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The core analysis was correct yesterday although there were a few blips here and there that confused within the individual currency pairs involved. Dealing with the Europeans first, the dollar highs seen were in the right place and followed by a solid resumption of the decline to stall just above the recent lows (in the continentals at least.) EUR/USD and USD/CHF appear to be following the appropriate structure and while there is a risk of initial sideways consolidation the final leg lower should develop in the European morning session at least.
Now, this is where it gets a bit more complicated. The recovery in GBP/USD was as limp as a dishrag… However, I can’t see that it has completed the larger correction higher. Clearly this needs to be resolved and either by a sudden rush of blood to the head that takes it higher to target or something else is afoot.
The rally in the continentals from last month’s dollar highs has developed in what could be considered a completed corrective structure – or will from the new low I am expecting today. However, as far as corrective structures go there is room for one more 3-wave move after which no more 3-wave moves are “allowed.” This is beginning to ring in my ears when considering GBP/USD. Thus, all is not necessarily straight-forward.
Now, this has a knock on impact on EUR/JPY. Yesterday’s developments including the minor new low and recycling (that I pointed out as a possibility yesterday) worked quite well. There still seems to be room for one more minor push higher but that should remain below the 99.18 high. Thus, the only thing it can do is drop…
This could be catered for by USD/JPY that does seem as if it is pointing to a larger decline, and probably echoed by the expected reversal lower in EUR/USD – whether that be a total reversal or just a correction. The question then is how the balance between USD/JPY, EUR/USD and EUR/JPY develops… At least, for now we can at least expect losses by the end of the day.
Thus, the day’s outlook appears to be fairly clear in terms of the Dollar rallying later today that should keep EUR/JPY on the downside. However, it’s the next few days that we need to watch for any shenanigans…
Now, this is where it gets a bit more complicated. The recovery in GBP/USD was as limp as a dishrag… However, I can’t see that it has completed the larger correction higher. Clearly this needs to be resolved and either by a sudden rush of blood to the head that takes it higher to target or something else is afoot.
The rally in the continentals from last month’s dollar highs has developed in what could be considered a completed corrective structure – or will from the new low I am expecting today. However, as far as corrective structures go there is room for one more 3-wave move after which no more 3-wave moves are “allowed.” This is beginning to ring in my ears when considering GBP/USD. Thus, all is not necessarily straight-forward.
Now, this has a knock on impact on EUR/JPY. Yesterday’s developments including the minor new low and recycling (that I pointed out as a possibility yesterday) worked quite well. There still seems to be room for one more minor push higher but that should remain below the 99.18 high. Thus, the only thing it can do is drop…
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This could be catered for by USD/JPY that does seem as if it is pointing to a larger decline, and probably echoed by the expected reversal lower in EUR/USD – whether that be a total reversal or just a correction. The question then is how the balance between USD/JPY, EUR/USD and EUR/JPY develops… At least, for now we can at least expect losses by the end of the day.
Thus, the day’s outlook appears to be fairly clear in terms of the Dollar rallying later today that should keep EUR/JPY on the downside. However, it’s the next few days that we need to watch for any shenanigans…
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