Technical Analysis of EUR/USD
The Big Picture
Fig. 2.08(a) shows that the Euro/USD exchange rate at the present moment is exactly the same as at the beginning of August 2010. Since then it has gone up to a high of just below 1.50 at the beginning of May last year. After that it started a slow process of decline, which was only interrupted by a few spikes above the Ichimoku cloud.
Fig. 2.08(b) shows that the EUR/USD exchange rate reached a low of 1.26251 on 16th January 2012. Since then we have experienced a reasonably strong surge in the rate and as of today, 8th February, it stands at 1.32440.
If we analyse the Ichimoku chart, we see that the green Chinkou Span line is well above the price of 26 periods ago, confirming a bull run, at least for now. The exchange rate is also above both the blue Kijun Sen and the Red Tenkan Sen lines, which further supports the view of a bull phase.
The price is, however, still in the Ichimoku cloud, which should caution us that we should not jump the gun here. Wait for at least two clear closes above the cloud before entering a long trade.
If the price should climb from there and rise above the maximum of 1.42464 we saw on the 27th October last year, it might be a clear signal that the longer term bear run is finally over, in which case additional long positions could well turn out to be very profitable.