Indices Review for 21/5/2012

I have posted 2 reviews today, Saturday 19/05/12. My Indices Review and my Trading Week review. 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 continued from the triangle breakout to reach a new key resistance level in 81.7, a previous market high. A double top may have formed and peaked here though.

Daily:  Ranging/Up. Price rallied to the 81.7 resistance level and reversed a bit from there on Friday.

4hr: Up/turning.  Price rallied for most of the week with continued Euro zone worries. Price bounced off the 81.7 resistance level though on Friday and has now broken below a bull trend line that has been in play for the last few weeks. Also, I have a TS signal to SHORT on the 4hr charts.

Thoughts:  Fundamentals impacted on markets last week with continued uncertainty following the fallout from the Greek elections. There is a G8 meeting over the w/e and news releases from this meeting could spin markets in either direction. Continued caution is required.

I will look to LONG the USD in pairs on valid TS signals if price on the USDX keeps rising and can break, close and hold above the 81.7 level.

I will look to SHORT the USD in pairs on valid TS signals and if price on the USDX continues to move back down from the 81.7 level and below the broken bull 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 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 a ‘hammer candle’. Hammer candles, in falling markets, are often viewed as a sign of reversal. Price flirted with the previous low of 100.5/100.6 on Friday which is also the bottom trend line of the descending triangle pattern. Descending triangles are viewed as bearish continuation patterns. 

Daily: Trend sideways/down. Price is still trading within the smaller of the two descending triangle patterns. Fridays candle was a bullish engulfing candle though. 

4 hr: Trend down/turning.  Price rallied on Friday to break above the bear trend line that has been in play for the last 3 weeks. Also, I have a TS signal to go LONG on the 4hr chart.

Thoughts:  I will look to SHORT the Eur in pairs on valid TS signals if the EURX reverses to trend back down.  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 continues to rally up from the 100.5/6 area. I am mindful of the bullish 'hammer' reversal candle on the weekly chart!