U.S. launches strikes on Iranian military sites after attack on cargo ship
There were just too many permutations on Friday. I had the impression it could recycle and that clearly didn’t happen. However, Friday’s development has almost certainly taken out the recycling option and implies the risk of a resumption of the dollar uptrend resuming. So we’re now (probably) left with just two options really – direct resumption of the uptrend or a minor new corrective low before the uptrend resumes. So which will it be? To be honest we’re going to have to be aware of the alternatives and perhaps look for some signs. There are hourly bullish divergences developing and the dollar resistance levels are not a million miles away. However, it is still possible that they’ll still allow a minor new low.
Looking more specifically at currency pairs, for a start theaussie still seems to still need to push higher but less directly. Here the risk is for a more choppy push to fresh highs seeing swings in both directions before the high should be in place. GBP/USD is touch and go. Even if it moves to new highs above 1.5777 I can’t see it extending too far.
Another influence that I feel will avoid direct resumption of dollar gains in the first half of the day at least is the falling 4-hour price equilibrium along with hourly price equilibrium that is sitting right below current dollar levels… In particular the 4-hour equilibrium zone needs to flatten out before there can be any penetration to trigger the resumption of the dollar upside.
The above really covers dollar-euro and aussie. When it comes to USD/JPY the upside progress has been constructive. I still tend to prefer the upside extending although still within the boundaries of a correction and this does seem to fit better with EUR/JPY. The cross also made further upside progress but is not a million pips away from key resistance levels. When viewed along with dollar-euro the general outline I have given above tends to integrate with each other.
Thus, the general approach should be cautious for the first half of the day, observing the developments between EUR/USD and USD/JPY and then attempt to coordinate the results to identify the resumption of the dollar rally.
Looking more specifically at currency pairs, for a start theaussie still seems to still need to push higher but less directly. Here the risk is for a more choppy push to fresh highs seeing swings in both directions before the high should be in place. GBP/USD is touch and go. Even if it moves to new highs above 1.5777 I can’t see it extending too far.
Another influence that I feel will avoid direct resumption of dollar gains in the first half of the day at least is the falling 4-hour price equilibrium along with hourly price equilibrium that is sitting right below current dollar levels… In particular the 4-hour equilibrium zone needs to flatten out before there can be any penetration to trigger the resumption of the dollar upside.
The above really covers dollar-euro and aussie. When it comes to USD/JPY the upside progress has been constructive. I still tend to prefer the upside extending although still within the boundaries of a correction and this does seem to fit better with EUR/JPY. The cross also made further upside progress but is not a million pips away from key resistance levels. When viewed along with dollar-euro the general outline I have given above tends to integrate with each other.
Thus, the general approach should be cautious for the first half of the day, observing the developments between EUR/USD and USD/JPY and then attempt to coordinate the results to identify the resumption of the dollar rally.