FX Trade Week Analysis for 15/10/12

Last week: 2 trades gave 240 pips in a choppy week: EUR/AUD (140) and G/U (100)

Trend trading was choppy last week and there were only a few TS signals. All of the ‘risk on’ alignment faded very quickly with a rally in the USD. Early in the week there was an A/J short =0 pips, a G/U short =100 pips and an EUR/AUD short =140 pips. I missed the lot! Then, later on there was an A/U long, which closed fairly flat and an E/U long currently up 15 pips after being up 50. So, an ok week except that I missed the moves!

This week: I'm expecting a choppy start to the week, if nothing else, as price vs Cloud position on the daily and 4hr Ichimoku USDX index charts is still divergent. There is a lot of divergence between the daily and 4hr charts with many of the currency pairs as well. Price on the USD only needs to fall slightly though before they become in sync and, then, in favour of 'risk on’ movement. The daily charts also show how price on both the EURX and USDX charts is tracking increasingly closer towards their respective Clouds. Thus, we could also be in for a period of further choppiness before reverting back to any 'risk off' alignment on the Ichimoku charts.

There is a lot happening this week: Lots of Earnings announcements, important Chinese data on Monday (CPI) and Thursday (GDP) and E/U meetings on Thurs/Fri so, check your calendar. Chinese GDP on Thursday will be a hugely significant item. A poor result here could really tip the AUD.

BTW: I have updated two of my Stocks pages on this blog: Aussie Stocks and Stocks: Oct

E/U: Price is trading within a symmetrical triangle on the weekly chart.  The bullish inverse H&S pattern on the monthly chart is still valid here though too. Last week’s candle was an 'inside bar' candle and these represent consolidation or indecision. Like with the EURX, this isn’t surprising given the large bullish candle form the previous week. Last week’s candle also has a slight ‘hanging man’ appearance to it too though. These are bearish signs when they appear at the top of an up move.  Price is currently above the Cloud on daily Ichimoku chart but embedded in the Cloud on the 4hr chart so this pair may be choppy. The 1.3 level is still significant as it is a whole number and psychological level.

• I will look to SHORT the E/U on any new TS signal and if ‘risk off’ returns.
• The E/U gave a TS signal last week and is up about 10 pips after being up around 50 pips.

E/J: Price is still trading just under the bear trend line on the monthly chart that dates back to August 2008!!!!!! As with the E/U, last week’s candle was also an 'inside bar' candle and a ‘hanging man’ candle with the same implications. Price is trading above the Cloud on the daily but within the Cloud on the 4hr here too so may continue to be a bit choppy.

• I will look to LONG the E/J if risk on holds and if price closes and holds above the triangle trend line and the 103 level.
• I won’t short the E/J or any Yen pair.

A/U: Price is still trading within a downward trend channel. These channels are neither bullish nor bearish. Price can still fall another 270 pips whilst still conforming to the symmetrical triangle on the weekly chart. Price is trading below the Cloud on daily chart but in the cloud on the 4hr chart so a reversal may well be in progress here. Price rolled over on Friday though as the price on Gold also had a bit of a fall. The pair will be very sensitive to the Chinese data due out this week, especially GDP on Thursday.

• I WILL SHORT the A/U on a new TS signal and if price breaks down from the trading channel. 
• I will look to LONG the A/U on any new TS signal, if ‘risk on’ returns and price breaks up from the trend channel.  

A/J: Price has broken out and up from a bullish descending wedge pattern on the 4hr chart but has failed to kick on. There is still a possible bearish H&S pattern on the daily chart though too. Price is trading below the Cloud on daily chart but in the cloud on the 4hr chart so a reversal may be in progress here too. This pair will benefit from BOJ Yen intervention so is one to watch for sure.

• I won’t SHORT the A/J unless it closes below 79.5. BOJ potential stimulus makes me wary shorting this pair.
• I will look to LONG the A/J on any new TS signal, if ‘risk on’ returns, if price closes above the monthly pivot and the daily 200 EMA. So, all in all, a close and hold above 82 looks best to me.

G/U: Last week was bearish again and the weekly chart still shows we’ve had a double top for 2012 with price from last April. I’ve currently got price trading within a descending broadening wedge pattern though which is a bullish pattern.  Price is trading above the Cloud on the daily but below the Cloud on the 4hr chart so the G/U may continue to be a bit choppy.

• I would look to LONG the G/U on any new TS signal, if ‘risk on’ returns and if price breaks, closes and holds out of the wedge pattern. I would want to see price on the Ichimoku 4hr chart trading above Cloud first though too. 
• I would look to SHORT the G/U on a new TS signal, if ‘risk off’ sentiment returns and if price breaks, closes and holds below the wedge pattern. 

USD/SGD: We sure got the bear flag break down! This pair had a huge spike on news last week so I'm leaving it for this week.  The SGD is tightly bound to 'Asian' market sentiment and, thus, this pair may trade erratically this week due to Chines GDP.

Swissie USD/CHF: Price is now trading within a symmetrical triangle on the daily charts. Price is trading below the Cloud on daily chart but within the cloud on the 4hr chart so a reversal may be in progress here too. 

• I will look to LONG the USD/CHF on a new TS signal and if ‘risk off’ returns.  
• I will look to SHORT the USD/CHF on any new TS signal and if price breaks below the bull trend line. 

Loonie:  USD/CAD:  Price is trading within a large symmetrical triangle on the weekly chart. Price is trading just below the Cloud on daily chart but within the cloud on the 4hr chart so a reversal may be in progress here as well and so may be choppy. 

• I will look to LONG the USD/CAD on any new TS signal, if ‘risk off’ returns and if price closes above the 4hr 200 EMA. 
• I will look to SHORT the USD/CAD on any new TS signal and if ‘risk off’ returns.

Kiwi: NZD/USD: This chart is quite similar to the A/U. I’m not a huge fan of this pair but I’m watching it again anyway. Price is trading above the Cloud on the daily but below the Cloud on the 4hr chart so is divergent.  I would want to see alignment on the 4hr and daily Cloud chart first though before trading this pair in any direction. Last week’s candle was an indecision style ‘spinning top’ candle.

• I will LONG the Kiwi on a new TS signal if ‘risk on’ continues and if price breaks up and closes above the weekly pivot.
• I will SHORT the Kiwi on a new TS signal and if ‘risk off’ returns.

EUR/AUD: I started watching this pair again recently. This pair gave up to 140 pips on a TS short signal last week. Price is trading above the Cloud on the daily but within the Cloud on the 4hr so it may be a bit choppy. There was a TS LONG signal on Friday, but I’d wait for a close above the weekly pivot if I traded this pair. I'd also watch out for Chinese GDP with this pair.

Silver: Price has broken out and up from the weekly symmetrical triangle pattern and is still looking quite bullish. This metal still looks like it has paused, bull flag style, while it waits to gather more steam for the next leg upwards. There is also a possible bearish ‘double top’ on this metal though too! A close below the 4hr 200 EMA and the $33 level might be quite bearish for Silver and last week’s candle was a bearish engulfing candle. (see Gold notes)

Gold: Price has broken out and up from the weekly symmetrical triangle pattern and is looking rather bullish and trading in a range, bull flag like. There is also a possible bearish ‘double top’ on this metal though here too! A close below the 4hr 200 EMA and the $1740 level might be quite bearish for Gold. Price fell late last week and, thus, last week’s candle was also a bearish engulfing candle. This seems to be due to the positive US data out on Thurs/Fri and thoughts that maybe 'QE Eternity' may not be needed and might be rolled back.