Still Some Work To Be Done To Confirm A Reversal

I’m not totally, 100% convinced by yesterday’s dollar highs. Yes, in all three Europeans the highs were valid projections although of the stubbier end of the range in EUR and CHF while at the (normal) extreme in GBP. Even the initial reversals hit the right areas that should be expected. It’s the bit after that which provides some question marks. There are solid 4-hour dollar bearish divergences across all three.

Each has retested the 4-hour Price Equilibrium Clouds and actually pressing to break through while the hourly Clouds have been marginally broken and threatening to break free of their confines. The only thing that is lacking is the break of important dollar supports. That and the rather strange development following the initial reversal.

So what happens now is going to be of importance. On the assumption that we have seen the dollar highs the worst we should see now is a period of range trading during the Asian session. Well, that’s pretty normal so we’ll have to sit on our hands and wait for Europe to force the break. Until that follow-through, breaking below key dollar supports and from the confines of the 4-hour Price Equilibrium Clouds, in the background there is just this nagging doubt…

I was caught flat-footed with USD/JPY and its marginal break above 78.61 only to reverse sharply back towards the 79.07 low… That failed rally also prevented price from breaking above its own 4-hour Price Equilibrium Cloud around which it is currently oscillating. It must now break higher to confirm the next leg(s) higher. That is also the requirement in the EUR/JPY cross although it has been able to make it above the hourly Cloud so it should be more a matter of time to make the extra break to set both on the upward path I have been looking for.

In AUD/USD the key support has held to allow further upside progress. The structure here has been extremely cumbersome but does still hold a bullish structure although there are still barriers that can provoke corrections. Overall, as long as yesterday’s low is not broken by too much (and preferably not at all) the main direction remains bullish.

Patience is required in the first third of the day but the final two-thirds should provide confirmation of intent.