FX.co ★ Technical analysis and trading recommendations for the EUR/USD currency pair for January 26, 2010

4-hour timeframe

The overall picture:
The downward trend is working out. The target level on Ishimoku (1.4192) is reached. Also the price hit the pivot level and strengthened below it. As the targets are reached, now is reasonable to expect a reversal, however, before this supposal confirmation bullish trading is discouraged. The target at day chart is 1.3984, therefore, the downward movement can continue to this level. For now, if the price is lower than Kijun-sen that will weaken the current signal and will bring hope of the upward trend, then 1.3984 will be a real target. Chinkou Span is below the price line that also signals about the downward movement. Ishimoku indicator is widening again, Senkou Span A is moving down that signals about possible continuation of the downward trend. Bollinger Bands are showing the sideways movement – Bands are narrowing and side-directed that can signals about the downward movement ending. MACD is also edging down that witnesses about the downward movement presence.
Trading recommendations:
Now, the yen target is 1.3984, however, in case of the price fixing above Kijun-sen (1.4135) the signal will weaken and bearish trading will be inexpedient. In case of a rebound from this level, the downward movement can renew. At this moment, bearish trading is recommended with stop-loss at 1.4160.
The picture clarification:
Ishimoku indicator:
Tenkan-sen — red line
Kijun-sen — blue line
Senkou Span A — light brown stipple line
Senkou Span B — light purple stipple line
Chinkou Span — green line
Bollinger Bands indicator:
3 yellow lines
MACD indicator:
The red line and the histogram with the white bars in the indicators window.
Happy trading,
Stanislav Polyanskiy
January 26, 2010