Indices review for Week 26/3/2012

I have posted 2 reviews today, Saturday 24/3/12. 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 a bullish engulfing candle but has a few days until close though.  This could be a bull flag pattern so I will be on the lookout for the trend line break here.

Weekly:  Trend up, overall / sideways. Price is trading within a symmetrical triangle but, also, does look like it could be forming a bull flag pattern.  This was noted here a few weeks ago and also mentioned in the ‘Monthly’ comment just above.

Daily:  Flat. After 3 indecision days the candle on Friday was bearish engulfing.

4hr: Flat/down.  The 4hr 200 EMA held price up for much of the week but failed to do so on Friday. Price has fallen back into the narrow trading range where it was bound for many sessions some weeks ago; the 79.5 – 78.5 range.  There is support in the monthly pivot (79) and bottom trend line just below current price.  There is resistance in the weekly pivot, monthly R1 and the key 80 level just above current price.

Thoughts:  I have been saying for the last few weeks that we are at critical levels across the broader markets.  The DOW is still holding above the 78.6% breakout 13,000 level.  The S&P 500 is just tucked under 1,400 but above the key breakout level.  The VIX, or fear gauge index, is still low at 15.  So, it is not at all surprising to see the indices trade and bounce around mostly sideways for much of the week.  This is a huge level to negotiate, either up or down, and all the instruments, stocks, commodities and currencies etc, are feeling and reflecting this tension.

The indices’ daily charts clearly show the narrow triangle patterns containing price.  The pattern for the EURX is much tighter than for the USDX though.  The 4hr ADX line has ticked up on both indices suggesting a move may be starting.  Based on Friday’s action, this looks to be LONG on the EURX and SHORT on the USDX.  I don’t have a full TS signal on either of these though yet.  I am keeping in mind the possible bull flag pattern on the USDX here though!  I keep saying, this could be a market top or, just a pause before the next big up move which could spell a falling USD.

I will look to LONG the USD in pairs on valid TS signals if price breaks, closes and holds above the 80 level and, then, the upper triangle trend line. 

I will look to SHORT the USD in pairs on valid TS signals and if price keeps below the 4hr 200 EMA and can break below the monthly pivot @79 and, then, below the bottom triangle 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 always have the potential to undermine all Technical analysis.

EURX

Monthly:  Trend down BUT has turned.  Last month’s candle ended up forming a bullish engulfing candle.  The current candle is an indecision doji candle.

Weekly:  Trend still up overall. 

Daily: Trend up overall.  Price is trading within a symmetrical triangle pattern. 

4 hr: Trend bouncing sideways.  Price is constrained to trading within the triangle pattern but was supported all week by the trend line, weekly pivot and 4hr 200 EMA. Price has also held above the monthly pivot @ 104.2.  

Thoughts:  I will look to SHORT the Eur in pairs on valid TS signals if the EURX breaks, closes and holds below the 4hr 200 EMA, monthly pivot and bottom triangle trend line.

I will look to LONG the Eur in pairs on valid TS signals and if the EURX continues to trend upwards, produces a new TS LONG signal and breaks above the upper trend line of the symmetrical triangle pattern.