It was a day of contrast- some pairs worked well and others decided to do their own funky stuff. For the most part, we saw a relatively narrow range day as expected and this has allowed the 4-hour Price Equilibrium Clouds to move closer to price, in some pairs this has the potential to pressure price according to its position (above/below the cloud).
We shall have to observe the reaction on price to judge whether we’ll see follow-through or rejection. Of course, we’ll have the Asian session probably remaining neutral and from there we need to observe Europe’s stance.
A few observations: USD/CHF retested the 0.9818 high again – and actually made a new high above Friday’s high at 0.98175 to the 0.98180 level – just 0.00002 below the high on the 2nd September. This has provided a potential double top and arguably a bearish divergence although only by a margin of 0.00005…
I was quite impressed with the recovery in EUR/USD but it hasn’t confirmed anything at this point while the third European, GBP/USD reached the pullback area I identified. Still, we’re going to have to run the gambit of whether the range extends sideways or we get a break of the range limits.
I looked for the Aussie to recover but then it decided that it liked the upside so carried through. We could see this remain in a type of range although I feel we’ll see another new high today. However, watch momentum carefully. This could end up being a little tricky.
Finally, the JPY pairs sprung a surprise with new lows. Watch USD/JPY in particular that has potential for an Inverse Head & Shoulders while EUR/JPY has provided a bullish divergence. This appears to have been a slight detour rather than a break of structure but best confirm the reversals.