“Search, Analyse, Trade” is a series of Price Action and Elliott Waves analyses. 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 you can get here.
EUR/USD pair reached local support yesterday. There was a demand reaction that did not allow the test of key support located on the last low. Currently, the pair is testing the level of resistance and if defeats it, should again face the line run on the tops. Looking at the last growth from the low and considering it as an impulse, the current decline can be treated as a completed simple abc correction. If so, yesterday’s rise should be the beginning of the 3C wave. Descent below the low negates such a scenario.
On the Ichimoku chart, small changes since yesterday. The pair tested Senkou Span A and rebounded from it. The increases stopped on the flat lines Tenkan and Kijun. The Chikou line is slowly approaching Tenkan and may reflect from them. The lateral movement begins to take form of a triangle. The structure tightens and the moment of breaking out is getting closer. Such movement should set the lines accordingly and allow searching for entry into the position. It seems logical to look for the long because of the trend.
Unfortunately, the sentiment is against long position. We have seen a sharp fall in longs since yesterday and an increase in shorts. Such a swing we have recently seen is characteristic for consolidation, so the system can change at any time.
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.
Things get interesting on GBP USD. The pair recently overcame the upper limit in the form of a line drawn over the tops. There was a level re-test and movement towards the resistance zone that held the price from the top. Currently, the pair is fighting against its upper limit. From the wave point of view, the growth was a fifth made from the low. If we assume that it is a 1A wave, then after the correction, i.e. the test of the trend line, we should see increases towards the high. How big it depends on whether it will be wave 1 or B. If, however, the pair overcomes the trend line, then the aforementioned five will have to be treated as a C wave in an irregular correction. In this case, we will see the right downward wave 3C, which should test the key support.
On the Ichimoku chart, the pair shyly emerged from the growth cloud. The KIjun and Tenkan lines have intersected creating a cross inside the cloud, which is a weak buy signal. Chikou’s line has beaten the price chart and is currently grappling with the Tenkan line. In general, the chart and average are slowly starting to grow in a bullish manner. If there is a correction in the Senkou Span A area, you will be able to look for a 3C wave position.
If, of course, the sentiment allows it, which at the moment is neutral. The number of short positions after a temporary increase remains unchanged. However, the number of longs gently decreases. The correction that is currently being created, is very similar to the correction we saw in last year’s October. Maybe the scenario will repeat itself and in the near future we will see the test of last high.
