a “pop” and potentially a “bang” although I see a broader tight range within which a lot of development needs to be seen. This tends to suggest deeper than normal corrections, possible even some complex. So it looks as if it could be difficult week. In particular, I still see a development mismatch between EUR/USD and USD/CHF that appears to require such choppy movement for both to maintain their independent structures without conflict.

I have noted that while EUR/USD and USD/CHF had a particularly range bound day on Friday that they both developed constructively and are also now pushing the Dollar upside limits of the 4-hour Price Equilibrium Clouds. They both now need a nudge to break cleanly away. This happens just as GBP/USD reached the upside target I suggested on Friday and requires a brief period of weakness. Interestingly though, is that GBP/USD looks more like it’s in a bullish sequence right now (although requiring a correction) so there appears to be a slight disconnect across the English Channel.

The Aussie also managed to poke a little higher and now it has to make a decision. It has been moving sideways and clinging lovingly to both the hourly and 4-hour Price Equilibrium Clouds. We now just need a decisive break to confirm the next direction.

The JPY pairs also developed as expected, both edging higher. There still seems upside available to USD/JPY having broken above the 4-hour Price Equilibrium Cloud but does face a declining daily Cloud not too much higher. I would expect the daily Cloud, once approached, to be the more dominant force. This suggests a gradual upside process developing so the downside acceleration – or lack of – in EUR/USD will have a determining impact on EUR/JPY. It does still have some upside available but is (not so) fast approaching resistance.

I suspect the Europeans and possibly the Aussie to be the better movers today but don’t bet on anything aggressive.

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