“Search, Analyse, Trade” is a series of analyses for Price Action and Elliott Waves. Its detailed step-by-step description can be found over here. I invite you to today’s review of selected currency pairs and potential trading opportunities.The analyses are based on the Dukascopy sentiment that can be seen here.
The recent growth of EUR/USD pair reached the resistance zone, which is the potential right arm of the head & shoulders formation. Rejection of this level should result in declines and attempt to attack the neck line. Defeating her should lead to a move towards 1.1300. Looking at the upward movement for waves, we will see a rising five. If this is not a C-wave of irregularly correction, and it maybe because the last drop sequence is a triple, then after correction we should see a strong upward movement and an attack on highs. Both scenarios are equally likely.
Looking at the sentiment graph, we see that small players are betting on a H&S formation. If the level currently tested is strongly rejected, we will be able to look for a short position. However, we need to take into account a scenario with a rising five and a move towards the highs.Therefore, rejection must be clear.
GBP/USD with strong upward movement has rejected recently tested support. The pair reached supply zone. If it is rejected we should see an attempt to continue the declines. The growth wave is so strong that we can witness few scenarios. First, it is rejecting resistance and move towards the trend line (least likely). The second is the wave correction and one more attempt to attack the currently tested level of C wave. The third is a impulse wave correction and a strong upward movement in the 3C wave.
The sentiment is supporting the rejection of the supply zone and continue declines. Remembering the dynamics of the last movement, I wait for the C wave and then I will find a short position. Overcoming resistance and implementing the third option will be an opportunity to find long.
On pair USD/JPY still nothing interesting is happening. The pair stays within a narrow range between two levels. We see a series of Pin Bars alternately rejecting the boundary levels. It is only defeating one of them will determine the direction in which the pair should move in the near future.