Forex Ichimoku Report – Sept. 20th
EURUSD – Making a Case
After mulling around the 1.26-1.29 range for a month, the pair has decided to take out the 20ema for the first time in 5 weeks. It did so with vigor making a case for a bigger push up and the lows at 1.2600 (being the 50% fib), suggest a short term bottom is in place and a run for the 1.33 highs may be under way.
All three lines are flat and not surprisingly so since the pair has ranged for the last month but we feel 1.36 should contain upside moves however we are only bullish in the short term up till 1.33. If the pair can take out last weeks highs, the chances of hitting the August high become highly likely. Any dips to 1.26 should be considered a solid buy opportunity unless it gets there in a hurry. A buy higher up could be had at the 20ema sitting at 1.2907 which was the last 4 weeks high while bears can wait till 1.33 which is not far off. A daily close below the 20ema suggests a move back down to the 50% fib so lots of plays in the near area.
USDJPY – The Gauntlet has been Thrown Down
The BOJ and Japanese Finance Minister finally threw down the gauntlet and drew a line in the sand just sub 83. Their intervention pushed the pair roughly 300pips taking out the Tenkan line for the first time since June this year. Now what?
We have to consider any Central Bank Intervention creates a bubble or artificial market and thus the order flow is obviously affected. Usually after the order flow becomes more neutralized, institutional speculators will start looking for opportunities to sell the pair because in reality, all the BOJ did was create a 2-way market in the short term but did they really change the outlook for the pair? With possible QE coming from the Fed, China buying the Yen and fears of a slow recovery, it seems likely the pair will be sold into any major strength with the 20ema coming into focus next. Might we remind you of the SNB’s 15mos failure to stem the rise of the CHF spending billions of taxpayers francs for a completely failed effort which they admitted. This seems the likely scenario for the JPY as well so look to sell into rallies either at the 20ema or the 50% fib sitting at 89.00 and the major support from Feb – July this year.
GBPUSD – Complex Ichimoku Structure
After selling for five weeks, the pair stopped at the 20ema and launched another attack to the upside which took out the previous 4 weeks of selling and also the 61.8% fib of the last major downswing suggesting this may hold and send the pair back to the 20ema.
What is challenging about this scenario is the Kumo. It has flipped in the current area and is still thin till mid-Oct. Since its been oppressed by the heavy kumo for some time, it may be the case it tries to make its move in the near future. We feel the 61.8% fib and the 20ema are your lines in the sand. You can buy and sell here and any break/close outside these lines really opens things up. To the upside – a return to the 1.60 level seems likely beyond the 61.8 fib and below the 20ema, a solid chance of 1.5000 seems the likely play with a brief stop at the Kijun.
USDCHF – Even After
The Swissie has been beating up the USD for the last 12 out of 15 weeks selling off at an incredible pace and taking out parity. After the BOJ bought 17+B USD’s, the pair had only a short term benefit and started selling on strength which is what we expected. We see no reason the CHF should lose ground and any moves back up should be opportunities to sell higher. Consider it this way;
-Switzerland’s economy is heavily tied to Germany. If they do good, its good for them and the CHF
-However Germany just posted a very negative ZEW last week which set off some risk aversion fears – also good for the CHF
-Global economic recovery not going as planned? – also good for the CHF
-and with the growth in the land of good chocolate outpacing the rest of the eurozone by 1.6%, expect them to continue to outperform
We like selling against the Tenkan or any moves back to 1.0350 for a move back to parity. The pair only has a few more levels to go and any close below the .9850 on the daily time frame sets up a likely move to .9650 (08′ low) and then on to .9500.
AUDUSD – A run for Parity?
As we said last week, ‘We feel this is its best attempt yet so any weekly close above 9400 sets up a test at 9500‘. We still feel this is the aussies best attempt to take out the parity barriers regardless of its failed close above 9400 last week. Last week there was a major 25B AUD barrier sitting at .9470 and now that it has been taken out (after rejecting price 2x last week) the pair should use this as a pivot point for further upside gains. The pair is likely going to close today’s session above .9400 which puts upside pressure on the pair and shifts models looking for further gains.
Keep in mind this was all preceded by a Tenkan/Kijun cross way back in July which has performed beautifully sending the pair 475pips higher. We feel the pair will likely take out the 95 and 9650 barriers in the coming weeks and any dips to 9200 or 9000 should be considered good buying opportunities for the pair to make its run to parity with the Tenkan climbing hard and the Kijun starting to pull upward.
Also keep in mind the pair double-bottomed off the 38.2 fib of the major fun from 2008-2009 which has a 138.2% fib project sitting just above 1.0700 which is our medium term target for late this year or early next year. Only breaks below .8100 will negate this scenario.
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