„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.
The pair has formed an Inside Bar within the support zone and now is staying inside that formation. The impulse down that took place last week seems to be finished. What is expected is a correction and an attempt to attack the upper limit of the resistance zone and the inner line. If those levels are rejected, one may envisage continuation of declines as part of wave 3 of the last wave down. However, if the pair succeeds in overcoming the obstacles mentioned above, the last impulse may turn out to be wave 5 of the entire downward move.
There have been no changes on the Ichimoku chart. The pair is still sitting below the Tenkan and Kijun D1 lines. I am expecting a correction towards those lines and, should they be rejected, I will be looking for a signal on the H4 TF to trade continuation of declines. Another support level that I marked is the Kijun M1 line – located 100 pips below the price. Once a proper signal occurs, the right risk to reward ratio should be achieved.
The partner of “Search, Analyse, Trade” series is a Dukascopy Europe broker who gives its customers access to ECN accounts in different currencies.
Trade on Forex, indices and commodities thanks to Swiss FX & CFD Marketplace. Open free trading account right now.
The pair has reached the support level without a major correction that I expected. The inner line has been breached and turned into resistance which, should a correction take place, could be used to trade continuation of declines. At this juncture, we still don’t know which scenario is playing out. For the time being, my main bet is that the current decline is wave 3 of an extended wave 5 of the whole downward impulse.
The current situation on the Ichimoku chart does not tell us much of a story, either. The pair landed under the Senkou Span A W1 line and is slowly making its way towards the extended Kijun W1 line. Those levels are marked as respective dotted lines. Unfortunately, since there has been no correction in the direction of Tenkan D1 and considering the current sentiment (the number of long positions keeps rising), all we can do is observe.
The most intensive PA occurred on USD/JPY. The pair defended a key support level for the upward scenario. Currently we are witnessing advancing moves that should be wave 5 of the last wave up, which will most likely result in a test of the resistance level located around the area of the last peak. That was the first scenario and according to the second one, the initiated gains are the beginning of wave 3 as part of 1212 sequence. If that scenario plays out, we should see a strong move up.
On the Ichimoku chart, we can see that the pair has tested the Kijun D1 line – this and the Tenkan M1 line converge. Because of its rejection, we are observing gains which, after the price left the ascending cloud, gave a buying signal. Right above the last peak, there is a resistance level in the form of the extended Kijun W1 line and the PA over there should provide us with a conclusive answer as to which scenario will develop. If the said line is breached, it opens more space for further gains.
Translation: Mirosław Wilk