A Rather Indecisive Moment

Friday began quite well, but then the outlook fizzled out with much deeper corrections than expected. Of all currency pairs, the USD/CHF performed extremely well, almost perfectly. While the EUR/USD didn’t quite go to “plan”, I don’t think the deeper pullback will cause too many problems as it looks very much like continuing its consolidation for at least half of today before breaking out. Both Continentals are battling with the flattening of both hourly and 4-hour Price Equilibrium Clouds, so the next break should be more decisive. Just a bit more patience is required.

However, there is a question mark over GBP/USD, and certainly a small puzzle to be solved. Are we seeing just a deep pullback before losses or is this part of a new wave higher that doesn’t seem to fit into the overall game plan? The 4-hour bearish divergence was clear, but Friday’s losses failed to break any key support. We have a rather balanced picture on our hands that will need some attention. The 4-hour bearish divergence remains, but hourly momentum is now quite strong. A break of the 1.5737 high would usher further gains, but the current outcome is just a little uncertain.

The Aussie also failed to make a statement of intent, leaving this rather like the GBP/USD. I remain neutral for now, looking for a larger base to develop.

The JPY pairs didn’t quite go to plan. USD/JPY … well, it could just be a deep correction, but we need to acknowledge that there are still deeper expansion levels in case it wants to play silly beggars. On the other hand, the EUR/JPY has covered itself with a rather leaden cloak, the decline on Friday negating the recycling back to 131.28 and opening it more to losses. I can’t see these being extensive today nor direct. So there’s a certain openness to the JPY pairs that will require a degree of flexibility. What will help is for the EUR/USD to complete its consolidation and provide a more directional move, but I can’t see an aggressive follow-through at this point.

Overall, the market seems not quite in a position to launch a stronger directional move today and thus take care.