It was a much more sluggish day than I had hoped for although in retrospect the directness of the gains we have seen, and even higher again in USD/CHF, was perhaps a sign as the 4-hour Price Equilibrium Clouds were still rising and they rarely break on the first attempt in a trend. The only exception was in GBP/USD but that hadn’t seen the same robustness in its decline so the Clouds were flat and allowed price to poke its head above the 4-hour Cloud.
Today? Well, initially mixed signals I think. I remain looking for the Dollar to lose out but there could still be some support a little lower down so patience is still going to be required. The Clouds need to flatten a little more in EUR/USD and USD/CHF so it’s a matter of timing. Given the extremely tedious development I’m not so sure we will see any burst of weakness today, or if we do then probably it will be in the latter half of the day. IN GBP/USD it should provide the opportunity for another poke higher but it, too, needs a pullback at some point before it can make stronger progress.
The Aussie … err… is strange. It’s one of those currencies that doesn’t require deep corrections so it’s possible we’ve seen a low but the structure became a little more quirky yesterday. I’d like to see it push higher but this is one that needs some good trade set ups. Having said that it does seem to be in a range at the moment and given this pair has the tendency to break peaks/troughs by a point or two and reverse. Until there is a more definite signal I’d suggest taking care.
The JPY pairs also had a quiet day. However, I feel that it could be a case of “do or die” right now. The good news is that the preferred bearish view is common to both and also the requirement for this is a solid decline. Indeed, in this position, assuming we get the breaks lower, the outlook is pretty much one-way in both pairs. It would be a fine solution given the proximity of the 48 week and 96 week cycle lows.
The caveat? Well, much above the highs we have seen so far would be pushing the limits on the upside. I don’t particularly like this option as the daily structure just doesn’t seem to sit comfortably but if there’s any strong bullish pressure it could keep going although I’d still feel that the larger range could last some time. Again, that doesn’t seem to match the position of the cycles.
Patience required today again. It’s August after all.