Forex Ichimoku Report – August 17th

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EURUSD – 1st in Seven
Suffering its 1st weekly loss (and a large one at that) in 7 weeks, the pair shed 5 1/2 cents in a week which is its 3rd largest weekly loss for the year.  In one fell swoop, the pair broke below the 20ema, the Kijun and landed atop the Tenkan.  Here it has found a little support but so far, the bounce is limited and timid.  Rightfully so in the face of that fall last week.  What now?

The pair is really in a messy position from an Ichimoku perspective.  Although bulls can use the Tenkan as support, there is not much left below it to use.  Price is still below the Kumo and last weeks dive took out the previous 3 weeks of gains.  Yet, it cannot perform a downward TKx in the near future since the Tenkan is below the Kijun.  With both lines being flat, the best place to sell would be last weeks high.  If the pair grows wings and starts to climb fast, it could break through the upcoming Kumo but after November, the chances dimish till early/mid 2011 for re-claiming 1.3500.

USDJPY – Will the defenses hold?
85 so far has withstood two tests.  The first one was a close close to it while the second was a small bounce off of it.  Although there is talk of the BOJ intervention, it has not happened.  The pair for this week has sold off from the open and is coming close to the big figure again.  Bulls can make cautious (very cautious) longs at 85 with stops below 84.72 and tight.  There is no need for more risk.

Ultimately the bulls will have to work harder than the bears as the Tenkan is down showing momentum still falling and the Kijun is flat which means short term no trend but the prevailing momentum in the downtrend still has inertia behind it.

GBPUSD – Almost minus the Cigar
After closing 9 out of 10 weeks up, the pair ran into the top of the Kumo and got slammed down by 4 cents which is a little less than its Euro counterpart.  With the pair inside the Kumo, trading is ill advised and the upcoming Kumo does not offer great prospects with the twist coming up.  Selling at 1.6000 is an option and buying off the 20ema is another but with last weeks reversal bar, caution would be advised on this play.  If the 20ema and Tenkan create a bounce, then a return to 1.6000 should be in play.

USDCHF – Is the line in the sand drawn?
After falling 8 out of 9 weeks, the pair ran into the 1.0350 area which produced a solid bounce last week.  Since then, the pair has sold off but touched this level again and bounced 80pips+.  If this support is for real, the pair should test the 20ema around 1.0700.  Another slow meander down to 1.0350 could offer a good buying opportunity so watch the price action leading up to it.  However, bulls should be cautious to see how price responds to a 20ema/Tenkan touch as both are together now and with the diving Tenkan, the reminder is the momentum is still pushing down.

EURJPY – Still cannot amount to much

After trickling out some gains, the pair has sold off aggressively last week killing 5 weeks of small nibbling gains.  The pair is testing the 110 barriers as we speak and only has 107.30 (yearly low) below to offer a helping hand.  The pair seems hemmed in between the low and the 20ema so plays off either are workable but the buys need caution.  The only vote of confidence is the long tail from the first week in July which was a long rejection at the bottom.  If we get a close below 109.75 (previous low close) this would likely put the yearly low under attack so buying at that point would not be advised.  The Tenkan and Kijun offer a flat trend so don’t be too surprised if your short or long takes some time to produce a healthy amount of pips.

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