Trade Week Analysis for 29/10/12

Last week: Divergence on the Indices Cloud charts emerged quite early last week and, from that point on, I suspected that we would be in for choppy market action. This is exactly what we got; some great trades on the shorter time frame 30 min charts during the London and US sessions BUT choppy, short lived trends on the 4hr charts. This is a pattern that is reproducing itself, time and time again. This predictable pattern is of some comfort to me though as it further supports my TS system and recent Epiphanies. 

There were only a few TS signals on the 4hr charts and none of them yielded much more than 50 pips or so. It appears that one really needs to adjust their trading targets, or to not trade at all, when there a clear signs that the markets are likely to be choppy. This is something I will be mulling over this w/e.

This week: There is divergence on both the EURX and USDX Cloud charts to start the week so I will be cautious with trading off 4hr charts. There is a lot of Ichimoku divergence on the individual currency pair charts too and I would want to see these trading in sync before I’d trade them.

The USDX is sitting on a key psychological and previous S/R level at 80. The major stock indices of the S&P500 and Dow are sitting at the bottom of their respective daily Ichimoku Clouds. The markets could continue to chop around a bit before some catalyst kicks the USD into action, either up or down. NFP Friday may just be that catalyst, if nothing looms before then that is!

BTW: I have updated my Stocks: Oct page.

E/U: I have re-drawn trend lines in here. The monthly bullish inverse H&S pattern is still valid. Price is trading within a bullish descending wedge pattern that is embedded within two symmetrical triangle patterns. The weekly candle was almost a bearish engulfing candle but Friday’s candle looks like a bullish reversal pin bar. Price has bounced off the bottom support bull trend line but is still below the S/R level of 1.3. Price is below the Cloud on the 4hr and just above the Cloud on the daily Ichimoku charts, so, is divergent which spells ‘potentially choppy’. Lots of mixed signals here!

• I will look to SHORT the E/U on a new TS signal, if ‘risk off’ returns and if price breaks, closes and hold below the bull support trend line.
• I will look to LONG the E/U on a new TS signal, if ‘risk on’ returns and if price breaks out and up from the trading channel.

E/J: I have relaxed the bear trend line on the monthly chart that dated back to August 2008! This pair has bounced around this week but is still trading above the bull support trend line. Last week’s candle is a rather bearish pin bar reversal style candle though but price has held above the key 103 level. Price is trading above the Cloud on the daily but within the Cloud on the 4hr, so, is divergent which spells ‘potentially choppy’.  

• I will look to LONG the E/J on a new TS signal, if ‘risk on’ returns and if price closes and holds above the trend line.
• I WON’T SHORT the E/J this week given all the rumours about possible BoJ stimuls.

A/U: Price is trading within two symmetrical triangles, one on the monthly chart and one on the daily chart. Price action is still printing a bull flag pattern on the monthly chart. A word of warning here though: Gold is currently trending down and, if this trend continues, it may pull the Aussie pairs down so, keep an eye on this metal. Price is trading below the Cloud on daily but above on the 4hr chart, so, is divergent which spells ‘potentially choppy’.  

• I will look to SHORT the A/U on a new TS signal, if ‘risk off’ returns and if price breaks down from the smaller triangle pattern.
• I will look to LONG the A/U on any new TS signal, if ‘risk on’ returns and price breaks up, closes and holds above the smaller triangle pattern and monthly pivot.  

A/J: Price is trading just above a bull support trend line on the 4hr chart and just under the significant S/R level of 83. Price is now trading above the Cloud on the daily and 4hr chart which is bullish. Keep an eye on Gold here though too: Gold is currently trending down and, if this trend continues, it may pull the Aussie pairs down. BoJ stimulus will most likely help this pair.

• I WON’T SHORT the A/J this week given rumours of possible BoJ stimulus.
• I will look to LONG the A/J on any new TS signal, if ‘risk on’ returns and if price breaks, closes and holds above the 83 level.

G/U: Price is still trading within a descending broadening wedge pattern which is a bullish pattern.  Last week’s candle was also quite bullish. Price is trading in the top of the Cloud on the daily and just above the Cloud on the 4hr chart so the G/U may continue to be a bit choppy.

• I will look to LONG the G/U on any new TS signal, if ‘risk on’ returns and if price breaks, closes and holds above the wedge pattern. 
• I would look to SHORT the G/U on THE new TS signal, if ‘risk off’ sentiment returns and if price breaks, closes and holds below the weekly pivot, 4hr 200 EMA and key 1.6 level. 

USD/SGD: Price has been choppy on this pair again this week.  Price is trading below the Cloud on the daily chart and just below the Cloud on the 4hr chart which is bearish. 

• I will look to LONG the USD/SGD on a new TS signal, if ‘risk off’ returns and if price closes above the Clouds on the Ichimoku charts.  
• I will look to SHORT the USD/SGD on a new TS signal and if ‘risk on’ returns. 

Swissie USD/CHF: Price broke up and out from a wedge pattern but has chopped around! Price is trading below the Cloud on daily but above the Cloud on the 4hr chart, so, is divergent which spells ‘potentially choppy’.  There was a TS LONG last week that has faded a bit.

• I WON’T LONG the USD/CHF on THE new TS signal. There is too much resistance in its path.
• I MIGHT SHORT the USD/CHF on any new TS signal if ‘risk on’ returns. 

Loonie:  USD/CAD:  Price action has been very choppy on this pair last week as it approaches parity with the USD.  Price is trading above the Cloud on the 4hr and daily charts which is bullish. This pair gave a TS signal late last week that is already up 50 pips.

• I MIGHT look to LONG the USD/CAD on THE new TS signal, if ‘risk off’ returns and if prices breaks, closes and holds above parity. 
• I MIGHT look to SHORT the USD/CAD on any new TS signal and if ‘risk on’ returns.

Kiwi: NZD/USD: I’m not a huge fan of this pair but I’m watching it again anyway. Price broke out and up from trading in a wedge pattern last week but again, like last week, there was little follow through. Price is now trading above the Cloud on the daily and the 4hr chart which is bullish.  

• I MIGHT LONG the Kiwi on a new TS signal and if ‘risk on’ returns.
• I MIGHT SHORT the Kiwi on a new TS signal and if ‘risk off’ returns.

EUR/AUD: I started watching this pair again recently. Price is still trading above the Cloud on the daily but below the Cloud on the 4hr so it may continue to be a bit choppy. I’ll watch this pair more with the next round of AUD interest rate news and if Gold/Commodities continues to fall.

• I probably won’t trade this pair this week. 

Gold/Silver: Both look now to have formed more of a ‘double top’ on their daily charts. Both are trading below bear trend lines on their 4hr charts. Note the Friday indecision style sinning top/Doji on both!