I often mention the phenomenon of Ichimoku Alignment and I have a section on this blog site dedicated to an explanation of this with examples. The last couple of weeks have been a period of just such an alignment and the EUR/USD has given a 600 pip move during that time. I therefore continue to recommend that technical analysts / traders should keep an eye out for such periods. This is a technical phenomenon and, consequently, this is an article for technical traders.
Ichimoku Alignment refers to periods where the price action is on one side of the Ichimoku Cloud on the daily and 4hr charts of the USDX and on the other side of the Cloud on the 4hr and daily charts of the EURX.
On October 22nd 2015 an Ichimoku alignment evolved where price was above the Cloud on the 4hr and daily charts of the USDX and below the Cloud on the 4hr and daily EURX charts. This period set up an alignment that favoured SHORT EUR$ and LONG US$ and I sometime refer to these periods as ‘risk off‘. Such a period would obviously impact the EUR/USD pair and this was in fact seen with a 600 pip fall since this alignment kicked in:
USDX daily: price moved above the daily Cloud on Oct 22nd:
USDX 4hr: price moved above the 4hr Cloud on Oct 22nd:
EURX daily: price moved below the daily Cloud on Oct 22nd:
EURX 4hr: price moved below the 4hr Cloud on Oct 22nd:
EUR/USD 4hr: October 22nd marked the start of a triangle breakout and a 600 pip move, thus far!
Summary: Ichimoku Alignment often, but not always, results in periods of decent trending markets and, thus, is worth keeping an eye out for.