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Ichimoku Report Mar. 29th
EURUSD – Downside Expected but not into the Close
Seven out of the last eight weeks, the Euro has rejected the gains from the earlier portion of the week to bounce later in the week. This tendency suggests if you are wanting to short, to take profits going into last London session instead of waiting for it to play out.
From an Ichimoku standpoint, the Tenkan is likely to limit upside gains and is currently posted just above the 61.8% rejection of the last downside swing from 1.3815 to 1.3421 so these levels should hold. Instead of the pair wanting to just fall, it has opened this week with decent gains to start jumping about 60pips from the Tokyo launch. Because the Tenkan is so sharp, momentum is really strong and considering its only posted 2 weekly gains in 2010, we really want to be aligning ourselves on the short side.
However there is one note of caution as the last weekly rejection was strong evne though it broke the yearly lows. Usually breaks like htis produce strong closes towards the lows but this was not the case. This could be signaling a false break which may trap shorts so be careful. Because of the overall commitment over the last few weeks and general tendency to reject to the downside, we are suggesting to take a small rally to the upside for a short play instead of taking shorts on breaks. If the pair makes a new low and closes below last weeks low, we feel the likely target coming in mid April will be just above the 1.3000 barrier.
GBPUSD – Calling All Bulls, Last Chance to Get on Board
With the pair rejecting strongly twice off the 1.5000 barrier and then posting back to back red candles, we feel the pair is coming to a decision and will either have to hold this week at the 2010 yearly lows or give up. The good thing is if you want ot be a bull, now is a good time as the pair is really close to the 10′ lows and gives traders a really nice risk to reward setup for going long.
From an Ichimoku perspective, the Tenkan + 20ema are both falling at a steady pace suggesting momentum really is not on this pairs side but the Kijun is flat for now suggesting flat trend but we really feel this is moreso reflective of the lack of ability to break the yearly lows so we do not suggest taking this as a bonus for longs. We feel if the pair cannot close above the 1.5269 level in the next 2-3 weeks, then its chances for a strong upside move diminish as the flat Kumo will come into play and will hamper all upside attempts. However should the pair drift up towards the flat Kumo in the next few weeks, then we have a good place to reject the pair for a short move close to the 10′ lows. Considering the pair has not broken the lows for this year at 1.4781, a short on break strategy has yet to be tested and with all the higher lows in place, this could be a viable play with light positions.
AUDUSD – Have to Play the Expanding Triangle
As we said last week;
…or a touch back on the Kijun/20ema lines are the only buy plays out there
What ended up happening was exactly that as the pair sank to the Kijun, got within 15pips of it and bounced back 170pips off last weeks low and jumping from this weeks open right out of the gate. Tenakn and Kijun are both flat so there is not only no trend but also no momentum in play. Hence, our only option is to play the expanding triangle and short off the top. Another buy off the Kijun or 20ema could be a possible play for now if you want to be a bull. Price is rapidly approaching the top of this price action formation and since it has only sold off 3 of the last 9 weeks, buying seems to be the better flavor. However, shorts do have a play off the top line but caution is advised since it did not spend much time oat the kijun and basically went for a 2nd attack on the upside with no hesitation.
USDCAD – Now or the 20ema
In regards to last weeks price action, we made the following prediction on the last report;
the pair has sold off 20 out of the last 34 weeks but never more than 3 weeks of selling (in a row) since April of 09′ so chances are good it will produce an uptick this week.
This is exactly what happened as it produced its 1st uptick climbing 160pips off the lows. The pair is now sitting near the 1.0200 barrier. Ironically, the Tenkan is flat but the Kijun is falling tracking the overall trend so we really do not want to be buying this week. We feel the best play is a rejection off the 50% fib which coincides perfectly with the Tenkan or take a play off the Kijun/20ema combo targeting 1.0200 and the yearly lows for the year just below the 1.0100 figure.
EURJPY – Threatening the 2month High
After rejecting off the 120.00 barrier 2x, the pair has now ponged off the 125 handle 4x suggesting upside pressure is building. It closed last week above the Tenkan for the first time since mid-Jan. so this could be suggesting some upside gains and a possible break of the 500pip range loom. Now that it has broken the Tenkan, there are two likely scenarios;
a) the pair will do a failure break and slam back below targeting the lows
b) tag the 20ema in the process. We feel we will have our answer this week or the next at the latest. Should we get a strong rejection this week, then the lows are likely going to be tagged again. However, if we break the range here at 125, then the 20ema is likely its next upside target which happens to be perfectly lining up with the bottom of the Kumo. If you want to sell and play this range, this is the best place to do it which is the range highs.
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