Not Quite Clarified But Confirmation Of Renewed Dollar Gains Is Close…
Ian Copsey | Jul 03, 2012 03:16AM ET
Yesterday was a much better day. I hadn’t expected a runaway market on either side and my preference for the dollar to recover proved correct. Today should prove to be more important. We have seen price equilibrium in the 4-hour charts push down to challenge yesterday’s strength. The common reaction at these times is either for the trend to resume, seemingly seeing price equilibrium to provide the catalyst, or for the market to stall for a while as the equilibrium flattens out and allows the market to push price through to reverse the equilibrium.
That just about sums up how I see today.
Which shall it be? Well, so far there are very constructive signs of the dollar being within the early stages of a renewed rally. However, it has just one hurdle to overcome in terms of price barriers and this should prove to be the key point to watch for today. I shall detail these areas within respective analyses.
My preference is still for dollar strength to emerge although I do have some concerns in GBP and AUD so the approach will be cautious today, noting the key ranges that will provide stronger indication of where the balance sways the structure one way or the other. We should find that over the next day or two that a more directional move will develop that should last us for a while longer. If there is any dampener then it could be the U.S. Bank holiday tomorrow.
Just to cover USD/JPY and the cross: USD/JPY dipped directly lower and this tends to fit more closely with the downtrend resuming. I can’t say the structure is particularly clear with the noise clouding the structure somewhat and a high degree of whippiness that is never easy to handle. Probably a more definitive move should develop once EUR/JPY makes a more decisive move. Just as with the Europeans there has been the potential for the underlying bearish move to resume, it does still face the need to confirm that move.
Thus, take care today, not key ranges and understand where to jump on board…
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