Friday’s development was always a situation of where will the corrective losses stall? There was no set level and in one of those positions where there were multiple choice answers, all of which could have been correct. The dollar’s losses have allowed price to remain below dollar resistance provided by the 4-hour Price Equilibrium Clouds, and this is valid across the three Europeans and Aussie dollar. What’s more, hourly momentum does still seem to have a bearish outlook, so there’s no significant sign of any reversal at this point.
So, as the week begins, there is a certain ambiguity running across the pairs, and we’re going to have to treat the initial development with kid gloves. There is a decent channel in GBP/USD and a bearish wedge in EUR/USD – although USD/CHF doesn’t offer any patterns at all. In AUD/USD, the entire decline from 0.8162 has developed within a narrow bearish channel. However, these observations could prove useful in identifying any break for those patterns.
And while the Europeans continued their development, USD/JPY decided to take a long weekend. This sees its 4-hour Price Equilibrium Cloud supporting price right now but I’m not certain that the structure tends to support direct gains. It therefore tends to suggest a rather limp and uncertain start to the week – although one issue is the approach to the 136.95 high in EUR/JPY. There is an hourly bearish divergence in the cross, so observation of momentum here could provide us with a clue. If that bearish divergence breaks down, we know that either/both USD/JPY and EUR/USD will have to see firmer gains…
There are limited clues – and at least watch these – but remain alert. I have a feeling some stronger moves are around the corner.
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