Last week: The markets traded ‘risk on for most of the week until the USDX hit the huge support level of the weekly bull trend line and the weekly 200 EMA and stalled there a bit. This significant support level was broken on Friday though. There were a few 4hr chart TS signals early in the week though and these combined to deliver over 1020 pips! E/U gave up to 200 pips, the E/J 280, the A/U 50, the A/J 170, the G/U 70, EUR/AUD 50 and the NZD/USD continued on from its 100 pips last week to now tally up to 240 pips. I have been noting for weeks about the potential for Yen easing. I can't believe then that I chose to LONG the E/U signal over the E/J signal. Both were winning signals but the Yen just gave so much more. Ditto for why I chose the A/U over the A/J!
This week: The Japan election result will need to be watched and any open Yen trades will need to be closely managed. The Conservative, Abe led, party is thought to be the potential winner and Abe is well know for his views on further Yen easing. Yen pairs have had a great run and this may continue. The big question amongst traders seems to be whether we will get any pullbacks or not. Further Yen monetary news is scheduled for Thursday.
The Fiscal Cliff will also probably continue to dominate investor sentiment this week. This continues to make technical trading quite challenging. Chart patterns across the broader markets seem more geared to further ‘risk on’ momentum than to ‘risk off’ though, even with all of this concern over the 'Cliff' and Europe's woes. This bias towards 'risk on' can be seen across the USD and Euro Indices, individual currency pairs, metals and, to a certain extent, across stocks. The Dow and S&P500 are both embedded in their daily Clouds but look poised for continued upward momentum:
The Fiscal Cliff will also probably continue to dominate investor sentiment this week. This continues to make technical trading quite challenging. Chart patterns across the broader markets seem more geared to further ‘risk on’ momentum than to ‘risk off’ though, even with all of this concern over the 'Cliff' and Europe's woes. This bias towards 'risk on' can be seen across the USD and Euro Indices, individual currency pairs, metals and, to a certain extent, across stocks. The Dow and S&P500 are both embedded in their daily Clouds but look poised for continued upward momentum:
The weekly S&P500 still supports the potential of a Christmas Rally:
NB: The EURX and USDX Ichimoku charts are now also aligned for 'risk on' momentum across the 4hr and daily time frames. This is a significant and rather rare trading phenomenon. Previous periods such as this have resulted in very reliable and profitable periods of trend trading. I will be looking to see if, firstly, this phenomenon persists and, secondly, whether this contributes to good trend trading again because, as the song goes, 'something tells me I'm on to something good'! http://www.youtube.com/watch?v=zxDh2sYQRpo
BTW: I have updated my Stocks: Dec page.
BTW: I have updated my Stocks: Dec page.
E/U: The monthly bullish inverse H&S pattern is still valid. Price has also formed a bullish inverse H&S pattern on the weekly chart! This pair gave a TS signal to go long last week and this signal delivered up to 200 pips. This signal is still going. Price is now above the Cloud on the 4hr and the daily Ichimoku charts which is bullish. I would not be surprised to see this pair pull back to the broken trend line though before any further move upwards. Price is currently outside the Bollinger bands adding weight to that point. The next major resistance level though seems to be the weekly 200 EMA, some 200 pips away from current price.
- I will look to SHORT the E/U on a new TS signal and if ‘risk off’ returns.
- I am LONG the E/U on the current TS signal.
E/J: Price has continued to hold out and up from the broken bear trend line of the monthly chart that dated back to mid 2008! Yen easing continues to help this pair. This pair gave a TS signal to LONG last week and delivered up to 280 pips. This signal is still going. Price is trading above the Cloud on the daily and on the 4hr chart which is bullish. Japan election results being held over the w/e may impact this pair next week.
- I will look to LONG the E/J on any new TS signal and if ‘risk on’ remains.
- I STILL WON’T SHORT the E/J this week given the ongoing stimulus.
A/U: Price has continued to hold up above the broken upper trend line of the smaller triangle pattern. This pair gave a TS signal to LONG last week and this delivered up to 50 pips before stalling at the next major bear trend line. Price is still trading above the Cloud on daily and on the 4hr chart which is still viewed as bullish. Price is also hovering just under a significant bear trend line dating back to mid last year. There are a lot of folk down here in Aussie land who want a lower AUD but the tide seems to be against them. I'm on the lookout for a new TS signal along with a trend line break out.
- I will look to SHORT the A/U on any new TS signal and if ‘risk off’ returns.
- I am still LONG the A/U on the previous TS signal.
A/J: This pair broke up and out over a bear trend line this week that has been in force since mid 2007! The move produced a new TS signal to LONG and this delivered up to 170 pips and is still going. Price is trading above the Cloud on the daily and on the 4hr chart which is still bullish. Japan election results being held over the w/e may impact this pair next week as well. I would not be surprised to see price re-test this major broken trend line at around the 87 level though before any continuation move. I will look out for such a pullback move and put an order in to LONG @ 87.
- I WON’T SHORT the A/J this week given rumours of further BoJ stimulus.
- I will look to LONG the A/J on any new TS signal.
G/U: Price has continued to bounce along in an upwards direction. This pair gave a TS signal to LONG last week that delivered up to 70 pips. Price is now trading above the Cloud on the daily and on the 4hr chart which is bullish. This pair has been messy lately. I'll keep an eye out for a new TS signal here though.
- I MIGHT look to LONG the G/U on any new TS signal.
- I MIGHT 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. I am not looking to trade this pair this week but will just keep an eye on it for any new trend.
Swissie USD/CHF: This pair broke down from trading within a symmetrical triangle last week and gave a new TS signal to SHORT. This signal has now delivered up to 80 pips. Price is still trading below the Cloud on daily and 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 MIGHT look to SHORT the USD/CHF on THE new TS signal.
Loonie: USD/CAD: Price broke down in choppy trade from trading within the smaller of the two symmetrical triangles three weeks ago. This choppy action didn’t produce a clean TS SHORT signal but it has moved down about 100 pips since the breakout. Price is trading back at the bottom edge of the Cloud on the daily chart but below the Cloud on the 4hr chart so is starting to look bearish.
- I MIGHT look to LONG the USD/CAD on a new TS signal and if ‘risk off’ returns
- I MIGHT look to SHORT the USD/CAD on any new TS signal and if the trend line break holds.
Kiwi: NZD/USD: I’m not a huge fan of this pair but I’m watching it too anyway. Price broke out and up three weeks ago from trading within a symmetrical triangle on the weekly chart. This TS signal has now given up to 240 pips but has now just closed. It is trading above the Cloud on both the daily and 4hr chart which is still viewed as bullish. Price is outside the Bollinger band on the weekly chart so it might re-trace a bit before any further up movement.
- I MIGHT look to LONG the Kiwi on any new TS signal and if ‘risk on’ continues.
- I MIGHT look to the SHORT the Kiwi on any new TS signal and if ‘risk off’ returns.
EUR/AUD: I started watching this pair again recently. Price is trading in the Cloud on the daily and above the Cloud on the 4hr which is mixed. This pair gave a TS ‘LONG’ signal late last week that has given up to 50 pips.
- I WONT chase this TS LONG on the EUR/AUD unless there is a really bullish move up over the daily 200 EMA.
- I will look to SHORT the EUR/AUD on any new TS signal.
Gold/Silver: The bullish ‘Cup and Handle’ patterns on the weekly charts are still valid for the time being. The ‘handle’ part for both metal charts seems to be forming a bullish broadening ascending wedge pattern though now. 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:
Gold weekly:
Gold daily:
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