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Ichimoku Report April 26th
EURUSD – Dueling Swords Plays out, Now What?
As we talked about last week with the dueling swords formation, the pair has played out its expectation by returning back to the lows and even going a little bit further. After rejecting off the Kumo bottom, the pair has sold off making new lows last week so the Kumo bottom now becomes more relevant. On top of this, the pair opened last week, hit the Tenkan and rejected from there so this becomes a mid-term selling point at 1.3510 which is also the 61.8% fib of the last swing down from the high two weeks ago at 1.3691 to the low last week at 1.3206. Pressure continues to mount and any upside moves have to contend with the Tenkan, 20ema and Kumo bottom – line of least resistance is down on a mild basis.
GBPUSD – Short-term Base in Play at 1.4800 and 1.5300
After 3 weeks of decline, the pair last week posted a doji with a strong rejection to the downside which got a lift from the Tenkan that ended up sending the pair back 180pips from the lows. Since then, the pair has rallied this week and will likely contest the sell orders waiting at the 20ema which has not had a breach since late Jan this year. Should the pair close above, technical buyers may come in and send the pair to test the Kijun at 1.5830. The Kumo is really thick so bears looking for a 2nd chance to reject this pair could wait till the red line gets tagged. For now, momentum is flat with a small upward bias but do not expect the pair to pull like a race-horse as the gains should likely be well contested and complex in their advance.
AUDUSD – Expanding Triangle Formation Still Relevant
After last weeks sell-off, the expanding triangle came back into play rejecting the pair’s downside advance and allowing the pair to post a doji. The situation is a little tentative for the bulls as its unlikely any new buyers are coming in unless we get a touchdown on the Tenkan or 20ema which are rising to the top of the trendline formation. The pair will have to test the highs from 2 weeks ago and then close above the 09′ highs to clear some of the air. For now, sellers have their location to enter while buyers have to wait for a break or another touch on the Tenkan/20ema before attracting a fresh round of buyers. Trading in between this range would not be advisable.
USDCAD – The Pressure Continues
This pair continually finds sellers and we have no reason to disagree with them. After a week of gains two weeks ago, the pair got slammed back down and closed below the open from the gains 2 weeks back. The pair has yet to even touch the Tenkan since Feb. this year and any moves back to there or the 20ema will likely get slammed again or at least challenged by some serious sellers. The earliest point we’d want to sell this pair would be 1.0215 and 1.0250 which are last weeks rejection high and the Tenkan. The 20ema is not too far behind clocking in at 1.0300 which gives more conservative traders an entry for selling. With all three lines in order and the enormous Kumo ahead, we feel the pair will have a hard time making any serious gains till 2011.
USDJPY – Is this Kumo Window about to Break?
For the first time in a while, the pair is making a serious challenge to the Kumo and threatening to clear the cloud for the 1st time since late 2007. This is by far the deepest penetration into the Kumo and its weakest point for some time so if the pair wants to form a reversal, now is the best time. Once it clears the Kumo, it has the 95 handle to contend with which is also the 61.8% fib of the 09′ high (101.43) to the 09′ low (84.82) so it should be an interesting level to watch. What we find most attractive is the double stair step in the Kumo top coming up so a break will likely come back down to test the Kumo top where it should find more buyers (should the break and close above the Kumo scenario play out). We like this as our best buy location should the aforementioned scenario come to fruition as its also the 50% fib of the 09′ high to low move at 93.21. From here traders can test the 95 cents and a break/close above here sets the sights back on 100 yen.
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