Forex Ichimoku Report June 28th

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EURUSD – Forming a Base or Part II?
After climbing for two straight weeks, the pair has sold off another week in a peculiar fashion.  How so?  The pair gapped up to start the week on the Yuan float, then sold off only to bounce at the end of the week and close exactly where it did the week before.  The rejection down below suggests there may be some buyers down below and 1.2000 is considered to be a fair value for the pair so one has to wonder if the selling is done.

However, the pair this week has sold off from the get go and is probing the weekly lows now at 1.2283.  We suspect the pair may find a short term support at last weeks low of 1.2208, then find some higher ground but will not make it above 1.2460 or 1.2660.  In fact, if there was a well priced option out there for a no-touch on 1.3000, we’d put the farm on that one.  Why?

The Kumo is way too thick on the dailies and the Tenkan has not been closed above since December of last year on the weekly.  We do not see this happening anytime soon so momentum remains bearish.  We feel moves back up to 1.2450 or 1.2660 are choice levels to sell the pair back down for a move to 1.2000.  Honestly, we would not be surprised to see a 1.15 Euro this year.

Sell on rallies.

GBPUSD – Opposite Direction
Completely opposite of the Euro, the Sterling is likely headed north and we suspect 1.5345 before running into any resistance which is the Kijun and just above the flat bottom kumo.  The pair has also climbed for 4 straight weeks and is sitting comfortably above the 20ema which could be a launching pad higher.  Any daily closes above the 20ema will boost the short term upside but no importa, for now we are short term buyers of sterling until 1.5300 or 5350 is reached.

USDCHF – Getting Hammered
Although the EURUSD has retraced a little, this pair has retraced a lot from its highs (800+pips) which is far more than the EURUSD has risen off its lows (400pips).  Like the EURUSD which lost last week, this pair has suffered quite a lot and threatens a key base of support at 1.0816 and is already eating into the Kumo which is thick and had a flat top.  If the pair can have a daily close below 1.0800, expect losses to mount and a potential move back to 1.0400 could be in the works where this pair may find a reprieve from the bottom of the Kumo as the pair is now also below the weekly Kijun so has taken out over 50% of its gains for the year.

NZDUSD – Out of the Kumo
Unlike its big brother the aussie which did not close out of the Kumo last week, this pair is holding above it and has rejected off the 20ema and kumo top like we suggested last week.  The pair though has started this week selling so it could retest the 20ema at 7000 and the flat tenkan at 6945.  Should this pair get a daily close below this level, we feel more losses are in store and a possible move back to 6700 would increase.  The Kijun is also flat so there is currently no trend and no momentum but should the pair use the top of the kumo for support, then a move back up to 7300 and 7400 increases week by week.

EURGBP – Set for more losses
After bouncing for two corrective weeks, the pair sold off heavily last week and has followed it with a good start this week breaching support at 8190 and currently siting at 8131.  The pair looks set to test support between 8030 and 8078 which is the 8mos. resistance for this pair back in the latter half of 2008.

Both the Tenkan and Kijun are falling nicely so the momentum for the downtrend is still in tact and holding steady.  Selling rallies back up to 8180/90 offer good R:R on a move back to 8030/80 and a weekly close below 8000 targets 7800.  Sell on rallies.

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