As I mentioned in yesterday’s post, Dollar weakness was overdue for a correction. Unfortunately, my short USD/JPY position was stopped, as I underestimated post-intervention yen strength. The DXY’s oversold condition has marked a daily bullish hammer reversal that stemmed from EUR/USD’s rejection at the 1.4027 pivot. Gold pulled back and has now potentially confirmed a daily bearish engulfment reversal. The Swissy also pulled back from all-time lows due to a deeply oversold condition and potentially risks a sizeable false-break rebound. The Aussie once again served as a leading indicator after spiking to a 26-year high early in Asian trade before reversing.
While overwhelming evidence suggests a dollar comeback, notice in the above chart that most turning points require the formation of a secondary high or low to complete the trend. As mentioned yesterday, I anticipate a 1-4 day counter-move before resuming trend. Beyond 4 days suggests an intermediate swing is possibly in place and could set up the secondary high or low scenario.
While overwhelming evidence suggests a dollar comeback, notice in the above chart that most turning points require the formation of a secondary high or low to complete the trend. As mentioned yesterday, I anticipate a 1-4 day counter-move before resuming trend. Beyond 4 days suggests an intermediate swing is possibly in place and could set up the secondary high or low scenario.
