Sunday, November 20, 2011

Indices for week 21/11/11


Monthly: Trend down. The current candle is bullish but, almost an inside candle. Inside candles are viewed as indecision candles. No surprises there heh?! The candle has some time to go before it closes though. Price is currently contained within a symmetrical triangle.

Weekly: Trend down. Last week’s candle was bullish and engulfed the previous doji.

Daily: Trend flat. For the last 3 days price has bounced around the strong S/R and psychological level of 78. This has also been the daily pivot level. The last 2 candles were almost ‘hanging man’ candles which, in an uptrend, signify bearish reversal but can also simply mean indecision. The monthly R1, daily R3, weekly R2 pivots and a bear trend line are just 100 pips above the current price action.

4hr: Trend flat. Price finished the week at the 78 strong psychological level, just under the daily pivot.

Thoughts: We continue to see fundamentals, by way of Euro zone dramas and news announcements thwarting technical analysis and rocking price action. This volatility continues to make it difficult to trade, from a technical perspective, on the longer time frames (4hr charts +). I showed last week how easy it was to trade TS from 30 min charts though so, this may be more suitable for some of you. Attention to risk and trade management continues to be paramount at all times but especially during volatile times like these.

THE USDX is proving to be a challenge to assess and evaluate this week as there are major hurdles to price just above and just below the current price of 78. At 79 there is: the monthly R1, daily R3, weekly R2 pivots and a bear trend line. At 77 there is: the monthly and weekly pivot and 4hr 200EMA. I will be watching, yet again, to see the impact of further news and whether this can move price above or below the 78 level. A break and close above 79 would have me looking to Long the USD in pairs. Be careful though as the 80 level is also a huge previous resistance area and a strong psychological level. A break and close below the 77 would see me looking to short the USD in pairs. I think it will really come down to whether people see this week coming as one for ‘risk on’ (short USD) or ‘risk off’ (long USD).


Monthly: Trend down. The newish candle for this month is also forming an inside candle. These are often viewed as indecision candles. Price action is still being held within the larger and smaller of 2 symmetrical wedge patterns.

Weekly: Trend down. Price is being held within the 2 symmetrical wedge patterns.

Daily: Trend flat/bearish. The 106.5 – 107.5 levels held price action on this index for much of the last few weeks. The 106-105.5 levels have held price for the last few days though as well as the bottom trend line of the smaller symmetrical wedge patterns. Price is fluctuating around the daily pivot in a similar way as the USDX has done.

4 hr: Trend flat. Price is bouncing along, just above the bottom wedge trend line and between 106 – 105.5.

Thoughts: I will be watching to see the impact of further news and whether a ‘risk on’ or ‘risk off’ approach dominates into next week’s trading. I will wait to see price if price moves out of the narrow trading range of 106-105.5 and whether it breaks down through the bottom symmetrical wedge trend lines. A break and close above 106 would have me looking for further reasons to long the EUR in pairs but, the 4 hr 200 EMA and monthly pivot are just above at 106.7 so any up-move might be hampered. A break, close and hold below the 105.5 and trend line would see me looking to short the EUR in pairs.

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