There was an interesting contrast of movement on Friday between the EUR/USD and Aussie versus USD/JPY, USD/CHF, GBP/USD and EURJ/PY – basically volatile versus steady.
In particular, USD/JPY followed the broad expectations I outlined with only minor adjustments, GBP/USD was in a position where it could move in either direction – although with an underlying bearish bias and USD/CHF edged still higher which was something I hadn’t expected – but then hasn’t changed the underlying structure. EUR/JPY… well, it was a bit extreme but within the norms of an extreme.
Clearly, it was the EUR/USD and AUD/USD that suffered the most, the latter being the more aggressive move. These pairs caused the biggest problems to structure that needed a bit of an overhaul but I still tend to prefer holding to the larger degree structure. From that perspective, any larger adjustment requires a bedding down process to confirm the changes. However, given that the rest of the bunch hasn’t really deviated from the larger structure, Friday’s moves in the rest of the bunch have not provoked any serious breach.
Therefore, I am expecting a steady day, the market probably testing the waters first before making any further dramatic moves. There seems to be a risk of some volatility around the 4-hour Price Equilibrium Clouds. If I am to point to a more directional move then I’d go with GBP/USD. Alternatively, USD/JPY has developed pretty much as expected and that can provide some good trades but don’t expect a larger trend to develop at this point. This has potential to drag EUR/JPY into a range also.
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