Yesterday saw USD/JPY, EUR/USD and USD/CHF reverse through the 4-hour price equilibrium clouds. Thus, we have a dollar bullish bias. It was expected although I had allowed for minor new dollar lows – but these failed to materialise. So we now pass to the next stage and need to quantify the structure to see whether it has the “oomph” to take advantage. However, GBP/USD remains in flux.
It has neither broken below its 4-hour price equilibrium cloud nor key bearish break level. Thus, we have to work with the balance between the upside and downside. Thus, we need to remain neutral until either new high – or a move below that key break level.
Indeed, there appears to be some risk of deeper pullbacks as the day starts and we’ll have to see how feisty the market will be once Europe and North America enter the fray.
EUR/JPY managed quite a solid recovery – that took me by surprise – with USD/JPY, unshackled from the bearish decline and break above the 4-hour price equilibrium cloud – to extend gains in the cross. However, there should be a lull in the USD/JPY upside for a while but we’re going to have to judge the balance between the two intrinsic pairs. Overall, I do still see the cross edging lower – unless the upside break level… breaks…
Down under we have seen AUD/USD extend losses as I had hoped. It’s currently testing the channel support but could see a pullback higher. Once the channel low is broken we should see stronger losses.