„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.
EURUSD
On EUR/USD we can observe that the scenario whereby a corrective triangle would be formed as part of wave 4 has been negated. Yesterday it could still be assumed that wave e as a false break-out unfolded, but no reaction on the demand side on the lower boundary of the support zone deepened the declines. According to another scenario, a simple correction could develop. Based on that assumption, the demand zone reached by the price should not be breached. It is quite possible that a test of the lower limit of the zone will take place, from which declines should end, thus completing wave C. A breach of that zone negates the upward scenario. In that case wave 3 will develop and possibly a change of the trend in the mid-term perspective may occur.
No major changes on the daily Ichimoku chart. The exit of the line from the cloud, which is at the maximum distance from the price, additionally confirmed declines. The Tekan and Kijun lines are still facing an obstacle in the form of Senkou Span A line. On the weekly chart at 1,2050, we have a flat Kijun line that should attract the price. It is exactly there, if obviously the whole downward move is a correction, that I assume the completion of wave C and further heading north.
GBPUSD
Nothing has changed on the GBPUSD pair since yesterday. The price is sitting right under the inner support level. The last three candles formed a sideways move, which, from the wave perspective, should be wave 4 of a downward impulse. Once it has been completed, we should observe a move towards the breached, accelerated trend line. Such a move should be part of wave 2B.
No major changes have occurred on the Ichimoku chart either. Having entered a tiny cloud, the pair has rejected the Senkou Span A line with a pin bar yesterday and is slowly trying to exit the cloud from underneath. The Chikou line tackled the cluster of lines and is free to head towards the flat Senkou Span B. So far Kijun and Tenkan have given no downward signal. They have merged and are moving horizontally. Sentiment has entered a neutral zone and justifies opening short positions. Formation of a correction as part of wave 2B will create a good opportunity for an entry on a lower TF with wave 3C as a target.
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USD/JPY
Since not much has changed on USD/JPY, let’s have a quick glance at the weekly chart. If we assume that the gains from the bottom of 2016 formed an impulse, then currently its correction should be unfolding. The last wave down should be wave C and the current rise the beginning of wave 3C. That is obviously only a scenario and the last upward wave may as well be only a correction of the 1212 declining sequence. But until it is negated, that is the probable scenario. The upward wave currently constitutes 1A2B3C sequence. We are waiting until wave 3Cm completes, which can reach the 110.00 area.
On the Ichimoku chart, the pair has breached the Senkou Span B line and made a break out upwards from the declining cloud, which is a weak signal for longs. Chikou managed to enter the cloud and the fact that it is at a maximum distance from the price confirms the strength of the trend. I am still hoping that a correction towards the flat Tenkan line will occur, where I am going to spot the right setup to trade wave 5 (assuming that the current rise is an impulse, not an ABC correction).
Translation: Mirosław Wilk
