Overall Friday was a positive one for my views. The EUR/USD is moving back towards the 1.3578 high, and has broken below the prior 0.9078 low in USD/CHF. As mentioned on Friday the GBP/USD made further gains, but less aggressively than the other two Europeans. In particular the dollar has penetrated the 4-hour Price Equilibrium Clouds with strong momentum that tends to suggest we’re on the right track. However, structurally I don’t think this is going to follow-through too strongly today. Yes, I do feel the dollar should weaken a bit more in early trading but not too far.
The Aussie seems to be very much in the same boat although I feel it’s more likely to see a correction first without moving to minor new lows. There is an hourly bullish divergence there but no 4-hour so the underlying direction does remain lower. Thus, treat this as being non-correlated with the Europeans overall.
The USD/JPY has progressed pretty much as expected. It always seems to enjoy making heavy work in its structural development, but there do seem to be signs from the hourly chart that we’re due a correction here also before long. A combination of corrections in both the USD/JPY and EUR/USD should therefore imply a modest correction in the EUR/JPY obviously dependent on whether both move in tandem or at different times. There is an hourly bearish divergence in the cross and the potential for a 4-hour divergence also, so note the key support levels that would risk a deeper move lower in the cross.
Therefore it does look like a rather 2-way day today, and as such the key support and resistance levels should be observed and as usual, look out for price reversal patterns and momentum indications at key targets.
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