Kijun Holds Latest Pullback in GBPCHF – What Next? – July 6th
As we wrote about in our end of the year report back in Dec. 2010, we expected the GBPCHF to continue to see further losses and find new territory to the south side. It has not disappointed clearing the all time lows by 1600+pips and posting 6 straight months of declines. Yep, that’s correct, 6 in a row and only gained the 1st month of the year (see chart below).
You could have pretty much sold at the beginning of any month, held onto it till the calendar end and made several hundred pips at a clip. But here we are today and the Ichimoku has some things to say about it. First off, since April of this year, the pair has not seen the northern side of the Kijun which has continually hemmed it in since. Remember, the Kijun is designed to map the overall trend and literally translates to ‘trend-line’ so as long as it continues to hold any upside advances, the trend will continue. The last 3day/400pip push ran right into it – only to reject it back down 250pips lower as of this writing. The pair will likely shoot for the all time lows before finding anyone who’d want to buy this pair (why would they since its sold off almost 3 out of every 4 days in the last 3 mos?). From here, should it bounce back, expect the 20ema and Kijun to hold the lines. In fact, if you are looking for a pullback entry, you could use either with the stops just above the red-line and then target the last major swing low for a great R:R trade. With the Kijun/Tenkan spread still stable and the Kumo continuing its smooth downward descent, we do not expect any reversals anytime soon if Ichimoku has its way.
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