„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.
Very little change has occurred on this pair since yesterday. It remains sandwiched between two zones and only once it breaches one of them, a major move in a specific direction should be triggered off. The consolidation we have been observing for several days, took the form of a triangle. From the wave perspective, it may be wave five of a developing impulse, or wave B in a complex correction. In both cases the formation has been completed and a breakout from the triangle upwards should be expected. Only a stronger move down breaching a support zone, will negate that scenario.
On the Ichimoku chart, we can see that the pair keeps defending the Kijun D1 line and retests it for a third time. The Tenkan D1 line also sneaked up to the price, which strengthens the levels being currently tested. The pair is slowly approaching Senkou Span A and a bounce off it may initiate a signal to trade wave 5 or, in the case of 1212 sequence, wave 3 of 3. Sentiment remains favourable to longs, so it will be possible to take a long position.
Nothing special has occurred on this pair, either. It is also staying stuck between two zones. The pair remains in a consolidation that is gently descending towards the support. If we label a rise from the bottom as wave A, then moves up should be expected in wave C towards the nearest resistance level. However, if, as I mentioned several times before, we treat the last wave up as a correction wave of wave 5 of the whole impulse down, a stronger decline triggered already from those levels is quite possible. For the time being, the only thing we can do is to observe and watch out for a decisive more in one direction.
On the Ichimoku chart, the pair is siting between Kijun D1 and Tenkan D1 and has just reached Senkou Span A. If the scenario with a complex correction is to play out, we should expect a bounce off SPA and a breach of Kijun D1. Based on the second scenario, the pair should be able to cut through the ascending cloud, which will enable it coming to a fruition. Considering the situation as of the present moment, I am staying on the side lines and waiting for an impulse in one direction.
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The most intensive action has been taking place on USD/JPY. The pair is following the scenario that I outlined recently, i.e. involving wave 3C, which may constitute a beginning of wave X, but obviously doesn’t have to. According to the second scenario, the current rise may be wave c of the last wave down that formed after the completion of wave X. How the pair reacts within the nearest resistance zone will be a key factor for gauging further moves. If the zone is breached, the gateway to continued advances is open.
On the Ichimoku chart, we can see that the pair has bounced off Senkou Span B and Tenkan D1 and moved beyond the Kijun D1 line. I expected that the latter would be tested, yet nothing like that happened and the pair continues rising. At this juncture, there is no other way out but to wait.
Translation: Mirosław Wilk