What a blockbuster day Friday was… It has certainly changed the outlook, but probably only temporarily. Where do I start? Well, on Friday morning I called for a correction lower for another rally in USD/JPY only to blink and find out that the BOJ decided to impose negative interest rates. Well, it turned out the correction was a mere 21%...
In the Continental Europeans we saw the dollar push above key resistance levels but then reverse – particularly so in EUR/USD. However, particularly in EUR/USD the dollar bullish structure has broken and USD/CHF appears to have adopted a new alternative corrective structure. All this tends to suggest further complicated trading. If I add GBP/USD into the mix, there’s some ambiguity also. Have we seen a recycling or will the downside resume directly?
I shall note the areas in the report that will be critical to the alternative outcomes but I feel the mess that we’ve seen since the beginning of the year may well continue into the middle of February at least. In particular I have my favoured scenarios but need to have these confirmed.
USD/JPY does not look to have completed its push higher but the rest of the move looks a little bit messy. It also confused the picture in EUR/JPY although, like USD/JPY, momentum is still pushing higher. I tend to feel this will be a rather scrappy development from this point.
And finally, AUD/USD pushed up a little further but does look like it’s running out of energy. I was caught out late in the week but there are signs of a reversal before long. Price is testing the supports in both the hourly and 4-hour Price Equilibrium Clouds and there’s a good hourly bearish divergence – but not in the 4-hour. It won’t take too much to see it topple.