Trading Week Analysis 2/4/2012

I have posted 2 reviews today, Saturday 31/3/2012. My Indices Review and my Trading Week Analysis review.  Only one e-mail alert will be sent though most likely.  Please make sure that you read the Indices Review as well so that you understand what I am looking for in the pairs this week.

I've had a busy week since returning from O/S with doctors etc.  This continues this coming week too.  I will probably not get to update my Stocks: April page until tomorrow or, maybe even, Monday

Broader Trading Context for this week:

We are at critical levels across the broader markets. I have been stating this for a few weeks now. The DOW is still holding above the 78.6% re-trace break out 13,000 level.  The S&P500 has held above its key 1,400 breakout level for most of the week, also a 78.6% re-trace.  The VIX, or fear gauge index, is still low at 15.5.  So, it is not at all surprising to see the indices bounce around, mostly sideways, for much of the week.  This week has been more suited to trading off bounces or trend trading off shorter time frames.  Neither of these suit me though.  So, this is a huge market level to negotiate, either up or down, and all of the instruments; stocks, commodities and currencies etc, are feeling and reflecting this tension.

I was thinking of an analogy for this sideways/bouncing action that we have seen of late in the indices and currencies etc.  To me, it is a bit like a school athletics carnival where you have multiple events, javelin, high jump, discuss etc, occurring around the field (read here: multiple trading instruments: stocks, commodities, futures, currencies etc). Then, you have one student, at one of the events, who is about to attempt to break a long standing record (read here: current stock market levels).  What usually happens in these situations is that there is a public announcement and everyone pauses to observe and cheer the result of this student's record attempt.  Well, to me, this is where the broader markets are at the moment.  They are all paused, looking on to see if the stock markets, that have made significant new highs of late, can keep this level up and, actually, keep moving upwards.

Next Monday April 2nd, being the first day of a new week, new month and new quarter will be very interesting. This will be where we see the 'carnival pause' until the stock market 'record breaking' event is watched and resolved.  I keep saying, this could end up being a market top or just a pause before the next big up move which could spell a falling USD. It is important to realise that the fate of the USD and, thus, currency pairs, is closely connected to the performance of stocks and of the broader market.

It is worth me noting here that the Stock market, more often than not, has a positive day on the first trading day of each month. I know of one brokerage firm where some of their traders simply  trade this one phenomenon/event per month.  With appropriate money management they turn this one trading day each month, with its greater than 50% strike success rate, into positive cash flow. Food for thought heh?

I will be watching to see how Monday treats the stock market and, then, assess how to read and trade any new TS currency signals.

E/U:

The E/U looks like it is trying to break up and out of a triangle pattern.

I will look to LONG the E/U if 'risk on' continues, I get a new TS LONG signal and price breaks, closes and holds above the upper triangle trend line.

I will look to SHORT the E/U if 'risk off' returns and I get a new TS SHORT signal.

E/J:

Price is still being supported by a daily bull trend line.  I will not SHORT the E/J.

I will look to LONG the E/J if 'risk on' continues. I already have a new TS LONG signal, as of late on Friday, but I want to see this maintained into the new week though.

A/U:

I have to admit that the A/U is looking bearish. This has me stumped!

I will look to LONG the A/U if 'risk on' continues, I get a new TS LONG signal and price bounces off the bottom bull triangle trend line and closes above the daily 200 EMA.

I will look to SHORT the A/U if 'risk off' returns, I get a new TS SHORT signal and if price breaks, closes and holds below the bottom bull triangle trend line.

A/J: The 'risk on' or 'bell weather' pair:

I discussed this pair at the end of last week.  I mentioned how it is giving mixed signals. On the monthly chart it looks bullish in that it has broken out of a long term triangle pattern, pulled back to re-test the trend line and could be about to keep moving upwards.

Alternatively, on the daily chart, it could be forming a bearish Head and Shoulder pattern.

The A/J has failed to declare its hand fully yet though as it finished the week, sitting on the fence, at just above the initial break out trend line level!

I will not SHORT the A/J.

I will look to LONG the A/J if 'risk on' continues, I get a new TS LONG signal and price breaks, closes and holds above the bear trend line and reaches the 87 level.

USD/SGD:

I will look to LONG the USD/SGD if 'risk off' returns, I get a new TS LONG signal and price breaks, closes and holds above the weekly pivot and daily and 4hr 200 EMA and the upper triangle trend line.

I will look to SHORT the USD/SGD if 'risk on' continues and I get a new TS SHORT signal and price closes below the bottom bull triangle trend line.

G/U:

The G/U has already had a close above the key psychological level of 1.6.

I will look to LONG the G/U if 'risk on' continues, I get a continuation of the TS LONG signal and price breaks, closes and holds above the upper triangle trend line.

I will look to SHORT the G/U if 'risk off' returns and I get a new TS SHORT signal.

Swissie: I don't trade this pair

This pair looks bearish though.  It has had a triangle break down on the daily chart and looks like it might be about to continue and follow through.  I will watch this pair to see if this evolves as this pair usually trades inversely to the E/U, so, it is useful for correlation.

Loonie: I don't trade this pair either!

It is just worth noting that this pair, too, is trading within a triangle pattern on the weekly chart. This is a most popular chart pattern at the moment!

Silver:

Silver is also trading within a triangle pattern but looks bearish at the moment.  On the daily chart you can see that price is stuck under the daily and 4 hr 200 EMA.  I would look for TS signals off the 4hr chart to trade this metal.

Gold:

Gold is also trading within a symmetrical triangle pattern, in fact, two of them! Price is being supported by one of the bull trend lines as well as the monthly pivot S1, daily & weekly pivot and the 4hr 200 EMA. I would look for TS signals off the 4hr chart to trade this metal.