Trade Spotting: Trade Week Analysis for 26/11/12

1285 Pips from me this week!

A choppy week but still 735 TS 4hr pips! PLUS an extra 550 pips on the A/J, Gold and Silver!

Last week: It was another rather choppy week but, yet again, there were some good TS signals around. The E/J, from the week before, has now given up to 460 pips. The E/U signal from late in the week gave 135 pips and the Swissie gave up to 110. The ‘Cup and Handle’ patterns on the metals gave pips too. 110 pips for Silver and 220 pips from Gold. The A/U gave a signal on Friday that is now up 65 pips and the G/U signal and breakout from earlier in the week ended up giving up to 140 pips. The A/J trade, albeit not a new TS signal, but one I stressed to watch for from the 84 level has given up to 220 pips. The TS signal tally for this choppy week has ended up at 735 pips and that is without including the A/J, Silver and Gold. Including these moves would make the tally 1285 pips! I had a frustrating start to the week getting stuck in a sideways G/U trade. I had opted for this pair over the A/J based on the first 4hr candle of the week. A 120 pip haul on the E/U later in the week eased this pain somewhat though!

This is a phenomenal performance for my TradeSpotting System. All of these signals were posted in advance, on my blog, with the exception of the latest A/U signal as I was absent on Friday. My TS system is not 100% perfect BUT no system is. My TS system is, though, very consistent and has a very healthy win/loss ratio and that is all you need. A few people have mocked me over recent weeks for my belief in technical analysis. I feel somewhat validated though with my consistent haul of pips, month in and month out, and, often huge amounts of pips like last week. I don't know if they will read this blog but, if they do, I'd like to remind them that, as the saying goes, 'the proof is in the pudding' and...I just keep baking!!!!!

This week: Most currency charts seems to be pointing towards ‘risk on’ momentum even though there is a back drop of grave concern about the global economy. ‘Risk on’ technical patterns have formed up on the USDX and EURX but fundamental news, by way of Euro zone meetings and Fiscal Cliff discussions, might determine whether these patterns continue throughout the week.

The stock markets have also rallied into 'risk on'. Some traders are noting this as a short reversal as part of a broader bear market move. The S&P500 has just closed up and out from a trading channel and, also, has closed above the key $1400 S/R level though:

Condensing this S&P500 to a weekly chart shows how a similar pattern last April/June, and subsequent breakout, led to a substantial rally.

Another view of the weekly chart of the S&P500 shows how price has bounced off the weekly bull support trend line. I had stated that I would not be too concerned about the recent pull back unless this trend line was broken. It is still holding so far:

A similar weekly bull support trend line is in play for the Dow:

I'm not saying, or predicting, that this trend channel pattern and breakout, noted above, will definitely happen again this time. Price may revert back to bouncing back down within this trend channel. I do note though that this recent bullish momentum seen on stocks is also supported by similar signals across the currencies and precious metals. This analysis is all detailed below. Poor global fundamentals may undermine these bullish moves yet though so caution will be needed. The $1400 level on the S&P500 will be a key level to watch for a reversal as will the USD and Euro dollar indices.

E/U: The monthly bullish inverse H&S pattern is still valid. Price also seems to be forming a bullish inverse H&S pattern on the weekly chart! Price broke out early in the week from trading in a trend channel on the 4hr chart that is set within a larger trend channel on the daily chart. Two TS ‘LONG’ signals were given this week and the latest signal has given up to 135 pips. Price is above the Cloud on the 4hr and almost up and out of the Cloud on the daily Ichimoku charts.

I will look to SHORT the E/U on any new TS signal and if ‘risk off’ returns.
I AM LONG on the current E/U TS signal.

E/J: Price has finally broken out and up from the bear trend line of the monthly chart that dates back to mid 2008! Price is trading above the Cloud on the daily and the 4hr chart which is bullish.

The TS ‘LONG’ signal from last week is still going and currently up 460 pips.
I STILL WON’T SHORT the E/J this week given all the persistent rumours about possible BoJ stimulus.

A/U: This pair gave a TS ‘LONG’ signal on Friday that has given up to 65 pips. Price action is still printing a bull flag pattern on the monthly chart. Price is now trading above the Cloud on daily and above the Cloud on the 4hr chart which is quite bullish.

I will look to SHORT the A/U on any new TS signal and if ‘risk off’ returns.
I will look to LONG the A/U on the new TS signal.

A/J: Price has been bullish most of the week and this pair was also helped by the talk of further Yen easing. Price is trading above the Cloud on the daily and on the 4hr chart which is bullish. This pair gave a TS signal the week before that is still going. It continued to move above the key 84 level this week and has given up to 220 pips since then. It is getting very close now to the bear trend line of the symmetrical triangle that dates back to September 2007!

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.

G/U: Price broke out and up early in the week from trading within a bullish descending broadening wedge pattern on the 4hr chart. It has yet to break out and up from the bullish descending wedge on the daily chart though. This pair gave a TS ‘LONG’ signal on the 4hr chart but was very slow to get going. It did yield up to 140 pips though. Price is trading just below the Cloud on the daily but above on the 4hr chart.

I will look to LONG the G/U on any new TS signal.
I will look to the SHORT the G/U on any new TS signal.

USD/SGD: Price has continued to be fairly choppy on this pair again this week. This pair gave a new TS signal to ‘SHORT’ on Friday. Price is still trading below the Cloud on the daily chart and above the Cloud on the 4hr chart so, is divergent which spells ‘potentially choppy’. This is exactly what we've had! Note on the daily chart how price has been trading just above the bottom trend line of the symmetrical triangle!

I will look to LONG the USD/SGD on a new TS signal and if ‘risk off’ returns.
I won’t SHORT the USD/SGD on the new TS signal.

Swissie USD/CHF: Price broke out and down from trading within a triangle pattern this week and gave two TS signals to SHORT. The current signal has given up to 110 pips. Price is trading just below the Cloud on daily and below on the 4hr chart which is bearish.

I will look to LONG the USD/CHF on a new TS signal and if ‘risk off’ returns.
I WON’T look to SHORT the USD/CHF on the new TS signal.

Loonie: USD/CAD: Price has broken down below the support trend on the weekly chart. It stalled at the monthly pivot though. There was a large 4hr candle that has triggered a new TS signal too but I don’t like these signals after such large candles. Price is trading above the Cloud on the daily chart but below the Cloud on the 4hr chart so might be a bit choppy next week.

I MIGHT look to LONG the USD/CAD on a new TS signal, if ‘risk off’ remains and if prices holds above parity.
I MIGHT look to SHORT the USD/CAD on the new TS signal.

Kiwi: NZD/USD: I’m not a huge fan of this pair but I’m watching it too anyway. It’s still very choppy at the moment though. Price broke out and up from a bear trend line this week and gave 2 TS LONG signals. The current signal from Friday is up 60 pips. It is trading above the Cloud on both the daily and 4hr chart which is bullish. Price is getting close to the upper trend line of a symmetrical triangle pattern that dates back to July 2011.

I MIGHT look to SHORT the NZD/USD on any new TS signal.
I MIGHT look to LONG the NZD/USD on any new TS signal.

EUR/AUD: I started watching this pair again recently. Price is trading in the Cloud on the daily and on the 4hr which means this pair might be choppy this week. This pair isn’t doing too much at the moment as both the Euro and AUD are trading ‘risk on’.

I will look to SHORT the EUR/AUD on any new TS signal.
I will look to LONG the EUR/AUD on any new TS signal.

Gold/Silver: Both Gold and Silver seem to have started to break out from weekly chart bullish ‘Cup and Handle’ patterns that I had noted last week. The theory is that the breakout target is equivalent to the depth of the cup. The handle patterns can be seen on the daily charts and this is the area where you can see the bullish breakout. These charts were posted last week before the breakout of the 'handle' pattern. Silver has since broken out and moved on for 110 pips and Gold has moved on for 220 pips. BTW: a few people have scoffed at me for these patterns. Let's see who is laughing now though!