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Dollar Extends Losses, USD/JPY Breaks Below Support

Dollar Extends Losses, USD/JPY Breaks Below Support

We had both 4-hour and hourly momentum displaying dollar bullish pergences… but the limp, reversal failed to garner any support for follow-through and that’s what caused me to err on the side of caution and wait for breaks that would push the dollar higher … but of course, as we now know, the hourly pergences broke down and the dollar extended losses. This has evoked the need for a re-evaluation in terms of the larger structure and a deeper retracement. With USD/JPY breaking below supports and the deeper losses I had forecast some 5-6 months ago, this now suggests that the lower targets will be more direct, but still with a rough timing for the low around early December. It would make sense that the Europeans will probably match that timing.

Having said that, we should not expect a direct line lower in the dollar with plenty of deep corrections likely to be scattered along the way. On that assumption, it will mean that EUR/USD will have remained in a range for some 8-9 months of this year. What a waste…

Well, we have come far in this particular move. There is still risk of a few corrections, but overall, the main bulk of the current move is complete. There are differences between the currency pairs and, no doubt, some minor deviations in terms of correlation, and this will require us to be aware of the basic structures.

This seems to apply to the Aussie also, although I have a feeling that it will not make a new high and is more likely to see a correction lower overall.

Thus, given the limited nature of the expected follow-through, we should be looking for potential stalling points for a reversal. Whether they occur today or tomorrow is a little uncertain at this point, but I suspect there will be profit taking over the course of tomorrow.

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