“Search, Analyse, Trade” is a series of analyses for Price Action and Elliott Waves. Its detailed step-by-step description can be found over here. I invite you to today’s review of selected currency pairs and potential trading opportunities.The analyses are based on the Dukascopy sentiment that can be seen here.
The gains we saw on the EUR/USD pair, which were the consequence of defending the support zone, reached the first hurdle which is the recently defeated support. The level has so far been rejected. It is quite possible that we will see a second attempt to attack the level and consequently a re-test of the defeated trend line. This will be a return movement to the neck line of head and shoulders formation. If the levels are rejected, the formation will be in progress and we should see a reversal of the short-term trend. The return over the resistance zone negates the downward scenario and will allow EURUSD to return to the main trend.
The sentiment sequence is put under the scenario of the head formation with the arms. The re-test of the zones and their rejection will be an opportunity to play on declines.
GBP/USD has rejected the supply zone near 1.3450 and is slowly moving towards 1.3340. If it is defeated, another important support zone is 100 pips below. All of the downward movement we have seen since last week is typical for correction, so I expect one of the levels a bullish reaction and continuation of upward trend. Looking at the chart for waves, the current correction should be the fourth wave, and after that another wave of growth will take place within the fifth wave.
The sentiment remains neutral and currently there is no reason to open a position on that pair. If the uptrend is to continue, the pair should overcome that supply zone and only then after re-test from the top will allow us to open position in line with the trend.
USD/JPY continues to struggle with the trend line drawn over last highs and S/R zones. On the chart we see indecision. At the moment the zones have been defended and as a consequence we watch a growth movement. Looking at the waves in the chart we need to pay attention to the appearance of the recent downward movement. We may be dealing with wave A, and the increase after support defence would be wave B. The consequence of this assumption will be another downward wave within wave C and a fall towards support (111,800). However, until the moment of breaking the mentioned support zone, the bulls are in force.
The sentiment remains neutral. Since I still have a position on this pair, I will only be an observer until stronger movement in some direction.