Yesterday’s outlook was always going to be fraught with difficulties. The dollar downside in the Europeans was clearly limited with the hourly & 4-hour Price Equilibrium Clouds supporting the dollar, trapping it into a corner from where it must escape. The market has been such that momentum has been the main driver for the dollar upside that we cannot ignore the potential for another high but I’d prefer not to go there. In addition, in general I am seeing some extremes that all tend to point to a reversal and it’s just the confirmation that is required to put this dollar bullish trend behind us.
So far, the progress has been generally positive and now that the hourly Clouds are flattening out together with the slope of the 4-hour Clouds becoming less acute, we have more chance of a positive outcome. Given the way the market has been so persistent over the past week or two, it would be prudent to wait until that confirmation is seen. While there would still be some risk of corrections and thus volatility, it would at least provide a more definitive stop loss.
While the above relates mostly to the Europeans, and because I tend to lump in the Aussie at this point, I am less certain that we have seen the final low. Price-wise it’s about right but I feel there is one more bearish leg to go. Therefore, do be aware when one scenario breaks down and the other begins.
I was snared by a trap in the USD/JPY yesterday. I thought we’d seen the top on Tuesday and that we’d see a deeper correction. Well, I was well and truly snafu’d. Thus, what we have seen from the 110.08 high was what I had expected earlier. Thus, it’s time for another rally with a clear upside target. This tends to match with the EURJ/PY. There’s still a little wriggle to come, but overall I feel USD/JPY will drag the cross higher.
The USD/JPY, followed by EUR/JPY, appear to be the clearer pairs to follow.