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„Searching, Analysing, Trading” is a series of analyses designed for an investment strategy based on Price Action and Elliott Waves. Its step-by-step description can be found in this link. We kindly invite you to follow our today’s review of selected currency pairs and potential opportunities for transactions.

Our analyses are prepared based on Ducascopy’s SWFX Sentiment Index, available here.

EUR/USD

The pair has reacted to the lower limit of the support zone. A small rebound took place, which reached the lower limit – this time of the supply zone. We are observing a first reaction to that level. We can still assume that this may be the beginning of wave 4 of wave 3C. If so, looking at wave 2, which is wave c of an irregular correction, it should take the form of a triangle or a complex correction and should be extended in time. We have an ideal place for such a correction, as the pair has been locked between two zones.

On the Ichimoku chart, we can see that the pair has successfully gone over the Kijun and Tenkan lines from the 4H chart. It is quite possible that they will be retested from above and the whole move will continue upwards towards Tenkan from the daily chart. It so happens that also Senkou Span A is located nearby, which will strengthen that level. As long as the price is holding below the Tenkan line, the wave 4 scenario applies and with the current favourable sentiment (increase in short positions and reduction in long ones), it will be possible to look for an entry within wave 5.

GBP/USD

The pair is still consolidating at the level of a lower limit of the support zone and the trend line. It took the form of an expanding triangle and should be wave 4 of an impulse down. For 4 days only candlesticks of indecision have been forming and it is necessary to wait for a break out of the triangle. Only this kind of move will verify whether it is a triangle being wave 4, or the beginning of a larger corrective structure.

On the Ichimoku chart the same triangle is playing out. If a correction is to be based solely on that triangle, only sub wave e is needed for its com0pletion and a downward signal. Such a wave, provided it is not truncated, should reach the area of the Tenkan line from the daily chart and reject it. However, if it is truncated, Senkou Span A will be a good place for its completion. With favourable sentiment, which is neutral at the moment, we could look for entries to trade wave 5 in those two places.

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USD/JPY

The pair, having bounced off the support level and negated the B wave scenario, reached a resistance level, which was rejected yesterday. As long as the current levels hold, the rising scenario is the preferred one. However, if the pair fails to hold the local support that is being tested and it falls to the area of the last bottom, we could consider a double top formation and a deeper correction. In terms of the wave structure, the current move should be wave 5 of wave 3C.

On the weekly Ichimoku chart, we are observing an obstacle that the pair is facing, mentioned by me before. It is the Kijun line, off which the pair has been bouncing for a third day in a row. Only once it has been breached, further moves up will be possible. Otherwise, a major correction should be taken into consideration.

Translation: Mirosław Wilk

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