Saturday, November 26, 2011

Indices for week 28/11/11

USDX

Monthly: Trend still down. The current candle is bullish though and forming an engulfing candle pattern. The candle has a week to go before it closes. Price has currently broken out and up from within the symmetrical triangle that had contained price since last year!

Weekly: Trend flat. Last week’s candle was a large bullish candle.

Daily: Trend flat/up. Price was fairly flat for the first two days of the week but then turned quite bullish for the final 3 days. Price actually broke out and up on Friday through the top bear trend line of the symmetrical triangle. You can see from the daily chart that price is forming a double top up near the 80 level with a peak from back in early October this year.

4hr: Trend up. The general trend has been up for most of the last 2 weeks. NB: The black vertical dotted lines on the 4 hr chart separate one week from the next. Price finished the week up and just below the 80 level. This 80 level is most significant as it is a former strong level of S/R and a strong psychological level. Price is currently sandwiched just below this 80 level and the R3 daily pivot and just above the R2 daily pivot, weekly 200 EMA, R2 weekly pivot, R1 monthly pivot and the previous trend line. Sort of, one might say, between a rock and a hard place!

Thoughts: Fundamentals, by way of Euro zone dramas and news announcements, continue to be triggers for price movement on the indices. The USDX is approaching a hugely significant resistance area in the 80 level. Given that price has broken out and up from a symmetrical triangle one might be correct in identifying this as a bullish sign and, thus, the signal for further ‘up’ movement. The slightest whiff of any good news out of the Euro zone though, or anywhere for that matter, could be a trigger to turn price down at this significant 80 level. So, I think a lot of caution is needed with picking trend direction for this week ahead. This week could be a turning point. I’m not making trend predictions here at all, I’m simply identifying an important psychological and, thus, significant level for the USDX.

I will be watching closely, yet again, to see the impact of further news and whether this can move price above or below the 80 level. A break, close and hold above 80 would have me looking to Long the USD in pairs. A break, close and hold below 79, the current daily pivot, would see me looking to short the USD in pairs.

NB: December is often a period where there is a rally in stocks. This would need the USDX to fall to support such a rally.

EURX

Monthly: Trend down. The newish candle for this month is forming a bearish engulfing candle. Price action is still being held within the larger symmetrical wedge pattern but has broken the bottom trend line of the smaller triangle pattern.

Weekly: Trend down. The last 4 weeks have been bearish.

Daily: Trend flat/down. Price was supported above the 105.5 level for much of the last few weeks but broke down through this level, and the through the bottom trend line of the symmetrical triangle, on Friday. It is worth noting that price is currently only 90 pips above the other, larger, symmetrical triangle bottom trend line. This triangle pattern dates back to mid last year.

4 hr: Trend down. Price was bearish for most of last week. Price has re-tested the bottom trend line of the triangle but failed to break up through it again. Price finished at the psychological 105 level which is below the trend line, weekly S1 and daily pivot but above the daily S2 pivot.

Thoughts: A break back up, close and hold above 105, and the previous trend line, would have me looking for further reasons to long the EUR in pairs. A break, close and hold below 104, and the other lower trend line, would see me looking to short the EUR in pairs.

No comments:

Post a Comment