Hourly Momentum Suspect For EUR/USD And USD/CHF
Ian Copsey | Jul 25, 2014 12:21AM ET
Early this week I thought the dollar bearish divergences, both hourly and 4-hour, would provide an opportunity for a reversal. Sustained dollar gains, in the EUR/USD and USD/CHF at least, broke the hourly divergences, held a knife at the throat of the 4-hour divergences, but they have survived by the skin of their, err, neck. Still, however, hourly momentum for these two remains somewhat suspect.
Through all this I have attempted to sustain a logical price indication through HEW which has basically succeeded in USD/CHF (slightly higher than I had originally expected), but the structure in EUR/USD required extensive renovations in the decline from 1.3650. I can see potential for a dollar top but hourly momentum still has its own work to do. What does make me somewhat cautious is the break of support in GBPUSD. Yes, I am bearish but had thought we’d get just a little more correlation with EUR/USD.
Perhaps there can be today although I can’t see the reactions being equal. Potentially this can develop later on but for now it seems as if the correlation will be erratic and brief.
Later I feel they can be brought together over the coming weeks. The AUD/USD topped out exactly in the topping area I suggested. I can’t see significant follow-through lower today and more likely a correction higher. This is still in the foundation stage so don’t expect strong moves at this point. The upside progress in USD/JPY has been developing well and should soon see its intermediate target today. Overall this remains on course for the target area I have been suggesting. As a consequence, despite the marginal new low yesterday, the EUR/JPY has begun its own recovery. There is still some risk of confusion with the on-off dollar correlation between EUR/USD and USD/JPY but overall there does still remain some upside. I just get the sense it’ll be quite choppy.
Still, we should see another relatively low-range day with two-way movement. Watch momentum and for potential targets.
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