Indices Review for Week 27/2/2012

I've had a fantastic week with TS this week.  370 pips locked in and the 2 trades currently up around 470 and still running.

My son sits near me of an afternoon as I trade and he does homework etc.  He has been playing this all week, so much so, that now whenever I hear this piece I associate it with my stalking of, and success on, the E/J.  Another good Aussie band: http://www.youtube.com/watch?v=w8l-9nuXkDo

I have posted 2 reviews today, Saturday 25/2/12.  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.

USDX

Monthly: Trend up overall.  The current candle is quite bearish.  This current candle now also confirms the ‘Dark Cloud’ pattern that was formed by the Dec and Jan candle.  Dark Cloud patterns are reported as highly reliable bearish reversal patterns.

Weekly:  Trend up, overall / turning. Last week’s candle was quite bearish.

Daily:  Trend turned to down.  Price action was bearish all week and it opened up with a gap down and a break below the bull trend line.  Price broke down and kept falling to clear the trend channel and ended up just above the daily 200 EMA, that is, at around the 78 level.  This will be a significant barrier to further downward movement though and a major level to keep watch of this coming week.

4hr: Trend down.  Price trended down for most of the week and was unable to break back above the 4hr 200 EMA.  Price has now even broken down, and closed below, the bottom trend line of the trading channel at 78.5 that it has been bound by for some weeks.  This is very bearish indeed. 

Thoughts:  There was a tendency to ignore any bad news this week and run with a ‘risk on’ sentiment.  I don't know how long this rally will last.  Essentially though, I don't care either!  I have my own conspiracy theories about what is fueling it though.  I will just continue to trade what the charts tell me and what I see.  

The USDX is approaching a significant barrier in the daily 200 EMA at around the 78 level though.  This will be a critical level for the USD this week and is a level I had warned about for some weeks now.

I will continue look to SHORT the USD in pairs on valid TS signals if price holds below the 78.5 level.  I will be cautious as price approaches the 78 level and be on the lookout for a possible bounce, or even a reversal in trend, at this level.

I will not look to LONG the USD in pairs on valid TS signals until price breaks, closes and holds back above the 78.5 level and until there is a new TS signal to go LONG on this index.

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 has turned.  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 now up.  Last week’s candle was bullish.

Daily: Trend up.  Price broke up and out of the symmetrical triangle and has indeed retraced back up to around the 61.8% level of 106. 

4 hr: Trend up, overall.  Price has rallied since breaking out of the symmetrical triangle last Monday and finished the week just under the strong resistance level of the daily 200 EMA at the 106 level.

Thoughts:  I will continue to LONG the Eur in pairs on valid TS signals and if the EURX is still trending upwards and can close above the 106 level.  The current level of 106 is critical though and I will be cautious until I see a close above this level.

I will look to SHORT the Eur in pairs on valid TS signals if the EURX fails to break up above the 106 level and, then, trends down producing a TS signal to SHORT on the EURX.