EURUSD - Only the Bottom of the KumoAs stated last week;
The pair fell as expected to 1.3850 just 75pips above the weekly Kumo. Although we feel the pair needs to correct a little bit, we ultimately feel any rallies are just opportunities to sell the pair higher.
Just as we wrote, the pair rallied to the big figure of 1.4000 and then dropped 350pips closed in the mid 1.36’s. Posting its 4th weekly decline in a row, the pair only has the bottom of the Kumo to take out before a large drop should manifest. Should we have a weekly close below the kumo, we are expecting a dive to the 1.2900 and longer term forecast could send the pair to 1.2400 by year end. Outlook for the bulls on the EURUSD do not look good as the last bastion of Ichimoku support is the bottom of the kumo and beyond that the atmosphere is thin.
GBPUSD - Look out below…Posting its largest weekly decline since sept. last year, the pair did two things which added to the bearish taste for the pair; 1) closed below the kumo for the first time in 6mos and 2) crashed below the major support at 1.5700 which was the last double bottom support for this pair in the last 10mos. Ichimoku analysis suggests unless a rally happens in the next month or so, this pair could easily be headed for 1.4900 with 2nd targets at 1.4500 and possibly a full reversal of the 09′gains back to 1.3500. Look out below as there is not much to help this pair.
AUDUSD - Cuidado as we are below the KijunFor the first time since March of last year, we had our 1st weekly close below the Kijun. We expect this along with the 20ema and Tenkan now to act as strong resistance so the line of least resistance has clearly formed to the downside and the bearish prospects have become attractive - especially with the RBA not raising rates last month and further concerns about inflation and a weakening labor market. The kumo does not come in till about 8000 so there is plenty of room for this pair to drop. Any rallies to the Kijun are likely good selling opportunities.
USDCAD - Working hard for its moneyOne of the few USD pairs having to work hard for its money, this pair had a doji week but nevertheless closed above the kijun and 20ema. This week it used it as support and should it have a weekly close above 1.0800, we feel the pair could likely be headed towards 1.1250 which is where the Senkou Span A comes in (kumo bottom). At that point it will have to work hard for its gains but for now, outlook is good for USDCAD bulls and as long as the dips are corrective in nature, the 20ema should hold as support for a good long base to form.
NZDUSD - Likely first to the weekly KumoWith its 5th weekly down close and now 2nd below the Kijun, the pair is likely headed for further losses towards 6500 as it spiked up to the Kijun only to get smacked back down 300pips lower. The 20ema has now gotten below the Tenkan and Kijun so this should reject any upside plays. The line of least resistance is clearly to the downside and we would not feel good about buying this pair anytime soon.
Chris Capre is the current Fund Manager for White Knight Investments (http://whiteknightfxi.com/). He 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 http://2ndskiesforex.com