Indices Review + Trading Week Analysis 19/3/2012

NB: There is only a brief update for this review for this week as I am still traveling quite a bit.


Indices Analysis 19/3/2012

USDX

Weekly: A shooting star type of pattern on the weekly.  This may suggest a reversal is in store.

4hrly: Price dropped below the key 80 level and finished the week at the weekly pivot area of 79.77. I almost have a TS signal to SHORT the USDX on the 4 hr chart.

EURX:

4 hrly: price is still trading within a symmetrical triangle.  I almost have a TS signal to go LONG on this index though.

Thoughts:

The USDX is currently looking bearish and the EURX is currently looking bullish.

I will look to trade 'risk on' (that is 'short' on the USD and 'long' EUR etc) if:

•  the USDX stays below the 80 level and
•  especially if the EURX continues to climb and breaks up and out of the symmetrical triangle pattern.

I will look to trade 'risk off' (that is 'long' on the USD and 'short' EUR etc) if:

• the USDX breaks and holds back above the 80 level and
• if the EURX breaks and closes below the weekly and monthly pivot, bottom trend line of triangle and the 4hr 200 EMA.

The current strength in the broader markets should not be ignored.  The DOW is still trading above 13,000 and the S&P500 closed above 1400 and to its highest level since May 2008.  Continued optimism, or 'risk on', trading such as this may have the continued impact of a falling USD.  This then often results in other currencies rising relative to the USD; currencies such as the EUR, AUD, SGD and CAD etc.  That is, if the normal currency correlation prevails but remember that this correlation did de-couple for a bit there last week when we saw a rising USD and rising stock market.

Trading Week Analysis 19/3/2012: Some of the pairs that interest me at the moment:

EUR/USD: this is looking bullish.  I already have a very new signal to LONG this pair on the 4 hr charts.

• I would look to LONG this pair if the momentum and trend continues and if price can close above the 4hr 200 EMA.
• If momentum changes I would look to short on a close below the bottom triangle trend line.

A/J: I wanted in LONG on this from 87.  It is now at 88.285.  88 would be a good level to try and get in othis again.  Remember, I have been stalking this for weeks pointing to this pair as a 'risk on' kind of beacon pair. That was back when it broke out at 85!

G/U: I will look to LONG this pair if risk on continues if it breaks and holds above the trend line and 1.6 area.

USD/SGD: I had a signal to LONG this last week but it didn't get very far before the run petered out.  It went a whole 80 pips or so from my initial signal.  This rally, though, came during that short de-coupled period where the USD rallied AND stocks rallied too so, in hindsight, it wasn't probably the safest trade to take. (see chart below)

I have since re-drawn the trend lines to better reflect recent support and resistance.  I would look to LONG this pair if 'risk off' returns and if we get a break and close above the top trend line.  I would look to SHORT this pair if we get a return to 'risk on' and when/if price breaks below the bottom trend line.

EUR/JPY: I mentioned to watch for this trade last week on the break of trend line.  It has now moved up to 130 pips.  I don't know if I would chase this trade now though.  A break and close above 110 might be worth watching for though.