FX TECHNICAL ANALYSIS
Majors Analysis with Ichimoku Kinko Hyo
To better understand how to use the Ichimoku Kinko Hyo indicator to analyze currency moves, please refer to FX Trader Magazine’s introductory article (in the October-December 2010 issue).
Ichimoku Kinko Hyo is a
multifunctional visual trend following charting system. It has been described as ”the king of indicators”. Trading or analyzing with it is a kind of high-level art. Using Ichimoku, it is possible to get the whole picture of the market, including trend direction, the main support/resistance levels, and exact entry or exit points. Furthermore it helps to define the strength of a signal. Te system can be used successfully for all markets and on all time frames - although it seems that the best performance is shown on the higher timescales. Although it is widely used and very popular in Japan, Ichimoku Kinko Hyo is an over-mystified and still nearly unknown technique in the Western world.
76 FX TRADER MAGAZINE April - June 2012 MAJORS ANALYSIS
It seems that the Forex majors are just waking up from their winter-sleep, as the previous ranging periods continued during the last quarter year. Te only exception was the USDJPY, as it moved against the trend with a significant volume. Let’s see how did the Forex majors perform during the last few months:
EURUSD Retrospect During the last 3 months, the price was
moving below the Kumo, Kijun-Sen and Tenkan-Sen lines on the Monthly EURUSD chart. However it is the sign of a bearish picture, - as the price got far from the Kijun-Sen line at the end of 2011- the price had to move a bit up to get closer to the Kijun-Sen and to solve the disequilibrium. It touched the Kijun- Sen in February and started to move down during March.
On the Weekly EURUSD chart the same consolidation happened. In January the price didn’t continue it’s way down as it got too far from the Kijun-Sen line.
Figure 1: EURUSD Monthly
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