Indices review for Week 23/4/2011

USDX

Monthly: Trend: up overall.  The current monthly candle looks to be forming a shooting star but, obviously, has yet to close. This could be read as a bearish signal given that this candle is appearing after a recent run up of about 5 months.

Weekly:  Trend: still bouncing sideways. Price has broken down from trading within a symmetrical triangle. Last week’s candle was a large bearish engulfing candle.   This, indeed, has followed on from the bearish ‘hanging man’ candle, pointed out the week before.

   

Daily:  Trend: Ranging. Friday’s candle was a large bearish engulfing candle after 3 indecision day candles. Price has broken down from trading within a symmetrical triangle pattern.

4hr: Trend: Sideways/down.  Price held around 79.50 for most of the week. Price broke out of the symmetrical triangle late on Friday though. A TS signal to SHORT has developed on this index on the 4 hr chart.

Thoughts:  We are STILL at key levels across the broader markets. The DOW is back above the 78.6% breakout 13,000 level although the S&P is just below its key 1,400 breakout level. There is still the possibility for market sentiment to move in either direction from here, although the BULLS do seem to have a lot of persuasion at the moment.

The other point to note is that the USD could simply bounce back up from these low levels. Look back at the daily USDX chart and you will see that price did bounce up from the lows, and bottom trend line, in Feb and March this year. There is also the saying ‘Sell in May and go Away’ where there is a belief shared by many traders that market growth declines in this period. A bounce back up in the US dollar could contribute to a fall in stock prices and, thus, give weight to this phrase.

I will look to LONG the USD in pairs on valid TS signals if price on the USDX reverses and bounces back up from the bottom triangle trend line it has just breached.

 

I will look to SHORT the USD in pairs on valid TS signals and if price HOLDS below the bottom triangle trend line that is has just broken down from. I do have a TS signal to go SHORT on this index already.

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. Price is still trading within a large descending wedge pattern.  There is an extra, steeper, bear trend line in play as well. The current monthly candle is bearish, but less so than it appeared last week.

Weekly:  Trend: sideways. Last week’s candle was a bullish engulfing candle after the ‘indecision’ Doji from the week before.

Daily: Trend: sideways/turning up.  Price is still trading within the smaller of the two descending wedge patterns. Price traded just above 103 all week; near the weekly pivot.  Friday’s candle was bullish engulfing candle.

4 hr: Trend: ranging.  Price bounced sideways in a narrow range around the weekly pivot for most of the week.  Price is moving up towards major resistance at the 4hr 200 EMA, monthly pivot S1 and psychological 104 level.

Thoughts:  I will look to SHORT the Eur in pairs on valid TS signals if the EURX breaks, closes and holds below the weekly pivot and, then, the 103 level. 

I will look to LONG the Eur in pairs on any new TS signal and if the EURX breaks closes and holds above the 104 level  and 4 hr 200 EMA.