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Weekly Ichimoku Report Oct. 12th
Threatening to take out the 2009 highs (only 3 weeks ago so not that dramatic), the EURUSD is nothing but bullish as it remains above the Tenkan and has not posted a close below the line on the weekly charts since late April this year.The only way you do that is with continual steady buying for the pair.Dips have been minor and the bears have at best posted two weeks of declines in a row while bulls have been winning the fight once it cleared the Kumo.
The challenging part about this pair is on a weekly basis, there are wicks on both sides of the fence so dips and rejections are all over the place.Anyone holding the pair more than a day is likely to get whipsawed so for medium term swing players, buying on a dip during the week or for sellers, selling on a rejection is your best bet however with the overall play above the Tenkan line being so consistent, bears have probably been vomiting losses like the girl in exorcist (the original) so unless you got the stomach for it (or vomiting losses), we suggest buying.
If the technical tooth fairy comes, then a dip or pong off the Tenkan is the play.Breaks have only worked out 2 weeks out of the last 24 so the Vegas odds are not in your favor buying breaks.
Selling off for the last 4 weeks on a closing basis, again more downside is envisioned (without the use of a crystal ball) should the pair break the weekly Kijun (red line).If that happens, we expect technical selling on the pair to increase and like selling off the 20ema as a rejection play (weekly chart).
As time goes on, the GBPUSD is getting replaced by the EURUSD 2.0 which is outpacing it in beating up the USD. In fact, the GBP and USD are in an almost deadlock as to who is going to win this contest of horns.Ultimately, we do not favor the USD against much, except perhaps the Iraqi Dinar and the Indian Rupee for the rest of this year, but I digress.
Getting back to the Ichimoku, the lines are becoming more flat and compressed but still sloping downward showing the pressure to the downside has not abated.The flat Kumo top could act as the rear guard for this pair should it break the 20ema and Tenkan to the upside.Another failed attempt here would intimate the pair will likely head back down and stay inside the cloud for the remainder of the year.The Kumo has a thick hide so should a break and close occur on either side, we expect the following move to be strong.
Based on this kumo formation, we would be surprised if the pair breaks the 1.6850 (kumo top) to 1.45 range for the rest of the year.If I were a betting man (only am in Vegas – blackjack or roulette), then I’d lay more chips on this pair breaking the lower belly of the kumo.Regardless, for this week you have the key levels to watch.
A simpleton these days, the AUDUSD has been relentless in its attack on the greenback climbing 15 of the last 23 weeks (65.7% kill ratio) and only posting one close below the Tenkan in the same amount of time.Anyone looking to sell this pair at any time soon should be questioned to see if they recently suffered any head trauma or were hit by a truck.The pair has only mounted a total of 8 selling weeks since the uptrend started back in march (32weeks ago) and has climbed for a consecutive 8.5months (including this month).How could you not be making money on this trend?
Since we have quickly concluded with any selling notions, the question comes as to where/how to buy into this trend.
- dips to the 20ema (daily chart)
- touch of the tenkan (weekly chart)
- any weekly retracement to the 38.2% or 50% fibs of the prior weeks price action with stops below the previous weekly lows (a strategy that has worked 9 out of 11x)
Kumo formations like this suggest continued uptrend and likely for the rest of the year.
As long as the tenkan/20ema/kijun lines hold this relative structure, the AUD will keep punishing the USD.Add in the surprise rate hike by the RBA and you have all the spices for more upside.
Finally doing something interesting, the pair broke below the slow downward dribble it was in and in one week, posted its largest open/close drop since July while taking out barriers at 1.0500.Although the Momentum is wanting to disagree with this downtrend, we do not see much reprieve for bulls until a close above the 20ema (weekly charts) prints.In fact, any attacks at the 20ema (as long as they are engulfing the previous candle) could be treated as a rejection play for more downside.
The kumo is sloping downward at an aggressive angle and unless this pair starts to ravage the upside (which we put those odds around the same as getting hit by lightning twice, or the Chicago Cubs winning a World Series in the next 3 years – no offense to Cubs fans, I’m from Chicago and would love them to win, just being realistic), then the pair should likely close below 1.1500 for the year and the 1Q outlook for this pair suggests bulls will have a tough time making any headway until mid 2010.
Riddle me this:Which pair has climbed for the last 12 out of 13 weeks against the USD?
If you answered with an Antipodean pair like the NZDUSD, you guessed right.Yep, 12 out of 13 weeks.Not even Tiger Woods has won that many tournaments in a row.Under the radar while the AUDUSD has been making all the headlines, this pair has posted an impressive 25 out of 33 weekly up-closes and only lost ground 4 weeks in the last 20.The trend is so strong it cannot even touch its twinkle-toes on the Tenkan line.In fact, it has not touched it since July 17th (ironically my birthday) which is awefully impressive.Unless someone comes in with a Trump size account, we could not be paid to sell this pair for any ransom.
This is one of the few pairs where buying on breaks has worked out as long as you can hold till the end of the week.Buying on the weekly open has also worked well (remember the 12/13 stat?) but small to medium retracements have been offered every week save 2 in the last 13 so we’ll look for the dip as a buying opportunity.Unless this pair runs into King Leonidus and the Spartans at Thermopylae, this trend should continue rolling.
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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