FX Indices Analysis for 20/08/12

NB: Much of this technical analysis is similar as to last week.
NB: I'm cautious whilst price is stuck in the Ichimoku cloud on the USDX daily chart! I have a new page on this blog site where you can read about how I use the Ichimoku chart. See the tab @ 'TS + Ichimoku'

USDX

Monthly: Ranging but currently in uptrend.  Price is still stuck under the monthly 200 EMA @ 84.16. Current new candle is still an indecision ‘spinning top’ candle.

Weekly:  Trend up. A supporting bull trend line is in place. Last week’s candle was an indecision spinning top candle.

Daily:  Trend up overall but ranging for last few weeks.  On the Daily Ichimoku Cloud chart: Price action is still hampered by being embedded within the ‘cloud’.

4hr: Ranging. Price is stuck just under a previously strong S/R level. Price is sitting just under the monthly pivot; the 4hr 200 EMA and the 82.65 level which is the 61.8% fib retrace level from the last major swing high from June 2010. The ADX and DMI are ALL below 20 showing no overall trend and no momentum.

EURX

Monthly:  Trend down. The current new monthly candle is still an indecision ‘spinning top’ candle.

Weekly:  Trend down. Price action could either be simply consolidating after a major low and about to turn back up OR forming a bear flag! Most confusing!

Daily: Trend overall is down. Price is trading within a symmetrical triangle but getting closer to the apex. On the Daily Ichimoku Cloud chart:  There is a ‘Cloud’ in the way of upward, ‘risk on’, price movement and price is currently stuck within the EMAs.

4 hr: Trend ranging. Price is trading within a symmetrical triangle and is stuck under the 98 psychological level, monthly pivot and 4hr 200 EMA.

Thoughts:  As with the previous week, stock markets have traded ‘risk on’ for most of the week but the same positive sentiment has not filtered through to the currencies. A lot of this optimism seems to hinge on the hope of an announcement out of the Jackson Hole Fed meeting later this month about further QE3 stimulus. Thus, these choppy markets might be with us until then! The Ichimoku chart on the daily USDX suggests that this choppiness might be a possibility for much of August with price embedded in the resistance of the cloud. This same phenomenon occurred last April too with price embedded in the cloud charts and there was choppy trading for the whole of April! Further ‘risk on’ sentiment will mean that price will have to fight its way through the clouds on both the USDX and EURX. This may well happen but, if it does, then I suspect that price action on the currencies will continue to be very choppy.

I will look for 'risk on' trades if:

• the USDX holds below the 82.65 area. This is the area of the 4hr 200 EMA, a major previous S/R level, the weekly and monthly pivot and the 61.8 % fib retrace from the last major swing high AND if it can penetrate down through the daily Ichimoku USDX Cloud AND IF
•  the EURX returns to being bullish and breaks up and out of the symmetrical triangle and 98 level.

I will look for 'risk off' trades if:

• the USDX returns to being bullish and breaks, holds and closes above the 82.65 & monthly pivot area AND if
• the EURX remains bearish and breaks out and down from the symmetrical triangle.

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.