Further Dollar Lows To Come

Was it dull yesterday? Well, kinda. Will it be dull today? For a while I suspect, but I think we’re due a little more fun very soon and it’s therefore a matter of “when” rather than “if.” I do feel that there are further dollar lows to come, but I’m not going to get too tied into one particular view today. Across the Europeans 4-hour momentum is setting itself up for a potential dollar bullish divergences. Hourly momentum is rather mixed and really needs to get its act together to match the 4-hour divergence. Daily divergences? Well, they happened at the recent dollar lows. It has only been the GBP/USD that has been lacking in terms of dollar bullish divergences, but has now begun to organise this.

Next week is going to be a very different kettle of fish…

The Aussie managed only a minor new high yesterday, and then collapsed in a Key Day Reversal. Has it reversed? Will it consolidate? I have to admit to being in two minds. Structurally I feel it still needs to make a new high but probably hasn’t completed its correction lower. I would prefer another new high, but does seem to fly in the face of the Europeans. A bit of care is needed today, I think.

As for the JPY pairs, the past two days have not been gracious to my outlook. The USD/JPY is in a position where – if it breaks very close support will risk much deeper losses. I can’t buy into that. I took the stance that I did because of the structure of course, but also that the drop to 98.54 was already a deep correction for its position. I was contacted by a subscriber asking about the potential for a triangle developing from the 103.73 high. I’ve seen quite a few offering this outlook. I have not taken that route since I’m not confident that the 103.73 (93.78 decline developed in 3-waves) which for a triangle must occur. Maybe I’ll be forced to eat my words. It wouldn’t be the first time, but in the current short term structure there is another alternative that I wish to confirm. If it holds then we could see continued consolidation. Much below yesterday’s low would send this lower. So there’s a fine balance here.

However, there’s an equivalent support in the EUR/JPY also, so watch these and observe the reaction as I feel this is the critical point between a deeper correction lower and further gains.