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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

Well, nothing came of the expected consolidation and irregular correction, which I assumed would appear as part of wave 4. The pair, having rejected the recently tested resistance level with a Pin Bar, headed south, leading to a re-test of the lower limit of the support zone, giving rise to wave 5 down. At this juncture it is still impossible to specify what it will be. Having looked carefully at the sub-waves of the last decline, one may suppose that it is wave 5 of wave 3 and once completed, we will see the actual wave 4. The problem of such meticulous counting of waves in a strong trend is that waves very often get extended and it doesn’t make much sense.

On the Ichimoku chart, the pair rejected the Tenkan line. There are unfortunately several trading scenarios. The main one assumes that the pair defends the support zone and a correctio of a possible impulse will take place, which will retest the Tenkan Line and reject it. This will correspond with a test of the Senkou Span A declining cloud on the H4 chart, True enough, the sentiment that keeps justifying long positions does not allow us to open a position, but the situation may chance once a correction occurs. A move up and breaching the Tenkan line will negate the falling scenario.

GBP/USD

There is not much to say about GBP/USD as nothing interesting has been going on here for some time. On the H4, chart we can clearly see that the pair is building a triangle formation (a diamond may develop as well) between the two levels of the support zone. Assuming that this is wave 4, we should see a break out of the formation down and continuation of moves down as part of wave 5. The target for that move should be level 1.3300.

Not much has changed on the Ichimoku chart. The pair is sliding along the Tenkan line. If a correction develops in that area with neutral sentiment, we might see occasions to look for a short position and trade wave 5. Another occasion will arise when the consolidation is breached downwards and a retest of the support zone from the bottom takes place.

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USD/JPY

Yesterday, the pair breached the resistance zone being a top, thus negating the hypothetical double top formation. My concerns about irregular correction were exaggerated, tool. After we count the waves from the bottom, we may assume that the pair is in wave 3 of wave 5. If so, the resistance zone that is being tested now should be breached and a test of the 111.000 level should occur in the nearest future.

On the Ichimoku chart, which I pointed out last time, the pair has breached the Kijun line from the weekly chart and the extended Senkou Span B line. Another resistance is located around the 110,900 area, once again in the form of a flat, extended Kijun line. The gateway to those levels is open. Currently sentiment support moves down, nor is there an occasion to open a long position. Thus, the only solution is to keep watching.

Translation: Mirosław Wilk

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Peter started his trading career in 2000. He spent first six years trading futures and created a system giving a 25% yearly return with limited risk. Since 2006 connected with foreign exchange market, where he trades using trend lines and breakouts, but spends the most of his time on Elliott Wave Theory. Here in Comparic, writes about Price Action and Waves in daily trading.