Forex Ichimoku Report July 6th

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EURUSD – Looking Stronger
Gaining 3 out of the last 4 weeks, the Euro is getting strong and bolder day by day.  I has opened above the Tenkan for the 1st time since May 10′ and beyond that its been since last year so this is a unique event suggesting a likely change in the short term momentum.

Up next for the pair is the 2mos. high at 1.2670 – beyond that is the 20ema at 1.2897 so we could be seeing a stronger Euro for weeks to come.  All the wicks are also to the downside suggesting the market has been interested in buying Euros on dips.  With the Kijun flat and the medium term trend to be defined as of yet, the possible V-like bottom should have its way if the pair can have a daily close above 1.2670 which will change a lot of technical models to the north side for the euro.

GBPUSD – 1st weekly close above since Jan. 10′
As the title suggests, the GU has had its 1st weekly close above the 20ema since Jan this year.   This should adjust some technical models to the long side and with the pair closing up now 5 weeks in a row, the Kumo flat bottom and Kijun are likely on deck.  Also lining up with the Kumo bottom is the 38.2% fib of the 1.68 – 1.42 move which started last year.  A weekly or even daily close above the Kijun suggests the pair is headed for 1.5555 which is the 50% retracement of the aforementioned move.  Beyond taht, the pair will be challenging the 61.8% at 1.5861 but short term models are clearly up and medium term models are turning as we speak.

USDCHF – One more left to open up the pressure
Falling now for 4 straight weeks, the pair has shed 1130pips which is an impressive drop.  Its stalled a little bit around 1.0600 but the pair is coming right into the strong barriers and S/R levels at 1.0500.  Now that the pair is below the Tenkan, Kijun and 20ema while 60+% through the Kumo, a daily close below 1.0500 suggests a full move to the bottom of the Kumo with little effort.  The only way to be short and medium term is bearish until it shows some signs of basing or rejection to the downside.  Buying now is more based upon hope as there is simply one barrier left so you’d be betting on the line of least resistance to fail.

EURGBP – The Final Rejection?
After forming a continuation pattern two weeks ago, the EURGBP formed an incredibly strong reversal. How strong?  Enough so that the rejection to the downside last week was virtually the same in pip value as the open – close from the heavy week of selling prior.  Last weeks candle also closed up so including these gains, it was a strong rejection.

With that being said, we are expecting a move back to .8383 and .8430 for the next tests in this cross.  A weekly close above the Tenkan opens up some of the topside and targets a move back to the 20ema sitting above 8500.  However we think the pair will have trouble getting beyond the 8600 (50% fib of the 9130 – 8075 move) and also the home of the Kijun.  Another tough barrier is just above at 8722 so these could be great rally points to sell as we anticipate medium term the sterling will outperform against the Euro for the rest of this year.

EURCAD – 1st time in a long time
For the 1st time since Dec. 2009, the pair is testing the weekly 20ema.  1st attempts have rejected but albeit a little bit and not convincingly.  With the pair also closing above the Tenkan, a daily close above the 20ema suggests a move back to the Kijun at 1.3770 which is 350pips above the 20ema.  Although the medium and long term is still down, other than a rejection play off the 20ema, the short term models are up as long as we hold above the Tenkan.  Only a close below the yearly lows re-opens the downside as they happen to be parked at the all-time lows for the pair.

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