That was quite a difficult day. In the majority of the pairs, price was battling with the hourly and 4-hour Price Equilibrium Clouds that fought a long battle over the day to try and prevent price making a breach. For these pairs the battle ended the day with the Clouds moving sideways with minor breaches – but not enough to trigger follow-through. While there are a few risks of this continuing, particularly in the Asian session, the chance for a break away from these Clouds is much stronger today.
Out of all the pairs, it was GBP/USD that first managed to wriggle itself free from the 4-hour Cloud and make further gains. Quite likely, any correction will hold above/within the Cloud before extending the move it began yesterday. The other pair that managed to break through was EUR/JPY although it isn’t in an impulsive phase at this point and given the swings around both hourly and 4-hour Clouds, more likely this is down to mere oscillation in a corrective phase.
Otherwise, as we begin today, there are some minor niggling issues that have risk of recycling but then reversal. It’s touch and go which will occur and therefore we’re going to need to be flexible to work with the alternatives. However, overall I do feel that we’ll see some more directional moves developing before long.
Even the Aussie has this duality. It rallied well yesterday and to the minimum target but in a structure that retains options on both sides of the market. One will be a more direct completion of the correction while the other could be a complex correction that will take longer to develop. Once again, this means we need to be fleet of foot and understand the particular outcomes that develop…