Expect Complicated Developments For USD Trade
Ian Copsey | Jan 05, 2015 11:43PM ET
Following such a frenetic opening yesterday there was always going to be an element of caution. Gaps have to be filled, or exceeded to confirm a deeper correction lower in the dollar – not exceedingly deep, but modestly so. However, until those gaps are filled and broken, there is a need for caution. The easy statement would be to say that we’ll see follow-through higher in the dollar but I’m not so sure that will occur.
There are pros and cons. That sharp gap higher in the dollar forced momentum to push higher in both 4-hour and hourly charts. Normally, I’d say that would trigger follow-through. Even then, I’d rather wait for that break rather than anticipate it. Equally, there is dollar support at that gap area that could also be reinforced by the dollar-bullish 4-hour Price Equilibrium Clouds. If there is any of the three Europeans that I feel could see a new dollar high, then it’s GBP/USD.
Therefore, today could be another cautious day – but one to work with breaks.
The Aussie, whipped me a little with the new low – a much deeper Wave V projection. However, otherwise the analysis remains the same.
The JPY pairs failed to push higher strongly enough and, as mentioned in yesterday’s video outlook, the outcome does appear to suggest a sideways consolidation in a complex correction. This could well continue over the rest of today but I shall be expecting further gains. The only downside is that EUR/JPY remains rather vague and isn’t really assisting in identifying the structure. Like the Europeans, it has bearish momentum so should – at some point – see lower lows, but the complications in EUR/USD and lack of direction in USD/JPY could well keep the cross within a limited range.
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