„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.
The pair, having rejected the support zone and retested its upper limit, went on to form wave C of the last impulse down. At present the pair has reached the lower limit of the resistance zone and has already completed 3waves in a potential wave c. There is only one move up to ensure its completion. If the pair rejects the local support being tested now, this move should take place. We should soon see a test of the upper limit of the supply zone and its rejection. This is the first scenario. According to the second, wave 3 up that we are witnessing now will be wave b as part of an irregular correction and the pair will breach local support being tested by forming wave cB. Only after its finishes, will we see proper wave C as completion of a simple correction of the impulse down. A third scenario assumes a strong move up from the current levels and confirmation that the last wave down ended the whole impulse that has kept developing since February.
No changes have occurred on the Ichimoku chart. The pair keeps struggling with Kijun D1 line and the development of the scenarios discussed above depends on how the pair tackles that line. Sentiment is tilting towards declines and currently I am staying on the side lines until the situation with the Kijun D1 line becomes clear.
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There is not much to be written about GBP/USD. The pair, having rejected the lower limit of the support zone, managed to reach the lower limit of the supply zone. The pair once again has consistently respected the inner line and currently we are observing its retest from above. If the move down is to end following the last three waves, we should see a stronger impulse up. However, the Pin Bar that formed in the resistance area may imply that this is wave A and after a correction, we will see another wave up as part of formation of an extended wave 5. A Pin Bar may also end sub-wave 3 within an impulse being built now. Therefore, it is worth waiting for the result of a retest of the inner line.
Talking about the Ichimoku chart, the situation looks similar to EUR/USD. Here also the pair is struggling with Kijun D1 line, which has been tentatively rejected. So far, no major declines have followed and at the bottom we’ve got the Tenkan line that will stand in the way as another obstacle for the price. Therefore, only once it has been breached, the downward scenario will be confirmed, and we will be able to look for positions. No major changes in sentiment have occurred. For some time, we have been observing a gradual increase in shorts, which enables trading possible declines.
Translation: Mirosław Wilk