FX Indices Review for Week 25/6/12

USDX

Monthly: Ranging but currently in uptrend.  Price is currently forming an ‘inside bar’, a pattern reflecting consolidation or indecision. This is not surprising given the strong move up for the previous month of May.

Weekly:  Trend up. The previous week’s ‘inverted hammer’ candle did indeed point to the reversal back up for last week.

Daily:  Trend Up.  Price closed up, and out, of the bullish descending broadening wedge pattern.

4hr: Trend Up/Ranging. Price has closed up, and out, of the bullish descending broadening wedge pattern but it now has to get up past the strong resistance level of 82.65. This level represents the 61.8% retrace from the last major swing low to the previous swing high. There are major blocks below current USDX price though: the 4hr 200 EMA, weekly and monthly pivot, the strong S/R level of 81.7 and the previous wedge pattern break out trend line. These may act to support price on any re-trace.

Thoughts:  News of Euro zone rescue plans are seeping out and may prompt ‘risk on’ trading even in light of ‘risk off’ technical signs and poor fundamental data. This may invalidate all of my technical analysis! There are more road blocks below the current price of the USDX than above it though.

I will look to LONG the USD in pairs on valid TS signals and if price continues up and can break, close and hold above the significant 82.65 level.

I will look to SHORT the USD in pairs on valid TS signals and if price on the USDX breaks, closes and holds below the 4 hr 200 EMA, 81.7 level, weekly  and monthly pivot and previous wedge 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. Price is just sitting under the previously broken and strong S/R 100.5 level. The current new monthly candle is bullish.

Weekly:  Trend down/ranging.

Daily: Trend down/ranging. Price has yet to close out and down from the bearish ascending broadening wedge pattern on the daily chart.

4 hr: Trend ranging. Price is flirting around the bottom trend line of the broadening ascending wedge pattern. There are road blocks above price on the EURX though in the 4hr 200 EMA, monthly pivot and the previous S/R level of 100.5.

Thoughts:  I will look to SHORT the Eur in pairs on new valid TS signals, if the EURX breaks, closes and holds down and out of the bear flag pattern.

I will look to LONG the Eur in pairs on any new TS signal, if ‘risk on’ sentiment returns and if price can break, close and hold above the 100.5, monthly pivot level and, then, the 4 hr 200 EMA level.