„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.
I seemed that the Pin Bar formed following the rejection of the support zone and the inner line drawn on the peaks of the last consolidation, should have resulted in a bigger reaction. Nothing of that kind happened and advancing moves stopped at the lower limit of the recently breached support zone. This time a down Pin Bar developed rejecting the resistance zone and today we are observing continuation of the moves down. If the pair fails to defend the nearest demand zone, the next target stop for the price should be the bottom formed in November last year, that is the area of 1.1600.
On the Ichimoku chart, we can see that the pair got within the reach of wave E. This fact coupled with the zones mentioned above, prompted a bigger rebound, only then followed by the formation of another wave down. Also, from the wave perspective, such a scenario could make sense, and is also reflected in sentiment where the number of long positions has been rising recently at the cost of short ones. However, from can be observed on the chart, the pair didn’t even reach the Tenkan line, which was the first signal that such a scenario would play out. The only solution now is to wait to see what happens.
Still, the GBP/USD has been following our recent scenario. It is now in wave 5 of the whole falling sequence and after breaking out of the expanding triangle, which was wave 4, it is continuing moving down. Yesterday I mentioned an Inside Bar and a break out of it resulting in a possible occasion to sell following a retest of the lower limit if the IB. However, this scenario did not pan out. Instead, a rejecting Pin Bar was formed and today we are observing declines that should reach the 1.3300 level.
On the H4 Ichimoku chart we can see that recently there have been two very good occasions to take position and trade wave 5. The first one was a retest of the Tenkan line form the daily chart and its rejection, equating to the rejection of the Senkou Span A line. The other one arose last night and that was the three-line signal. Obviously, sentiment does not allow me to open any positions on this pair. The number of long positions keeps rising, corresponding with a decrease in short positions and such a situation does not justify trading shorts. We can’t do anything but observe.
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Two days ago, the pair reached a key resistance level and a line drawn on the peaks. A rejecting Pin Bar developed, continued today in the form of a strong supply candlestick. The pair got to the supply zone that it breached before. If it breaks the levels being tested, we will need to consider the rising sequence as completed. In such a case, a deeper correction could be expected. However, if the support is defended, another attack on the levels that have been rejected recently should follow.
On the Ichimoku chart, we can see that the pair got within the range of wave E in the 42nd day of the cycle. A reversal occurred, with the price reaching the Tenkan line. If it is breached, declines towards the Kijun line that has been slowly taking a flat trajectory should continue. Right now, I am on the side lines, waiting for how the situation develops.
Translation: Mirosław Wilk