USDX
Monthly: Ranging but currently down. September was a bearish candle.
Weekly: Trend up overall. We had two bullish weeks after 5 consecutive bearish weeks.
Daily: Down, overall, but has turned up recently. Price still, at this stage, looks to be forming either a ‘bear flag’ or starting a new uptrend. I need a clear break out, either way, to confirm which move it will be. The trend line break from last Friday did not hold. I have now moved the bottom trend line to reflect this new level of S/R. For the Daily Ichimoku Cloud chart: Price is still trading well below the ‘Cloud’ but has crossed up over the Tenkan –sen line, that is, crossed up over one of the EMA like lines.
4hr: Trend up. Is this a ‘Bear Flag’ or the beginning of an uptrend though? Price did close for the week above the weekly 200 EMA and this may be viewed as a rather bullish sign. Thus, I will be guided by clear trend line breaks on the flag pattern. I want to see these trend breaks hold though. The weekly pivot is just below the bottom trend line and I'd like to see this broken too to be more confident of any 'risk on' move. There is also a possible double top in play at the moment too, just to add to the confusion! So, I’d like to see a close above the 80 level to confirm that the current uptrend still has momentum. For the 4hr Ichimoku Cloud chart: Price has held above the Cloud on the 4hr chart this week. This is at odds with price position on the Daily Ichimoku chart and this divergence might be the cause of this choppiness.
EURX
Monthly: Trend down but turning back up. August and September candles were bullish. September was almost a hammer style candle though which could spell ‘reversal’.
Weekly: Trend down but turning back up. Price still closed below the weekly bear trend line that has been in play since May last year. We’ve had 2 bearish weeks after 5 bullish weeks.
Daily: Trend up overall but down for last 2 weeks. Price still looks to be forming a bullish pattern but this is more like a bullish descending wedge pattern now. There were a few indecision style candles during the week, evident by their long shadows. For the Daily Ichimoku Cloud chart: Price has been out of the Ichimoku daily cloud now for 3 weeks but has crossed back below both the Tenkan and Kijun –sen lines.
4 hr: Trend down for last 2 weeks. Price still looks to be trading within a bullish looking descending wedge pattern but is still under the previous broken trend line from the weekly chart and the daily 200 EMA. For the 4hr Ichimoku Cloud chart: Price has held below the Cloud on the 4hr chart this week. This is at odds with the position of price on the Daily Ichimoku chart and seems to be causing some choppiness.
Thoughts: I still have price trading within trend channels on both the EURX and USDX. These are ‘risk on’ type signals as they appear at the moment. The EURX still looks to be in a bullish wedge pattern and the USDX in a bearish wedge pattern. The trend line break on the USDX last week did not hold though. My trading this week will still be guided by trend line breaks that hold. Bad news can easily undo all of these technical patterns though and this seems to be what happened late last week. The markets are very jittery at the moment and I had both ‘risk on’ and ‘risk off’ signals last week. Whilst the current trading patterns appear to point more towards ‘risk on’ I will trade either way but only when there is a clear direction. I am also keenly aware of the ‘position’ divergence for both indices for their daily and 4hr Cloud charts. I will be watching very closely to see if the markets continue to be choppy in tandem with this divergence.
I will look for 'risk on' trades if:
- the USDX breaks down from the bear flag/wedge pattern and weekly pivot AND IF
- the EURX breaks up from the bullish wedge pattern .
I will look for 'risk off' trades if:
- the USDX returns to being bullish and closes & holds above 80 level AND if
- the EURX returns to being bearish and closes & holds out below the bull flag pattern.
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.
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