Friday began relatively quietly but did warm up towards the end of the day with the dollar regaining its strength. This has seen dollar bullish breaks above the 4-hour price equilibrium clouds, although there are mixed indications from the daily clouds. Observing momentum will be very helpful in determining the potential for multiple time-frame readings in momentum.
Before getting too enthusiastic, I do note that there appears to be some early dissention between the pairs. The Continental Europeans do appear to be set for losses against the dollar but GBP/USD and USD/JPY are hinting of a slower start – both having momentum indications that suggest some minor dollar bearish divergences. It would therefore be prudent to confirm the outlooks in both groups – Continental Europeans versus GBP/USD / USD/JPY – just in case the market has trapped itself. The positive factor is that the dollar index has pushed back higher again, and that should set the underlying trend.
I am slightly mixed in EUR/JPY. It has managed to haul itself off from the floor but not by a significant margin. Hourly momentum hasn’t really proffered any bearish divergence, but the 30-minute chart has. However, if my observations above in terms of the two Continental Europeans versus GBP/USD and USD/JPY stand true, this would tend to suggest losses.
The Aussie is also in a particularly uncertain situation. It basically developed as expected – although the drop down to 0.7117 was a bit deeper than I've normally seen for the outcome I suggested last week. However, there’s a fine line between bullish and bearish now… Watch that carefully.
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