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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 par is continuing wave 3. Another support level was breached yesterday. Currently the pair is sitting within a demand zone and once broken, the price should fall towards the 1.1700 level. Thus, a potential space of 120 pips opens, which, if the level is retested, could be used to join any moves down. If we have a closer look at the wave structure, we should see that is should be slowly coming to an end (assuming no sub-wave is extended) and a correction in the form of wave 4 should play out soon. However, the move is so strong that it will be hard to establish when it happens and at what level the price will bounce off.

The strength of the trend is visible on the Ichimoku chart. The price made a strong move away from the Tenkan and Kijun line from the daily chart. Chiikou is also situated at its maximum distance from the price. The pair is clearly and neatly respecting the Tenkan line on the H4 chart and currently there are no signals for a correction. Sentiment is at a neutral level, with a slight tilt towards long positions. If a correction occurs in the direction of the Kijun line on the H4 chart from the current levels or after a retest from the bottom of the support zone that is being tested at present, I will be looking for long positions.

GBP/USD

We are observing a similar situation on GBP/USD, which has reached and for several days tested the lower limit of the support zone and the trend line. The last three days displayed a consolidation and attempts to breach the support zone, which so far have been unsuccessful. The pair is in wave 3, in which wave 1 and 3 are equal, so extended wave 5 is still possible and continued declines towards a subsequent support zone. The defence of the zone being tested now should result in wave 4 and may be used to join the trend.

No changes have occurred on the Ichimoku chart. Yesterday the pair breached the Tenkan line from H4 TF reaching Kijun and rejected it, leading to another sequence of declines. Currently the pair is retesting Tenkan. The last move down seems to be exhausting slowly, therefore a correction or a sideways move is quite possible. If a correction takes place, it may reach the Tenkan line from the daily chart and assuming that sentiment is neutral, I will be looking to take a long position in those regions following the current trend.

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USD/JPY

The pair is continuing its rebound and has just reached the support zone, which it recently rejected. As I wrote before, that move may be wave B of a correction, as the decline was wave 5. If this scenario plays out, a small H &. S formation would be formed and once resistance is rejected, we would have moves down as part of wave 3C. If the level is breached, the said scenario is negated.

On the Ichimoku chart, we can see that the pair is approaching a buy signal. Currently the Senkou Span A line is being tested and its breach should give a buying signal. The pair is sitting above the Tenkan line from the daily chart, as well as Tenkan and Kijun from H4. Only the Chikou line is situated below the price, which is slightly weakening a possible signal. However, a rejection of Senkou Span B and a retreat below Tenkan will allow us to follow the scenario with wave 2B and moves down as part of wave 3C.

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.