Friday, April 15, 2016

Potentially a tricky day

The Dollar made gains yesterday, much as expected. This reached in to the middle of the target in EURUSD but USDCHF failed to reach the target I had hoped for. We’re now at a stage where it can go in either direction – one side limited and the other with greater room for a decent trend. (Not that trends are particularly bountiful these days…) This will probably suit Asia that tends to maintain a neutral stance until the European session begins. Thus, we’re going to have tread water for a while, maybe into the weekend if there is little sign of human traders’ life.

Even the “other” European, GBPUSD, managed a decent day of losses but has come up against a pullback of follow-through decision. This tends to match with the Continentals in terms of the options that are available on both sides of the market. No doubt it will take until the European session begins to see what the market wants to do first…

USDJPY didn’t provide the follow-through higher yesterday – well, only marginally – and then corrected lower. Even here there is a risk of an additional dip but overall I’ll expect it to begin to rally but there remains a balance between EURUSD and USDJPY that saw limited moves in EURJPY, down a bit and up a bit. This does tend to suggest the cross will – at some point – move lower to retest the 122.53 low. Therefore, we’ll have to observe the balance between the two major pairs to ensure that the expected final outcome develops – that EURJPY must push back higher at some point. However, we need to satisfy its own individual structure first.

Finally, the Aussie… What can I say? “Strange.” It rallied to 0.7736. That’s one point from a potential target I had been suggesting. Sounds good but I the underlying structure doesn’t seem to be correct. There’s no hourly bearish divergence but a modest 4-hour divergence but nothing that particularly screams out … “it’s done.” For the alternative structure I was considering, it appears to have broken down or maybe needs more development. This needs more information.

Have a great weekend
Ian Copsey  

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