Last week: Last week the markets seem to have been held captive to ‘Fiscal Cliff’ news. The indices closed not too far from where they opened. Stocks closed the month above key support levels though: Dow above 13,000, the S&P500 above 1,400 and the NASDAQ above 3,000. The NASDAQ had the first positive November since 2009 and these milestone targets are not to be taken lightly. The VIX is still low at 16 and well below the 20 ‘watermark’ level. The S&P500 is still setting up for another possible bull trend following the channel breakout:
It was yet another rather choppy week on FX though with only a few TS signals and they all faded very quickly. There were only short lived signals on the E/U, E/J, A/J and NZD/USD and none of them were at all convincing. November has closed as another very positive month for my TS system. I only had a few trades but ended up positive. I'm ok with that given it was a very disruptive month for me here with lots of travel and family issues.
This week: The charts still seem to be pointing towards ‘risk on’ momentum even though there is a back drop of grave concern about the ‘Fiscal Cliff’ as well as the global economy. ‘Risk on’ technical patterns have held up, to date at least, on the USDX and EURX but fundamental news, by way of Euro zone debt issues and 'Fiscal Cliff' discussions, might determine whether these patterns continue throughout the week. There were significant swings across currencies and stocks in the wake of some 'Fiscal Cliff' news announcements last week and these events random may continue. Let's hope that Congressional leaders display a little more restraint, responsibility, leadership and diplomacy this week!
I am reading that many traders are noting they will trade 'risk off' and short the E/U from its current 1.30 level. Others are going LONG on the Swissie. I understand their logic and also their confusion about why the Euro could possibly be rallying, and continue to rally, BUT I am going to trade what I see! Most of my charts are pointing towards 'risk on' but if there is a reversal to 'risk off', and I receive TS signals to that effect, then I will trade with that momentum. I mentioned recently that the current market choppiness reminds me of a train journey. The bumpy ride we've had in the markets of late is similar to the bumpy ride one gets whilst the train is switching tracks as it seeks out its new direction. I still consider that we are in a transitional, track switching, phase and I don't know what the new direction will be. What ever it is though, 'risk on' or 'risk off', I'll trade it once the signals come through.
Some other key reminders for this week: It is the first day of the trading month this Monday. These are frequently bullish days for ‘risk on’. There is AUD interest rate news on Tuesday (others throughout the week too) and NFP data on Friday.
I am reading that many traders are noting they will trade 'risk off' and short the E/U from its current 1.30 level. Others are going LONG on the Swissie. I understand their logic and also their confusion about why the Euro could possibly be rallying, and continue to rally, BUT I am going to trade what I see! Most of my charts are pointing towards 'risk on' but if there is a reversal to 'risk off', and I receive TS signals to that effect, then I will trade with that momentum. I mentioned recently that the current market choppiness reminds me of a train journey. The bumpy ride we've had in the markets of late is similar to the bumpy ride one gets whilst the train is switching tracks as it seeks out its new direction. I still consider that we are in a transitional, track switching, phase and I don't know what the new direction will be. What ever it is though, 'risk on' or 'risk off', I'll trade it once the signals come through.
Some other key reminders for this week: It is the first day of the trading month this Monday. These are frequently bullish days for ‘risk on’. There is AUD interest rate news on Tuesday (others throughout the week too) and NFP data on Friday.
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 too! Price is struggling to break up and over the 1.30 level though. The 1.3 level is a key psychological level for the E/U. It also represents the 78.6% fib re-trace level from the last swing high back in October. It is also the region of a bear trend line that has been in play since May last year. Price is above the Cloud on the 4hr and almost up and out of the Cloud on the daily Ichimoku charts. The monthly pivot is just below current price but this position may change when the charts open and re-set to December. This pivot will act as some support to current price.
- I will look to SHORT the E/U on any new TS signal and if ‘risk off’ returns.
- I will look to LONG the E/U on any new TS signal, if ‘risk on’ returns and the triangle trend line and 1.3 level breaks and holds.
E/J: Price has finally broken out and up from the bear trend line of the monthly chart that dates back to mid 2008! Yen easing continues to help this pair. It is struggling at the psychological 107 level. Price is trading above the Cloud on the daily and the 4hr chart which is bullish.
- I will look to LONG the E/J on any new TS signal and if ‘risk on’ returns.
- I STILL WON’T SHORT the E/J this week given the BoJ stimulus.
A/U: This pair has diverged from its other ‘risk on’ friends last week. Maybe everyone is mindful of the possible rate cut this week and factored that in to this pair. Price is trading above the Cloud on daily and just above the Cloud on the 4hr chart which is still viewed as 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 any new TS signal.
A/J: Price was choppy last week after 2 very bullish weeks. This pair has also been helped by talk of further easing. Price is trading above the Cloud on the daily and just above on the 4hr chart which is still bullish. Price is struggling at the 86 level though.
- I WON’T SHORT the A/J this week given the continuing BoJ stimulus.
- I will look to LONG the A/J on any new TS signal.
G/U: I’ve now got price trading within a symmetrical triangle on the daily chart for this pair. Price is still 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 last week. It is getting down closer to the weekly bull support trend line though that has been in play since mid last year! 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!
- I will look to LONG the USD/SGD on a new TS signal and if ‘risk off’ returns.
- I will SHORT the USD/SGD on any new TS signal and if prices closes and hold below the bottom trend line.
Swissie USD/CHF: Price is trading near the bottom of a symmetrical triangle. Price is still 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 any new TS signal and if ‘risk off’ returns.
- I will look to SHORT the USD/CHF on any new TS signal and if prices closes and holds below the bottom triangle trend line.
Loonie: USD/CAD: Price is trading within two symmetrical triangles and has been trending up for the last 3 months. Price is trading above the Cloud on the daily chart but below the Cloud on the 4hr chart so might continue to 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 any new TS signal and trend line break.
Kiwi: NZD/USD: I’m not a huge fan of this pair but I’m watching it again anyway. It’s still very choppy at the moment though. Price is trading just under the bear trend line of a symmetrical triangle on the weekly chart. There is also an extra bull support trend line on the daily chart. It is trading just above the Cloud on both the daily and 4hr chart which is still viewed as bullish.
EUR/AUD: I started watching this pair again recently. Price is trading below the Cloud on the daily and above on the 4hr which means this pair might be choppy this week. This pair gave a TS ‘LONG’ signal late last week. AUD interest rate news might help this signal continue this week.
- I will look to SHORT the EUR/AUD on any new TS signal.
- I will look to LONG the EUR/AUD on the new TS signal if price holds above the daily 200 EMA. I would wait until after AUD interest rate news on Tuesday though.
Gold/Silver: The bullish ‘Cup and Handle’ patterns on the weekly charts are still valid for the time being. 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.
Silver weekly:
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