Saturday, February 18, 2012

Indices Review for 20/02/12

I have posted 2 reviews today, Saturday 18/2/12.  My Indices Review and my Trading Week review.  Only one e-mail alert will be sent though most likely.  Please make sure that you read the Trading Week Analysis as well so that you understand what I am looking for in the pairs this week.


Remember that Monday is a holiday in the US and Canada.


USDX
Monthly: Trend up overall.  Last week’s print of the current monthly candle, a hammer candle, did indeed indicate that the downward trend was over.  The USD rallied mast of last week.  The current print of this candle is a long legged Doji.  You can’t even see it on my chart.  Long legged Doji indicate great indecision.
 
Weekly:  Trend up, overall / turning. The downward blip in this overall uptrend has been paused by 3 weeks of bullish candle patterns.  Last week’s candle looks much like an inverted hammer which, after the short downtrend, would indicate upward movement with the USD.

Daily:  Trend up.  There was bullish action at the beginning of the week but Thursday was bearish engulfing and Friday was a hammer indicating that there might be further upward movement after the 2 bearish days.  Price broke up through the significant 79.5 level on Wednesday which was the upper range of the trading channel that the index had been stuck in for almost 3 weeks.  Some positive data brought the USD back down again as confidence rose.

4hr: Trend up.  Price rallied for most of the week and broke the 79.5 level.  Price is being supported by an upward bull trend line and is currently trading within an ascending triangle pattern.  It is worth noting that ascending triangle patterns are bullish patterns that form in an uptrend and as part of a continuation pattern.

Thoughts:  There is still much uncertainty in the market concerning the Greek debt and Euro zone crisis.  Surprise announcements of good data and news though, continue to cause sharp intraday U turns in trend direction.  It seems that the markets try to grab, and hold onto, the slightest hint of any good news and run with it, even if just for a short time.  The sentiment has been one where it switches from ‘risk on’ to ‘risk off’ quite frequently.

Most of the technical patterns on both indices point to bullish outcomes on the USDX and bearish outcomes on the EURX.  This would suggest a ‘risk off’ rally.  There seems to be a tendency of late though to exaggerate the impact good news and force ‘risk on’ rallies.  I will be looking for either possibilities this week, either 'risk on', that is, Short on the USD, or 'risk off', that is, Long on the USD.  Logic tells me that we should be heading 'risk off' but, intuition tells me that we might head into some 'risk on' sentiment this week, especially if there is slightest bit of positive Greek debt news.

I will look to LONG the USD in pairs on valid TS signals if price closes and holds above the 79.5 level and the bull trend line.  I still think there could be an attempt for price to further test the lower 78 level though so, I will be cautious during any continued USD rally upwards.

I will not look to SHORT the USD in pairs on valid TS signals  until price breaks, closes and holds below  the bull trend line.

As always, Fundamentals, by way of Euro zone dramas and news announcements, continue to be triggers for price movement on the indices.  These events can always have the potential to undermine all Technical analysis.

EURX
Monthly:  Trend down BUT turning.  Last month’s candle ended up forming a long legged Doji which represent indecision.  The newest candle is still forming a bullish engulfing candle.

Weekly:  Trend down, but has turned.    Last week’s candle was a bearish hanging man candle.  A hanging man candle in an uptrend is often a sign of a reversal.

Daily: Trend sideways/up.  I still see that it is entirely feasible that this index could retrace back up to around the 61.8% level which would have it around 106.  Price has continued to drift higher this week.

4 hr: Trend up, overall.  Price is now trading within a symmetrical triangle pattern.  The upper bearish trend line dates back to October last year.  Price is nudging up against the upper bearish trend line.

Thoughts:  I will look to SHORT the Eur in pairs on valid TS signals if the EURX breaks below the daily bull trend line on the symmetrical triangle.

I will to LONG the Eur in pairs on valid TS signals if the EURX breaks above the daily bear trend line on the symmetrical triangle.

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