Trade Week Analysis for 08/10/12

500 pips last week from just 2 TradeSpotting signals!

Last week: Trend trading continued to be a bit choppy early in the week but some trends emerged towards the end of the week. The EUR/AUD and E/J gave 500 pips on their own, sadly, without me on board! 

This week: The daily and 4hr Ichimoku Indices charts are trading in alignment now. Thus, there may be some further ‘risk on’ trading in store if the current trend persists.

Items to note:

• Monday is a public holiday in the US, Canada and Japan. 
• Angela Merkel is making her first trip to Greece this week so there may be some further Euro rumblings from this. 
• Earnings seasons starts. This may trigger some market movement as the forecast is for some poor results: S&P 500 earnings for the third quarter are forecast to have fallen 2.4 percent from the year-ago period, which would be the first decline in three years, according to Thomson Reuters data.
• I’ll be watching the stock markets closely as there is a potential double top on the S&P500. A stock market reversal, or even just a short term pullback, would most likely result in a USD rally with obvious flow on effects for currency pairs. 

E/U: Price has broken out and up from the bullish descending wedge pattern. The bullish inverse H&S pattern from the monthly chart is also still valid. Last week’s candle was a bullish engulfing candle. Price is above the Cloud on both the 4hr and daily Ichimoku charts. The 1.3 level is a significant one as it is a whole number plus psychological level as well as the 61.8% retrace from the last swing high. 

• I will look to SHORT the E/U on any new TS signal, if ‘risk off’ returns and price breaks down below the 1.3 level.
• I am currently LONG on the E/U with my stop at b/e.  The E/U gave a TS signal last week and is up about 50 pips.

E/J: This pair gave one of the better trades last week after I said I’d leave it! The TS signal is now up 220 pips! Price is now very close to the bear trend line on the monthly chart that dates back to August 2008!!!!!! Last week’s candle was also a bullish engulfing candle.

• 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. I'd look for other 'risk off' signals.

A/U: I've adjusted the trend lines again here and it looks to be in a downward trend channel.  These channels are neither bullish nor bearish though. Price can still fall another 250 pips with this pair whilst still conforming to the symmetrical triangle on the weekly chart. This pair will benefit from any Chinese stimulus news.

• I will look to 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 and if ‘risk on’ returns.  

A/J: I’ve adjusted the trend lines a bit here too but it still looks to be forming a bullish descending wedge pattern on the 4hr chart but a bearish H&S pattern on the daily chart. Price is trading below the Cloud on the 4hr and daily charts though which is bearish. This pair will benefit from any Chinese stimulus news and, also, from any 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 breaks up and out from the trading channel and if price closes above the weekly & monthly pivot and the daily and weekly 200 EMA. So, all in all, a close and hold above 82 still looks best to me.

G/U: This pair was choppy last week, as expected by moi I might add, as price was above the Cloud on the daily Ichimoku chart but below on the 4hr chart. The weekly chart still shows we’ve had a double top for 2012 with price from last April. Last week’s candle was an indecision spinning top/Doji, again!  So, there are certainly mixed signals making this pair quite difficult to read. I’ve currently got price trading within a downward trend channel. Interestingly, the G/U fell last night on the upbeat US jobs data whilst the E/U rose. This correlation divergence is noteworthy! Last week’s TS signal faded and I had warned against this signal due to divergence on the daily and 4hr Ichimoku chart.

• 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 trend channel. I would want to see price on the Ichimoku 4hr chart trading above the Cloud first though. 
• 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 trend channel and 4hr 200 EMA. 

USD/SGD: I’ve adjusted the trend lines a bit here too but it also still looks to be forming a bearish ascending wedge pattern. This pair will be impacted by any Chinese stimulus news and BOJ Yen intervention. Last week’s candle was an indecision style Doji. Price is trading within the Cloud on the 4hr chart and below on the daily chart so, it is divergent. I would want to see alignment on the 4hr and daily Cloud chart first though before trading this pair in any direction.

• I will look to LONG the USD/SGD on a new TS signal and if ‘risk off’ returns.  
• I will look to SHORT the USD/SGD on any new TS signal, if ‘risk on’ returns and if price breaks down from the wedge pattern.  

Swissie USD/CHF: Price has broken down from the bearish broadening ascending wedge pattern.  Last week’s candle was a bearish engulfing candle. Price is trading below the Cloud on both the 4hr and daily Ichimoku charts.

• 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. The Swissie gave a TS short signal last week and is up about 30 pips.

Loonie:  USD/CAD:  Price has broken down from trading within a bearish broadening ascending wedge pattern on the 4hr chart. Price is below the Cloud on the daily and 4hr Ichimoku charts, albeit just. 

• I will look to LONG the USD/CAD on any new TS signal and if ‘risk off’ returns. 
• The USD/CAD gave a TS short signal last week and this was up about 70 pips but closed up about 25 pips.

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 as it is trading up near a significant bear trend line from the monthly chart. Price is trading above the Cloud on the daily Ichimoku chart but below the Cloud on the 4hr chart so, it's divergent.  I would want to see alignment on the 4hr and daily Cloud chart first though before trading this pair in any direction.

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

EUR/AUD: I started watching this pair again recently. I posted about this pair during the week; just before the run up and subsequent triangle breakout. Price is now up over 300 pips since the triangle breakout and TS signal. I won’t chase this trade now though. Price is trading above the Cloud on the daily and 4hr charts.

Silver: Price has broken out and up from the weekly symmetrical triangle pattern and is still looking quite bullish. Price is up 500 pips since the TS signal although it hasn’t moved much for 3 weeks.  This metal looks like it has paused, bull flag style, while it waits to gather more steam for the next leg upwards. The last 3 weekly candles have been indecision Doji candles.

Gold: Price has broken out and up from the weekly symmetrical triangle pattern and is looking quite bullish. Price is up 1200 pips since the TS signal although it hasn’t moved much for a few weeks! This metal also looks to be forming a bull flag! The last 3 weekly candles have been indecision Doji candles.