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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 not found a place to settle down for long in the area of the resistance zone around the 1.1830 level. It rejected that level and broke out down from the Inside Bar that it formed before. At present the pair is retesting the support zone around the 1.1550 level. From the wave perspective, last week’s decline is a three and the rebound we have been observing for the last several hours, is forming wave 4. Once completed, I am expecting a test of the lower limit of the support zone, i.e. of the last bottom.

On the Ichimoku chart we can see that the pair, having balanced on the Kijun Line, did not manage to breach it and collapsed, resuming moves in accordance with the general trend. I personally expected, in one of my scenarios, a 1212 sequence or a completion of five, i.e. a larger corrective move. We ended up having a zig-zag. The impulse that is forming now could be used to trade continuations of declines. The pair has breached the Senkou Span A W1 line, marked green. This is also the level where the Senkou Span A M1 line is running. As sentiment is neutral, a possible correction and a retest of the said level should make it possible for us to look for positions on a lower TF.

GBP/USD

On the GBP/USD pair we can see first signs of a scenario involving an extended wave five. Having rejected a local resistance, the pair reached a support. The entire decline, as has been the case with EUR/USD, is slowly forming wave five down. Once completed, we should see resumption of declines as part of wave 3 of wave 5. Currently the pair is consolidating as part of wave four right underneath the upper limit of the support zone. I am expecting this level will be retested and declines will continue.     

The Ichimoku chart shows very clearly where the pair is currently sitting. The continuous line is Kijun M1, which is running right over Kijun D1. Both have been rejected and the pair reached another line – marked as dotted. It is Senko Span A W1. A more serious move will be possible only once of those lines has been breached. Then there will be more space for a possible move (if any). Currently I am waiting for completion of the impulse and a correction towards Tenkan D1. This will allow us to look for entries to trade another wave down.

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USD/JPY

The pair got into a struggling mode. Based on the scenarios presented before, the advance we have been observing recently was to take place based on wave three. So far, it hasn’t been surely wave three. It seems to be a simple correction of the last wave down, though at this juncture there are more alternatives, including 1212 sequence. Once the pair moves below the nearest support, i.e. under the thick red line, should provide the answer which scenario is likely to play out. For the time being, all that remains is to wait.

On the Ichimoku chart, we can see that the pair managed to breach the Kijun D1 line, which may be a sign that moves up are ahead. The continuous line is Tenkan M1, which overlaps with Kijun D1. Both of them boost the price up as strong support. Until they have been breached, our bet is a rising scenario and trading 1212 sequence. A correction in the region of Tenkan D1 or the lines mentioned above will give a good opportunity to look for a long position. Sentiment is neutral, which does not prevent us from opening such positions.

Translation: Mirosław Wilk

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