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The Ichimoku Report Jan. 12th
Attempting a little bit of a comeback after the three week sell-off, the pair is moving in a rather non-committal corrective structure. With a few tests above (20ema, Kijun, Tenkan lines) and one test below (Kumo Top) which is falling, if the pair cannot break through the rejections lines/levels above, the pair will either maintain its corrective mode or start a strong sell-off towards the kumo top which has already fallen to 1.3760/80 level and will remain there till the end of Feb.
What is interesting to note about this level and scenario is the 50% fib. retracement of the 1.2500-1.5100 move is also at this kumo/price level. Unless the structure gets more impulsive to the upside and closes above these lines happen in the next week or two, the line of least resistance will remain to the downside until 1.3760/80 level or until after feb. 26th when the Kumo starts to climb and build a good base of support for months to come.
A picture getting messier by the week, there is nothing attractive about this cloud chart on every level. The trend line (Kijun) is flat, the momentum line (Tenkan) and the Kumo (blue space on chart) twists, turns and gets thinner for the next two months suggesting the pair will most likely remain range-bound for the next few months so building positions on either side of the market would not be suggested.
Based upon the current structures, small position buys could be placed around 1.5700 and short term aggressive cells can be posted at the Tenkan/Kijun lines which are parked at 1.6375.
Finding nice support off of the 20ema and easily clearing the Tenkan line with an impulsive climb, the pair could be resuming its longer term uptrend but has the 09′ highs up at .9405 waiting for it and likely some sell orders parked there. Although the Tenkan is relatively flat, the 20ema and Kijun are climbing so dips to the 20ema are good buy levels or any weekly closes above the 09’s highs as long as the impulsive price structure remains intact.
Any major dips are well supported by the thickly rising kumo so we prefer buying until kumo penetration has occurred.
Coming within 50pips of the 09’s lows, the pair has found a short term support and has bounced about 100pips. However, other than the high risk buys off the lows, the only smart move would be to wait for approaches to the 20ema which is continually falling and yet to be breached since April of 09′
Ultimately, the thick kumo is falling along with the diving Kijun line all suggest bears are really the only solid plays out there.
Following suit of its big brother the AUDUSD, the Kiwi acted as the canary in the coal mine selling off against the USD and could do so again but only to the downside. Because it has moved impulsively but lesser than the Aussie, if there is weakness in the commodity pairs, it will likely be spotted in the NZDUSD. This is also supported by the fact it has further to go to reach its 09’s highs so it could pull on the AUDUSD rising while it fights to break through the ceiling.
Ultimately, we feel the thick rising kumo structure will build and hold as a base on 80% of all major dips to support another run to the upside and continuing the longer term uptrend structure which is in place.
Chris Capre specializes in using Ichimoku, Momentum, Bollinger Band, Pivot and Price Action models to trade the markets. He has built Ichimoku Systems for Institutions and has an Advanced Ichimoku Course for further training. For more information about his services or his company, visit https://2ndskiesforex.com
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