Indices Analysis for Week 4/6/12

USDX

Monthly: Ranging but currently in an uptrend.  Price moved above the 82.7 level which was the 61.7% fib re-trace from the most recent low to the previous high. As suspected, there was some hesitation around this level. I am now watching this level, as well as the monthly 200 EMA at the 84 level, as we move into next week.

Weekly:  Trend up. The long upper shadow on last week’s candle shows some price hesitation.

Daily:  Trend Up.  Price rallied for most of May. The bull trend line is still being respected.

4hr: Trend Up. Price is still doing impersonations of the Very Hungry Caterpillar! Price pulled back on Friday to the 61.8% fib level near the 82.7 level though.

Thoughts:  Poor data out of many regions drove ‘risk off’ trading for most of last week and, with little good news on the horizon, may continue to do so again this week. The hope, or whispers, about further stimulus by way of easing (printing money) seems to be the only way that a reversal to ‘risk on’ could evolve. The slight ‘risk on’ sentiment pullback on Friday was probably due to thoughts of this. Gold shot up over $60 on Friday on the hope of QE3. 

I will look to LONG the USD in pairs on valid TS signals if price on the USDX keeps rising and holds above the 82.7 level. I will look for signs of weakness though at the 84 level which is the monthly 200 EMA.

I will look to SHORT the USD in pairs on valid TS signals and if price on the USDX moves back down below the 82.7 level and breaks, closes and holds below the 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 has finally broken down through the 100.5 level and from trading within a large descending triangle pattern.  Price is at new low levels now.

Weekly:  Trend down. The long lower shadow on last week’s candle might point to some potential reversal.

Daily: Trend down. Price is still trading under a few different bear trend lines though. Fridays candle was quite bullish; most likely due to hopes of further currency easing.

4 hr: Trend down.  The bear trend line above current price is also near the weekly and monthly pivot.

Thoughts:  I will look to SHORT the Eur in pairs on new valid TS signals, if the EURX continues to trend down and if price stays below the bear trend line.

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 bear trend line.  I'd prefer for price to clear the weekly and monthly pivot and the 100.5 level too.