Monday, July 21, 2014

Leap taken. What next?

So, EURUSD was the leaper. Actually, it wasn’t too surprising given the momentum conditions. The question is more whether it’s tied to a bungee cord. In this segment of the Dollar’s upside there is a little question mark – will it take a second dip or will the bungee cord return the Euro back above the starting platform? As we start the week this is the first puzzle to solve. There are hourly Dollar bearish divergences across all three Europeans but ones that could absorb one more follow-through. Therefore, take some time to observe this. Whichever develops, the outcome should be a deeper move back lower in the Dollar.

This tends to be suggested in AUDUSD also that surprised with its strength on Friday to break the bearish sequence. The early part of the day will provide the same choice by the market as explained above in the Europeans, but the final outcome will be higher but I suspect in a relatively choppy manner.

The barrier at the 101.35-45 area worked quite well. It was a natural resistance point but the more difficult part was judging whether it would provide a temporary or stronger barrier. Obviously the latter has occurred. We still face that issue as the week starts but I don’t think it will be for too long. Are there any clues from EURJPY? I think so, although using this method to try and solve the problem is one of those suck-finger-and-stick-it-in-the-air processes.

If I am to go with what I see in EURJPY, it looks to be as if we shall see EURUSD dip to a new low, taking EURJPY with it before both EURUSD and USDJPY both make upward progress.

In terms of significant moves, I don’t think we’re going to see a runaway market today. The current pattern of hit and run still seems to be dominant.

Have a profitable week
Ian Copsey  

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