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EURUSD Opens Below Ichimoku | Market Sentiment Analysis


Sep.20.2016

EURUSD Opens Below Ichimoku

Ahead of FOMC rate decision, EURUSD opens below Ichimoku on Wednesday's Sydney session. How could market sentiment change in the coming days? Read on for an Invest Diva style trading strategy. Read my book to learn more about forex trading.

 

 

EURUSD Opens Below Ichimoku - Kiana Danial with Capital Index EURUSD Opens Below Ichimoku - Kiana Danial with Capital Index

 

EURUSD Opens Below Ichimoku - Technical Analysis

Long time frame

EUR/USD has been ranging between 1.05 and 1.15 since March 2015. The flattening Ichimoku cloud suggests the range could continue in the medium term.

 

 

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Short time frame

After forming an angled Double Top pattern, the pair opened below the Ichimoku cloud testing the 38% Fibonacci level on Wednesday at Sydney's market open.

 EURUSD Opens Below Ichimoku - Technical Analysis EURUSD Opens Below Ichimoku - Technical Analysis

While this could be a beginning of a bearish indication, we still need a confirmation of a break below Ichimoku and 1.1150 for a lower-risk signal.

Once confirmed, the supporting pivot is set at 50% Fibonacci at 1.1025. Extended supports within the range are set at 1.09 and 1.06.

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EURUSD Opens Below Ichimoku - Market Sentiment

The ratio of long to short positions in the EUR/USD stands at -1.05  49% of traders are bullish on the pair. The fact that the majority of traders are short gives signal that the EURUSD may continue higher. However the trading crowd has grown less net-short from yesterday and last week. The combination of current sentiment and recent changes gives a further mixed trading bias in a short-term basis.

 

EURUSD Opens Below Ichimoku - Fundamentals

All eyes will be on the US as the FOMC Rate Decision  and Fed Summary of Economic Projections is out at 6 PM GMT.

The Fed is broadly expected to keep rates unchanged. Based on some of their recent testimonies, majority of the FOMC voting members are starting to lean towards a hawkish stance, which suggests that a rate hike could be on the table. Should the Fed decide to stay put for now, their revised economic projections might provide clues on whether a rate hike is still possible in December or not.

As far as 2017, policy makers could potentially downgrade their forecast and show preference for a shallower normalization cycle. This is because growth momentum has been fading. However the US presidential election in November could change Fed's stance massively, and therefore creating further volatility in the USD crosses.

 

More on the Economic Calendar...

Wednesday:

London session: We have Public Sector Net Borrowing out of the UK at 8:30 AM GMT.

Thursday

Sydney Session: Reserve Bank of New Zealand Rate Decision  is out at 9 PM GMT.

Join me for a FREE WEBINAR on Thursday AT 5 PM GMT, as I cover Kiwi Trading Strategies, LIVE.

 

 

EURUSD Opens Below Ichimoku - Trading Strategy

Step one: Calculate your  risk tolerance.

Step two: Pick a scenario that best matches your risk tolerance.

Bearish Scenario

Aggressive to moderately aggressive traders can already set up a bearish strategy targeting 1.1025 and 1.09 in extension.

Fundamentally we need...: very hawkish FOMC statement, or even a rate hike

Sentimentally we need...: Over 51% of traders in bullish position

Moderate to conservative traders should wait for a confirmation below 1.11 and can target long-term targets of 1.09 and 1.0750.

Bullish Scenario

If the pair fails to confirm below the Ichimoku cloud, we could see a move back up towards 1.13 and 1.15 in extension.

Fundamentally we need...: Less hawkish or even dovish FOMC statement

Sentimentally we need: Over 51% of traders in bearish position

You can target either levels of support or resistance stated below based on your RISK TOLERANCE.

Here are Invest Diva's calculations for important CAD/JPY approximate levels to keep an eye on:

Support Levels Turning Point Resistance Levels
1.06 1.1025 1.13
1.09 1.1150 1.15

 

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Kiana 喜愛成
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