Ichimoku Report Mar. 22nd
EURUSD – Moment of Truth?
After 4 weeks of probing the 1.3500 big figure, the pair rebounded two weeks ago with an impressive climb and its first since Jan. 8th of this year. And what did it follow it up with last week? An outside reversal bar to close a hair above the 1.3500 handle. With the force of last week combined with the several probes before, this week will probably be the moment of truth for the pair. If it can do what it failed to do before (close below 1.3500) then the pair is likely to start another round of selling. If it again fails to close below 1.3500 (and possibly for a higher low), then its likely to start another bounce and attack last weeks highs at 1.3793. The good thing is if you are a bull, you are close to where you would want to get in (1.3500). If you are a bear, you can wait for the close below 1.3500 or take a weak corrective move up to the 1.3700-1.3800 area and short for a 1.3500 touch (1st target) and hope for the break you are chomping at the bit for while putting 2nd targets just shy of 1.3000 and stops above 1.3800 (last weeks high).
The Kumo will be like this for another week but the diving Tenkan will likely challenge any upside thrusts.
GBPUSD – Likely the Last Attempt to Get a Good Long
If the pair is going to hold the 1.5000 figure, this is likely the last week (and perhaps your chance is gone now) to get long on a good pullback. The pair has already had two long rejections to the downside and survived last weeks late sell-off (and close towards the lows) to bounce solid this week. The pair could pull an Euro move and bounce off the lows for the next 5 weeks but we feel this is less likely considering the nature of the last two rejections (higher lows). The pair however did start this week making a lower low than the last week so the downside action is a little trickier. The Kumo for the next 4 weeks will likely not interfere with price action as its too far away to have a direct impact on it however it will not encourage bulls by any means.
All the lines (Tenkan/20ema/Kijun) are all too far away to also provide a contact move so the slope/angle will communicate downward momentum communicating to traders getting long has a higher risk than usual. If you want to go long, get as close to the 1.4900 level as you can, put stops below 1.4775 and target 1.5175 and 1.5375. However if the price action gets really impulsive in the next 24hrs (to the downside) we’d suggest serious caution getting long. The longer it takes for the pair to get down to the yearly lows, the better it is for bulls. Bears can take any rejections around the mid 1.53’s and target 1.5000 and 1.4900 which has the better R:R out there.
AUDUSD – Expanding Triangle Confirmed Last Week
Well the expanding triangle theory we’ve been touting was confirmed last week as the upper trendline was touched to the tee and rejected forming a weekly doji candle. Even though it was a doji, the bottom line is the candle closed up and that makes it 5 for the last 7 with the pair opening and climbing for this week so we feel another test of the upper trendline is likely. Should it break and close above, then the pair is likely headed back to the 09′ highs at .9400 and possibly the 9500 figure.
That scenario (break and close above the trendline) or a touch back on the Kijun/20ema lines are the only buy plays out there while bears can watch for tentative price action to drag the pair up towards the trendline. If it approaches with the caution of a cat meeting a dog, then bears can take sells off the trendline (.9251) and shoot for the 20ema.
USDCAD – Close to Breakout/Pullback Level
After closing two weeks ago below the 09/10 lows, the pair followed it up with a decent rejection which has often formed a bounce-back for the pair. The first level to watch is the 1.0200-1.0230 level as a possible rejection area. If this fails, we feel there is about an 81.293646% chance the pair will make its way back to the 20ema where it will undergo a serious stress test and consequently give bears a great location to sell again. Aggressive shorts can be placed just above 1.0200 with targets just below 1.0100 and stops just under 1.0300. Bulls will need a close above 1.0230 or a play off the lows at 1.0063 to take any longs. Anything else would be ill-advised. The close proximity and the drifting down nature of the Tenkan and 20ema will force the bulls to earn their upside. The pair has sold off 20 out of the last 34 weeks but never ore than 3 weeks of selling (in a row) since April of 09′ so chances are good it will produce an uptick this week. However medium-long term prospects are (to quote the old black pyramid with the floating thing inside that gave the recommendations) ‘outlook does not look good’.
EURJPY – Clean 500pip range to play with
This one is not too hard to figure out. The pair is hemmed between the 120 and 125 levels with two rejections to the downside and 4 to the upside. Since touching the lows this year, the pair has spent more time rejecting off these levels while being more apt to close up near the 125.00 level suggesting the pair is open to bouncing quickly off the lows. It should also be noted the pair has formed only 3 down closes (on a weekly basis) while forming 4 up so it has a slightly greater tendency to push up over the last 2 mos than down (within this range) but, and there is a but here, the strongest closes and ranges have been on the selling weeks so the bears are working less hard for their money.
The bottom line is the pair has cleanly rejected off both barriers (120 and 125) so there is a clean range to play with while both sides allow for stops less than 100pips and targets of 500pips (likely to take more than 1 week to get there) hence patience is needed but the R:R is great. An ideal situation would be a slow descent or rise to either level showing tentativeness suggesting the market is not convinced, thus communicating its more likely the range will hold.
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