May 2013

The A/U pair has made a significant down move over the last couple of weeks. I had been reluctant to take the 4hr signals though given that the Euro index had been holding up so well. I decided to look back over the Ichimoku Cloud chart of the A/U pair, on both the daily and 4hr time frame, as well as the index charts to see if there were improvements to be made to my trade processing strategy.

My TC system gave two SHORT signals on the A/U over the last 3 weeks as shown on the chart below. These signals were received on May 1st and May 10th 2013:

These signals came through when the Euro index was either just in the top or just above the daily Cloud. Thus, I had been hesitant to take these TS signals:

Similarly, the USD index was in the Cloud for the first signal but it was above the Cloud, and thus supportive, for the second signal:

Thus, the first TC signal on May 1st was not supported by either Index Cloud chart but the second signal on May 10th was supported by the USDX Cloud chart.

I decided to look back over the Ichimoku Charts for the A/U pair itself though. This proved to be most instructive. The Daily and 4hr Ichimoku Charts of the A/U both supported a SHORT signal for the 2nd May, just one day after my initial TC SHORT signal.

A/U Cloud chart 4hr:

A/U Cloud chart daily:

Conclusion:

The recent TC signals were supported by signals on the A/U daily and 4hr Ichimoku charts. The Euro and USD Index charts give a good overall guide about the overall market sentiment for general ‘risk on’ or ‘risk off’. The A/U has been a bit de-coupled from this usual correlation of late though. This has meant that TC trend signals for the A/U might be better evaluated against the Ichimoku charts for the A/U itself, rather than against just the Euro and USD index Cloud charts.

Future TC signals for any currency pair should be cross checked against the Ichimoku charts for the individual pair on the daily and 4hr time frame. This should occur in conjunction with cross checking the USDX and EURX.