2016/08/08 – Technical Analysis – Week Review

Last week we discussed the GBP/USD currency pair, after analysis we determined that we sit at an opportunity for a long position but potential for a price drop if our Senkou Span intersects with a crossover our price line. The immediate period following our analysis outlined our market falling for bearish dominance, looking at our Senkou Span the price bounced off as a resistance level and continued to drop.

Our blue line (Kijun Sen) holds steady above the price level, indicating a continuation of this drop. After today’s activity we can see that this has continued on with little support from the bullish opposition. This is an excellent example of how if you see conflicting indicators that you need to tread lightly and watch the market closely.

Our best tool when in doubt is to look at our lagging indicators after a trend or reversal has begun and doubly confirm with another comparable analysis tool. Since we are now following in a downtrend we can look at our ADX to examine the remaining strength for our current currency pair’s trend. Almost in an instant, our ADX caught fire and boomed to a high capacity, continuing to gain ground and steadily approaching 50. ADX lines always alternate with frequency and strength so we can assume that this downtrend is just reaching its peak and should continue on for several more periods before it exhausts and bends to a bullish reversal.


Let’s have a review of last week’s analysis of the USD/JPY currency pair. A strong bullish reversal took hold and shot skyward, hitting hard at our Senkou Span levels. Our analysis predicated this as a possibility but it looks like the bullish overhaul wasn’t enough to break through our resistance levels. Despite this opposition there has been a steady upward trend and with our ADX holding steady around 40 we can safely assume this trend will hold for a few more periods.

The recent few periods show that our Senkou Span is pushing back, bouncing the price down a few pips. This is fair warning that our uptrend may have reached its limit. To confirm this suspicion we can examine our Stochastic lines; the last few periods have shown a sharp jump, pushing past 80 which can indicate an overbought market. Our quick review confirms that we will see a possible bearish reversal so push in for a short position until other indicators can show us anymore detail.


Last week’s analysis of our USD/CHF pair strongly advised through our IKH indicator that we are sitting at a bullish reversal point, almost following the next period we see a massive jump from opening to close price in our candlestick chart. This huge swing put our price right above our Senkou Span which are our two orange lines; we predicted this possible breakout last week when we mentioned the Kijun Sen, Chikou Span, and Tenkan Sen activity all supporting a bullish trend and reversal.

The USD/JPY pair now sits comfortably above and secures two valuable support levels that can help keep our price in this upper range. Expect this trend to meet some resistance however for our Stochastic lines are juggling above the 80 mark, exposing the exhaustive efforts of our bullish leaders giving rise to a possible bearish reversal. We will follow these currency pairs more in the coming week and see what might develop.