Still Expect Follow Through

Friday didn’t provide any drastic surprises but nor too much exceptional success. However, it did seem to provide some decent clues that seem to suggest we’ll see the start of the week resume Dollar losses. How far these losses extend is another matter. Time-wise I can’t see this move lasting more than a couple of days or so. Much depends on any mid-way correction. At the same time, we’re beginning to see Dollar bearish momentum beginning to falter and providing the potential for both hourlyand 4-hour Dollar bullish divergences. Let’s just say the potential is there, but we need the structure to confirm.

Having said that, I have found a slight discrepancy between the GBP/USD and the Continentals in terms of proximity of the targets in the follow through, although the GBP/USD does have a certain level of ambiguity that requires closer attention. It could perhaps keep the market fairly steady in a range for much of the week, while price equilibrium begins to flatten and allows the market to absorb last week’s adjustment before a stronger directional move.

The Aussie has dropped below the deeper projection I had been looking for. This perhaps suggests that I caught the structure incorrectly. There is a larger daily projection target not a huge number of points below, and it will be useful to observe the test. Having said that, momentum doesn’t look that strong - quite the opposite in fact - so retain the downside bias, but be aware of key support levels.

The JPY pairs almost went extremely well, although they dipped a little lower than expected in the end. I can see the error I made, and overall the downside remains the larger threat. There is just a mild risk of some sideways consolidation that is even reflected in EUR/JPY. I am approaching these two with some caution since I can see suggesting of a day or so of range trading. However, don’t fight any more direct follow through lower.