Critical Point For The Dollar

The puzzle has been resolved, but a bigger one may have occured.

I didn’t get yesterday's answer right, except in the EUR/USD and even that has moved to the higher end of my target range. During this process, there were a couple of developments that made me uneasy. In one part of the structure, the proximity of two waves were just a bit too close for comfort. (For those understanding Harmonic Elliott Wave it’s the proximity of the Wave -iv- to the Wave -b- of Wave -iii-.) Other than that, the ratios were working well. In addition, while the other Europeans saw deeper dollar losses than I would have liked, we are beginning to see some hourly Dollar bullish divergences. In the higher wave degree structure, as I see it, the combination of these levels and the divergences look appropriate. I was disappointed with the Dollar Index, but feel this may well imply a stronger follow-through than originally planned.

While there is still a target window that should end yesterday’s moves, there does seem to be a good argument for a return to Dollar strength. Failure will throw us back into a big and messy daily consolidation and I’ve love to avoid that. There is just one indication that this could happen – and that’s from the AUD/USD that is approaching an important support that would imply quite a solid correction. For now it’s best to be aware that something larger is going to develop.

The JPY pairs played out their individual game plans, not entirely according to plan but with a minor deviation only. In both we are facing some key decisions, in particular regarding the EUR/JPY that seems to have completed its triangle. My preferred outlook is bearish for the cross for a little more before recovering, while the USD/JPY seems set to push back to the top of the huge daily consolidation. I still see the USD/JPY needing to make a new high. There’s a potential for both to be right, but it’ll need some timing for the intricate combinations across all currencies to allow this to develop.

Be aware of the options, and the conformation for each outlook…