Indices Analysis for Week 14/5/12

I have posted 2 reviews today, Saturday 12/05/12. My Indices Analysis 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/turning sideways.  The current monthly candle is bullish and engulfing.

Weekly:  Trend up. The ‘Bull Flag’ pattern evolved.  Price broke out an up, conforming to bullish expectations, from the triangle pattern discussed last week.

Daily:  Ranging/Up. Price has mostly rallied so far through May.

4hr: Up.  Price traded near the 80 level after the triangle breakout for much of the week but, then, rallied with continued Euro zone worries and some poor US news.

Thoughts:  The sentiment for last week definitely favoured ‘risk off’ and looks to continue that way into next week. The broader markets finished below key levels: The DOW finished below 13,000 and the S&P500 below 1,400 BUT above the psychological level of 1350. Caution is required at all times though as any positive news seems to be greeted with enthusiastic ‘risk on’ reversals.

I will look to LONG the USD in pairs on valid TS signals if price on the USDX keeps rising.

I will look to SHORT the USD in pairs on valid TS signals and if price on the USDX breaks back down below the 80 level.

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. This chart is essentially the same as it has been for the last few weeks. Price is still trading within a large descending triangle pattern.  There is an extra, steeper, bear trend line in play as well. The current monthly candle is bearish.

Weekly:  Trend sideways/down. Last week’s candle was another bearish candle but with longer shadows reflecting some indecision. Price is approaching the previous low of 100.5/100.6 which is also the bottom trend line of the descending triangle pattern. Descending triangles are viewed as bearish continuation patterns although price might falter a bit at this point given it is a major low for this index.

Daily: Trend sideways/down.  Price is still trading within the smaller of the two descending triangle patterns.

4 hr: Trend down.  Price gapped lower at market open due to Euro zone worries and traded down for most of the week. The descent eased off a bit towards the latter part of the week but looks to be heading toward the bottom triangle trend line at 100.60/50. There is little resistance in its path.

Thoughts:  I will look to SHORT the Eur in pairs on valid TS signals if the EURX keeps declining.  I will be cautious as price approaches the bottom triangle trend line value of 100.5/100.6 area.

I will look to LONG the Eur in pairs on any new TS signal and if the EURX rallies of the 100.50/60 area low and makes a new TS LONG signal.