This morning’s open produced a snafu that pushed EUR/USD above 1.0828 and in USD/CHF below 0.9881 that has provided a minor quandary. Basically, what appears to have occurred is that the rally from 1.0340 on the 3rd January fooled me – and instead the rally to 1.0828 developed in 5-waves. The rally from the 1.0493 low is now looking like a 5-wave move that will complete a zigzag.
This has generated losses in the dollar but I feel we need to take care due to the 4-hour momentum divergences that are seen across the 4 majors. Confirmation of this will need a break through the 4-hour Price Equilibrium Clouds – all of which are flattening out and should see break to the dollar upside. With those confirmed, we should see follow-through.
The odd-one-out is AUD/USD. Friday saw additional losses to complete a triple three and accompanied by a solid hourly bullish divergence and a mini 4-hour divergence. Perhaps it would be prudent to confirm this through direct gains – although it does seem to have broken above a descending wedge high. The idea of having a totally negative correlation is a little concerning – so it’ll still be best to take this step-by-step.
Thus, we’re going to have to take care today and hopefully by the end of the day we should discover the next directional move.