Forex Price Action and Ichimoku Setups June 15th
EURUSD – Coming up to a critical juncture
After having a series of up-down-up days, the pair has begun a very strong sell-off today taking out key supports below and heading into some critical support levels.
Looking at the first chart below which is the daily chart, the pair has started to really show its new stripes as the sell-off moves have been far stronger and more impulsive than the buy-ups. Since the pair failed at the 1.4900 region, the next move down was very impulsive, followed by some decent strength. But the failure at 1.4700 was characterized by the strong piercing candle at 1.4700 which took out the prior days losses almsot completely. This should have been noted as the pair had not only posted a 700 pip climb, but had closed the prior days towards the high and closed making a new high in that leg. This was followed by immediate selling which in three days took out the previous five days worth of gains, communicating the sellers were coming in with much more force than the buyers. This was capped by today’s candle which is the most violent sell-off since the start of this at the rejection/failure of 1.4900.
With that being said, we want to reference the weekly chart below which contains some critical information. Other than the 1st week of the year, the pair has not closed below the 20ema on the weekly chart and has several times offered support. We feel this is a critical level to watch and should we get a weekly close below it, will likely force long term technical models to re-evaluate any existing longs and likely increase the bearish pressure on the pair.
EURCHF – Picking on the EURO
While we are picking on the EURO which seems to have its hands full both technically and fundamentally with the issues (riots) in Greece, as we wrote at the end of last year in our upcoming yearly analysis, we think this will be a good year for the CHF to make gains as a whole. This has certainly played itself out against the EUR as the CHF has continually battered its regional compadre after reaching a high of 1.3200 and hitting its most recent swing lows a hair above the big figure at 1.2000. This region has held the pair in check for the last 10 days but one thing has remained constant over the last 6 weeks – that the pair has remained below the 20ema and any approaches to it get rejected. Case in point was yesterday’s climbs which were promptly rejected by today’s selling.
We feel this should continue but are cautious around the big figure which the pair will have to clear the defense of before major downside gains are had. As long as the next rejection off of 1.2000 is not a screamer, look to sell at the 20ema for an eventual break of 1.2000.
AUDUSD – What to Make of It?
This is an important question as one of the bedrocks of the bullish trend for 2011 was the AUDUSD, as of late its really been struggling to find a cue. Clearly the 1.0500 big figure is doing its share of keeping the upside with no daily close below it, however, sellers at 1.0750 are also playing the game and holding serve on their end with no daily closes above it. We think these are the lines in the sand and being that we are in summer trading, with volumes lower, this should not be suprising. However, we are not ruling out a technical break of these lines on both sides and are waiting patiently for the next cue. Its hard to pick sides since the range that was created as of late. There have been more blue to red candles with a ratio of 55/45% in favor of the buying days but this is not convincing by any means. The overall candles have been larger when they are blue, but the worst or largest candles of them all have been selling suggesting they have force behind them. We feel the range can be played with tight stops below the range lows/highs but should you see a close outside of this, look for intraday price action on the 4hr to confirm the break with a breakout-retest formation, and then a stiff rejection of the prior level to confirm it. You can click on the link above to check out how to trade this method. Beware of trading inside this range and wait for the edges to get into the market.
DOW Index – Starting to suffer
The DOW Index is starting to shed its old ways and bear its new banner. Assuming today does not form a miraculous recovery, the index will have been held under the daily 20ema for the longest period for 2011. This is also the largest sell-off since the 1000+pt sell-off, ironically, in June of last year. But this one seems different as its been going on longer and with greater force/impulsiveness behind it. It is very possible 12919 is the top for the index for all of 2011 and possibly 2012 as we see a lot of indications the DOW is headed for lower ground. Also key to note is the 2nd chart below which is the weekly chart as last week was the 1st weekly close below the 20ema since sept. last year and this weeks selling looks to continue that trend. We suspect the index will find its way down to 11250 before it runs into any serious defenses of the donwside and will test the mettle of this market. Keep in mind the high for this week was rejected by the 20ema on the weekly so this should be a clue as to whether buyers have re-entered the market in the future by taking this out.
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