Time Frame: H1 & H4

Lets analyze this chart and determine how strong the kumo breakout is:
1. There is a bullish Tekan/Kijun cross
2. There is a candle close outside above the kumo
3. Chikou confirms the bullish bias
4. The leading kumo is bullish

Now lets analyze why this may be a weak signal:
1. Notice that the bearish kumo has a flat top, this can be dangerous as it represents “price
equilibrium” and price likes to come back towards it.
2. There is a bearish shooting star (reverse hammer), there has also been a failure to make higher
highs, maybe its just retracing? …maybe
3. We may be expecting a bearish Tenkan/Kijun cross soon
4. We have a convergence of Fibonacci levels, the 23 and 100, which provides support for a
bullish bias, we also have a pivot level at 1.0551, which provides further bullish support

Before I place my order for this amazing opportunity, I need to confirm this bullish bias via another
method.
In general we can see that price action is still below the kumo, there is a bullish cross but its would be
considered a weak signal, chikou also hasn’t yet broken out of the kumo.

Note: 200SMA is purple, 100SMA is blue, 50SMA is yellow, 20SMA is turquoise, 10SMA is orange
1. ADX is showing a bearish bias
2. The leading kumo is bearish
3. The 100 SMA is providing resistance
4. The 200 SMA is providing resistance
5. The central pivot point is 1.0597
Even though the H1 chart shows a promising bullish trade, I still remain bearish. Even though NFP
numbers came out with 162K, worse then the forecast but better then the previous of -14K, I don’t
believe price action will be able to break past 200SMA. The best course of action would be to either
enter a bearish trade with a tight stop loss just above the 200SMA, or simply wait for Monday or
Tuesday, to see how the market will continue to move.

5m: Bearish – Tenkan nearly cross Kijun, but price is far awat from tenkan. Waiting for them to cross and price normalize.

15m: Bearish – Price already breakout Kumo and close below it.

30m: Bearish – Tenkan still not cross Kijun but other rules is done.

1h: Bearish – Price already cross Tenkan. Short term bottom already in place, but right now price is crossing back tenkan and waiting to close below it

4h: Bearish – Tenkan and Kijun cross again. All rules done!

Daily: Strong Bearish

Weekly: Strong Bearish

Action: Waiting for tenkan and kijun to cross and price normalize. BUT, I already sell EUR/JPY hehehe

p/s: sorry for technical error.. this analysis is for EUR/JPY not GBP/JPY

5m: Bearish – Price retrace and try to retest Kijun after Tenkan has cross Kijun earlier.Wait to enter short after price fail to retest Kijun.

15m: Bearish

30m: Bearish – Price retrace and try to retest Tenkan.

1h: Strong Bearish

4h: Strong Bearish

Daily: Strong Bearish

Weekly: Medium Bearish. Price try to break Kumo (cloud)

Action: Wait to enter short after price fail to retest Kijun on 5m chart

GBP/USD – 1.6021

Most recent candlesticks pattern : N/A

Trend : Sideways

Tenkan-Sen level : 1.5968
Kijun-Sen level : 1.6063
Ichimoku cloud top : 1.6268
Ichimoku cloud bottom : 1.6178

Original strategy

Sell at 1.6060, Target: 1.5860, Stop: 1.6105

New strategy

Sell at 1.6060, Target: 1.5860, Stop: 1.6125

Although the British pound has continued to edge higher after rebounding from 1.5850 (this week’s low) and correction of recent decline to 1.6063/64 (current level of the Kijun-Sen as well as 50% Fibonacci retracement of 1.6277 to 1.5850) cannot be ruled out, reckon renewed selling interest would emerge there and bring another decline later. A break of yesterday’s low at 1.5904 would signal correction from 1.5850 has ended, then retest of this support and the recent low at 1.5832 would follow, once the latter support is penetrated, then the decline from 1.6879 should extend weakness to 1.5790/00 but previous chart point at 1.5708 should remain intact.

In view of this, we are still looking to sell cable on recovery for such a fall. Only above minor support at 1.6113 (previous support, Thursday’s low) would suggest low is in place, then correction to the Ichimoku cloud bottom (now at 1.6184) would follow.

Bias: While 145.50-60 supports we should see a retest at 147.28-45 before lower again

The underlying MT direction is bearish while the daily bias is bullish. Therefore it is likely that any gains are corrective only. Note resistance levels that could stall any rally. Consider bearish set up patterns at key resistance levels or should price threaten to break below any key support levels that would indicate a possible resumption of the move lower. Only consider a possible larger reversal higher should key MT resistance break.

Consider buy set ups at: 145.50-60 or 146.13-20

Consider sell set ups at: 147.28-45 or 145.40

Daily Bullish

Yesterday saw the 143.63 low hold and we have seen strength since then. I feel we do have a little more to go. While 146.13 caps we should see a shallow pullback that should hold above the 145.50-60 area. From there I feel we will see extension back above 146.13 and then through the 146.44-74 corrective highs to then revisit the 147.28 corrective high and maximum 147.45… I feel this will cap for losses. Thus only above 147.50 would maintain the bullish momentum for a move through 147.81 & 148.48 en route the 148.72-00 area.

Medium Term Bullish

28th January: I feel that the 147.28-45 area can be retested but should hold. Only breach would extend gains to 148.72-00 initially.

Daily Bearish

I remain bearish overall but feel we are more likely to see a retest of 147.28-45 first. Look for a bearish trade set up here. Only an earlier break below the 145.50-60 pivot support would cause earlier reversal lower through 145.00 and to 144.45, 144.05 and back to teh 143.63 low. I suspect it should hold on first test but note lower targets then at 142.91 minimum and probably 142.14-45…

Medium Term Bearish

27th January: We’ll need a break of the 143.74-144.07 area to extend to 142.14-45 at least. Next support is at 141.60-85… and if seen it will raise the risk of a retest of the 139.30 low

Ian Copsey
FX-Forecaster

USD/CHF – 1.0170

Most recent candlesticks pattern : N/A

Trend : Near term down

Tenkan-Sen level : 1.0259
Kijun-Sen level : 1.0259
Ichimoku cloud top : 1.0381
Ichimoku cloud bottom : 1.0342

Original strategy

Sell at 1.0390, Target: 1.0210, Stop: 1.0440

New strategy

Sell at 1.0255, Target: 1.0100, Stop: 1.0320

Despite rebounding to 1.0386 last Friday, the greenback faltered below the Ichimoku cloud top and did fall sharply from there as suggested in our previous update, price tumbled after breaking support at 1.0237 to as low as 1.0132 this morning. This selloff signals recent rise from 0.9910 has ended at 1.0509 and at least a strong correction is under way to 1.0100, however, reckon 1.0050 would limit downside due to oversold condition.

As dollar has recovered after reaching 1.0138-39 (1.236 times projection of 1.0509 to 1.0279 measuring from 1.0422 and also 61.8% Fibonacci retracement of 0.9910 to 1.0509), initial consolidation would take place but the Tenkan-Sen and Kijun-Sen (now at 1.0259) should limit upside, bring another decline later. Above 1.0320 would risk another test of 1.0386 but only breach of key resistance at 1.0422 would signal retreat from 1.0509 is over

USD/CHF – 1.0305

Most recent candlesticks pattern : N/A

Trend : Sideways

Tenkan-Sen level : 1.0312
Kijun-Sen level : 1.0332
Ichimoku cloud top : 1.0391
Ichimoku cloud bottom : 1.0362

New strategy

Sell at 1.0420, Target: 1.0220, Stop: 1.0485

Although the greenback broke below support at 1.0253 this morning, lack of follow through selling suggests further sideways consolidation would take place and the horizontal moving Tenkan-Sen and Kijun-Sen also add credence to this view, however, reckon upside would be limited to Ichimoku cloud top (now at 1.0391) and renewed selling should emerge below resistance at 1.0422, bring another retreat later. Below said support would bring stronger retracement of recent upmove to 1.0210 (approx. 50% Fibonacci retracement of 0.9910 to 1.0509), however, reckon support at 1.0176 (previous resistance turned support) would hold from here.

In view of the above analysis, we are looking to sell dollar on recovery. Only above resistance at 1.0509 would signal the upmove from 0.9910 (2009 low) has resumed for headway to 1.0550/60, then towards 1.0592 (previous support turned resistance).

GBP/USD – 1.6052

GBP/USD – Wave (v) of C possibly ended at 1.6879 as a failure 5th

Although the British pound dropped to as low as 1.5923 last week, the recovery from there suggests initial consolidation would be seen this week and minor correction to 1.6110 is likely, however, renewed selling interest should emerge around 1.6228 (38.2% Fibonacci retracement of 1.6722 to 1.5923) and bring another decline later.

Our preferred count on the daily chart is that the major decline from 2.1162 top (9 Nov, 2007) is a 5-waver with wave 1: 1.9337, 2: 2.0399, extended wave 3 has ended at 1.3500 and wave 4 is unfolding with A: 1.4986, B: 1.3655 and impulsive wave C is sub-divided into (i): 1.5068, (ii): 1.4398, (iii): 1.7044 (instead of 1.6745), (iv): 1.5708 and wave (v) has either ended at 1.6879 as a failed 5th or may extend one more rise but upside should be limited to 1.7403 (50% projection of wave (i)-(iii) measuring from wave (iv)) and this wave C as well as wave 4 should hold well below 1.7802 (61.8% projection). Only a breach below support at 1.5708 (previous forth of a lesser degree) would confirm wave 4 has indeed ended.

On the downside, below 1.5923 would extend decline from 1.6879 to 1.5800, however, reckon support at 1.5708 (wave iv trough) would hold on first testing.

On the upside, above 1.6323 (50% Fibonacci retracement of 1.6722 to 1.5923) would dampen this bearish view and suggest the first leg of decline from 1.6879 has possibly ended, then stronger rebound to resistance at 1.6412.

Longer term – Cable’s rise from 1.0520 (Feb 1985) to 2.0100 (September 1992) is seen as [A], the decline to 1.3682 is labeled as (B) and (C) wave rally has ended at 2.1162 (9 Nov, 2007) which is also the top of larger degree wave B with circle. The selloff from there is a 5-waver and break of support at 1.3500 (23 Jan 2009) would extend to 1.3300 but price should stay well above psychological support level at 1.3000.

GBP/USD – 1.6025

The British pound continued to move lower after recent fall from 1.6879 and price dropped to as low as 1.5923 last week (almost reached our indicated downside target at 1.5900) and although marginal fall below said support is likely, support at 1.5708 should hold on first testing and cable shall stay within recent established range of 1.5708-1.7044 for the last trading week of 2009.

On the upside, whilst recovery to 1.6160/70 cannot be ruled out, renewed selling interest is likely to emerge around 1.6288 (38.2% Fibonacci retracement of 1.6879 to 1.5923) and price should falter well below the Kijun-Sen (now at 1.6375), bring another decline later. Only a daily close above 1.6400-12 (current level of the Tenkan-Sen and previous resistance would suggest the fall from 1.6879 has ended.

On the daily chart, the British pound fell in line with our expectation and indicated downside target at 1.5972 (1.236 times projection of 1.6879-1.6272 measuring from 1.6722) has been met and price did stay above calculated support at 1.5857 (100% projection of 1.6722-1.6167 measuring from 1.6412) and recovered from 1.5923. Therefore, expect initial recovery to be seen this week and whilst retracement to the Tenkan-Sen (now at 1.6167, also the same level as previous support) cannot be ruled out, reckon Ichimoku cloud bottom (now at 1.6293) would limit upside and the Kijun-Sen (now at 1.6334) should hold.

On the downside, below 1.5923 support would extend weakness towards 1.5857 (100% projection of 1.6722-1.6167 measuring from 1.6412), however, loss of near term downward momentum should prevent sharp fall below 1.5800 and the British pound shall stay above support at 1.5708 and bring further choppy consolidation within early established range of 1.5708 – 1.7044.

EUR/USD: Wave v of (c) ended at 1.5145 and fall to 1.4015 is underway

The single currency finally dropped to another 3-month low of 1.4218 last week in line with our expectation, however, as euro has recovered from there, suggesting a minor wave iii of the decline from 1.5145 has ended there and minor consolidation would take place in wave iv and recovery to 1.4500 is likely, however, renewed selling interest should emerge around 1.4625/30 and 1.4680 (50% Fibonacci retracement of 1.5142 to 1.4218) should hold, bring another decline in wave v later.

Our preferred count on the daily chart remains that a wave (B) from 1.2329 is unfolding with A-leg ended at 1.4720, followed by wave B at 1.2457, the wave C from there is also a 3 legged move and is labeled as (a): 1.3739, (b): 1.2885, the wave iii of the 5-waver (c) from 1.2885 has ended at 1.4339 and wave iv is a triangle ended at 1.3878 and wave v has ended at 1.5145.

Below 1.4218 would extend weakness to 1.4175/80, then eventually towards 1.4007-15 (previous support and 50% Fibonacci retracement of 1.2885-1.5145).

On the upside, above 1.4625/30 (previous support turned resistance) would suggest the first leg of decline from 1.5145 has ended, then gain towards 1.4785/95 (61.8% Fibonacci retracement of 1.5145 to 1.4218) would follow, however, still expect upside to be limited to 1.4900 and euro shall falter below 1.5000 and bring another selloff.

Euro’s long-term uptrend started from 0.8228 (26 Oct 2000) with an impulsive structure. The rise from 0.8228 to 0.9593 (5 Jan 2001) is labeled as wave I, the retreat to 0.8352 (6 Jul 2001) is wave II and the rally to 1.3670 (31 Dec 2004) is wave III. Wave IV from there ended at 1.1640 (15 Nov 2005), the subsequent upmove to 1.6040 (July 15, 2008) is treated as wave V, the major selloff from the record high of 1.6040 to 1.2329 (October 27, 2008) signals a correction of the long-term uptrend has taken place with (A) leg ended at 1.2329 and once (B) wave finishes, wave (C) will take euro lower and below 1.2329 confirms and extends to 1.2136 (50% Fibonacci retracement) and 1.2000.