FX Indices Analysis for 10/09/12

USDX

Monthly: turning down. The August bearish engulfing candle did, indeed, accurately forecast lower prices on this index.

Weekly:  Trend up but turning. The last three weekly candles have been bearish. The bull weekly trend line is now clearly broken. The weekly 200 EMA is just below price though @ 79.77. This might slow, or pause, any continued down move.

Daily:  Down.  Price has plunged below the weekly bull trend line and daily 200 EMA. Tom Petty’s ‘Free Fallin’ comes to mind here!  http://www.youtube.com/watch?v=5gqT6En2O78. For the Daily Ichimoku Cloud chart: Price is still trading below the ‘cloud’.

4hr: Down. There ain’t much more to it than that!

EURX

Monthly:  Trend turning back up. It seems like price has bottomed and now turned.

Weekly:  Trend turning. It seems like the ‘bottoming’ pattern has trumped the ‘bear flag’ pattern. Price is moving up to a bear trend line that has been in play since May last year. This level will need monitoring...lucky for me that I LOVE doing just that!

Daily: Trend up. Price action has been bullish since late July and is supported by a bull trend line. The weekly bear trend line is sitting near the daily 200 EMA about 120 pips above current price. This resistance will no doubt impact price action. It will cause price to at least stall temporarily for sure and might even bring about a reversal. This level will need watching. For the Daily Ichimoku Cloud chart: Price finally closed completely out of the cloud this week and hence we got some good trades in! 

4 hr: Trend up. Price has moved up and is trading above the bull supporting daily trend line, the weekly and monthly pivot and 4hr 200 EMA. If Tom Petty is singing for the USD then Yazz is doing a number for the Euro.... http://www.youtube.com/watch?v=0Lwlr5ZAoQ4

Thoughts:  Price closed completely out of the Ichimoku clouds on both the EURX and USDX daily charts and did indeed create a clear path for ‘risk on’ trading this week! The USD has a lot of resistance in its path if it is to reverse back to ‘risk off’. This resistance includes the weekly and monthly pivot, 4hr 200 EMA, the recently broken weekly bull trend line and the 81.70 S/R level. 

There is still more room to move with this current ‘risk on’ rally. I do see some resistance in the path for further ‘risk on’ though: the 200 EMA on the USDX weekly chart and the bear trend line and daily 200 EMA on the EURX chart. This is all just technical analysis though and has the potential to be subsumed by news etc. 

I will look for 'risk on' trades if:

• the USDX remains bearish and holds below the daily Ichimoku USDX Cloud AND IF
• the EURX remains bullish and holds above the daily Ichimoku EURX Cloud. 

I will look for 'risk off' trades if:

• the USDX returns to being AND if
• the EURX returns to being bearish.

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.