Until the European morning I was feeling comfortable with the development. Beyond was yet another blow to my dollar bullish view. This break of expectation implies my daily structure is incorrect – a factor that increases my uncertainty until I can ratify the daily structure. In EUR/USD, I have had an alternative in my mind for a while which I had put on the back burner. It is one that would imply limited upside but an even stronger, bearish projection (which I find quite scary…) Looking around for supporting evidence, I see that USD/CHF has potential to find a low. This is probably the base for gains to resume. However, we do need the combination of daily, 4-hour and hourly bullish divergences to develop. If this approach fails, we need consider another option.
GBP/USD is hanging in mid-air waiting for the results of today’s General Election. The outcome is very clear. As always it will provide an ineffective government - whatever colour - it’s all a bit of a mess with those bickering kids in the House of Commons. However, we shall see how this develops – but there is an option for losses. We should begin to get an idea by Asian morning tomorrow.
The Aussie has recovered more than I expected. The start of the decline from 0.8075 was rather complicated. Like the Europeans I am first looking at an alternative bearish outcome – but failing that the risk is for a new daily high. Even then, I can’t see a huge buffer for any deeper correction in the daily structure.
USD/JPY slipped ignominiously below support and has extended the extraordinarily complicated development since the 118.32 low. We really need this resolved before any stronger directional move can develop. Any attempt I have made to resolve this so far has ended in “Lost in Translation.” Sugoi muzukashii… Therefore, it’s not a safe pair to be handling at the moment. EUR/JPY appears to need another rally. Hourly momentum is bullish while 4-hour momentum is rising – but could provide potential for a bearish divergence.
All in all, I would not suggest any stronger outlook until these current issues have been resolved – and preferably with a correlated outlook across the currency pairs…
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