Just A Hint Of An Uncertain Outcome
The correction, when it came, was a shallow one. I particularly dislike these shallow corrections because they can come with some kinks in them that make things easy to misjudge. In the process I like to see correlated markets – as in the Europeans – to have a generally common theme to their respective structures. From what I can see, it does look like we had a shallow correction. In addition, we have seen the dollar push beyond the 4-hour Price Equilibrium Clouds and with dollar bullish momentum. Therefore, the risk does continue to suggest a strong dollar.
Even so, as the day begins – and moves into the Europeans session – I would really like to see follow-through from yesterday. However, before that, I see some currency pairs that do suggest a correction first. Therefore, we’re going to have to approach this within an integrated outlook that should satisfy as many currency pairs that we can. This suggests – in the Europeans at least – a correction lower in the dollar over the Asian session – perhaps into Europe – before the dollar rally resumes.
AUD/USD also saw a limited correction and has extended losses further but we are due a correction here also. That always begs the question of how deep they should be but I feel it should be relatively limited. This still has both 4-hour & hourly Price Equilibrium Clouds pressing lower.
Despite the gains in USD/JPY, the downside in EUR/JPY won through, basically driven by EUR/USD. The cross appears to need a correction higher and once again the issue is – how deep? I’m sensing probably limited gains. The only way the cross could be stronger is if USD/JPY breaks above the resistance area I detailed yesterday – or EUR/USD suddenly decides that it has taken steroids… For the moment I’ll stick with the inpidual outlooks that tend to match with how I see EUR/JPY developing…