„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.
There have been no decisive moves on this pair so far. Wave 4 or B took the form of a triangle. It reached a resistance zone, which was rejected with a strong pin bar. The move up towards the 1,1850 level may continue and carry on as part of vC3. The test of the said level should slightly clarify the situation. Its rejection may mean that wave 5up, which will be wave 1AC, has been completed. A breach of that zone means that the scenario with extended wave 5 or 1212 sequence comes into play.
On the Ichimoku chart we can see that the pair has defended the Kijun D1 line once again, while testing and rejecting Tenkan D1 and Senkou Span A, With the current neutral sentiment, one may be tempted to trade the next wave up. The only line that prevents us from opening a position is Chikou, which at present is sitting under the price.
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The pair finished forming the wave up. Yesterday we saw its correction that reached a support level. A reaction to demand showed, which tentatively rejected the level being tested. If we label the last wave up as 1A, the pair should race towards the nearest resistance zone boosted by wave 3C. It still remains to be seen what the current rebound is and the situation should clarify once the price gets to the zone mentioned above and reacts to it.
On the Ichimoku chart we can see that the pair struggled a few times with the Kijun D1 line. It was rejected several times, which resulted in declines and a re-test of the Senkou Span A. Currently we are witnessing a rebound that made it possible to go above Tenkan D1. Only a strong exit from the cloud and a breach of Tenkan 1D will trigger off the scenario involving wave 3C. Until then, we are sitting on our hands.
The pair followed our scenario involving an irregular correction and completed forming wave C, or wave 1 within 1212 sequence. At present the pair is testing the lower limit of the inner support zone and if it is breached, the price should have an open path to a decline towards the 109,850 level. Once it gets there, we will see more clearly which scenario is playing out. A strong defence of that level may indicate a scenario involving 1212 sequence. However, a decline under the support level will mean we are dealing with completion of a simple correction and a possible fall as part of wave 3C
On the Ichimoku chart, we can see that a key support level overlaps with a flat Kijun D1 line. If it is breached, sentiment that favours shorts will change. For the time being, the pair is approaching the Tenkan D1 line, which will be the first obstacle on the way to declines (if any). Currently what we can do is only wait.
Translation: Mirosław Wilk