Trade Spotting: Trade Week Analysis for 04/02/13

January closes with TS signals reaching 3,815 pips!

Last week: Signals from just last week gave up to 860 pips to finish off a very successful January and start to the New Year. The maximum pip haul from TS signals throughout January totaled 3,815. That is spectacular and mostly due to the Ichimoku alignment that I have been raving on about for months! The best of the weekly signals were the E/U giving 150, the E/J 330, the G/U 80, U/J 100 and the E/A 200 AND all, except the G/U, are still going. There were other choppy signals on the A/J that gave up some pips too. The Aussie pairs have really struggled lately though under the weight of possible lowering interest rates. Silver (75) and Gold (150) also gave pips during the week but have not been included in the tally. The EURX has broken and closed above a major resistance level of 108.5 and the USD index has broken below key support in the weekly bull trend line. These facts, along with continued Cloud alignment across the indices, support continued ‘risk on’. There are some possible road blocks in the way for both indices though and this might stall ‘risk on’ over the short term. This was discussed in my earlier FX Indices Review post.

This spectacular TradeSpotting result is mostly due to the Ichimoku alignment that I have been on about for months! The haul from just the EUR/AUD, E/U and E/J from just the last 10 days, since Ichimoku alignment kicked in, is over 1,400 pips. This is a three month pip haul in just one week! I will be writing up a more detailed report on this Ichimoku alignment phenomenon and posting this on my new web site.

I’m feeling some very mixed emotions here though this week. I’m absolutely chuffed that my technical analysis and TS signals have been so accurate, especially with tracking this ‘risk on’ rally over the last 6 months. Incidentally my analysis has been contrary to many other commentaries. This augers well for my ongoing success with market analysis for sure. My own trading week was another one of frustration though. After monitoring for Ichimoku Cloud alignment, stalking the indices and stalking key levels on the E/U, EUR/AUD and E/J, I actually failed to stay in any of these three trades. They were, by far, the better signals that presented during the week. I got shaken out at b/e from an A/J LONG @ 95 and EUR/AUD LONG @1.301 and both of these trades went on for up to 150 and 170 pips respectively! I didn't lose a single pip but, I lost opportunities to make heaps! This is in part due to the size of my trading account and my risk management so, I suppose, I shouldn't be too hard on myself...but....I am! I tightened my stops too early and this cost me dearly. I noted earlier that I feel a bit like a bride though who, after planning the wedding for many months, put on the wrong dress and turned up late to the wrong Church! At least I've captured some of these moves through my Stock and Option trades. I have had a good month though with a 500 pip haul and I do need to keep this all in perspective. There are some other positives here that I need to focus on too. One is that my son is now back at school so I get my time back and this, combined with a new month, means I also get my internet speed back...yeah. Those of you with teenagers will understand! So, with all of this, the following song came to mind here and I have played it to myself a few times this w/e... http://www.youtube.com/watch?v=WoaktW-Lu38.

This week: There is still Ichimoku alignment across the indices so that continues to favour ‘risk on’. I’m cautious though as the Euro and USD index are coming up towards potential road blocks. This could slow current momentum a bit or even create some opportunities for pullbacks (See my FX Indices Review for an explanation of this). I am hoping that these possible road blocks do create some pull backs to key levels on the Euro based pairs. I'll be watching out for this.

I’ll continue to leave out the A/U and G/U from my ‘risk on’ focus pairs. Both pairs are experiencing various issues at the moment.
AUD: Interest rate announcement is due out next Tuesday. Employment data on Thursday will be important here too.
ECB Press conference on Thursday. Watch out for ‘Super Mario’ and any comments that could impact Euro.

Pairs I’m leaving for the time being: I am leaving out the USD/SGD as there has been a lot of noted and documented anomalies with this pair. I’m also leaving the USD/CHF too whilst there is pegging of the CHF to the Euro. I’m leaving the Loonie out too. I’m realising it is far better to watch just fewer pairs, the ones that are delivering trends, and to watch them well.

Stocks: I have started a new Stocks: Feb page.

Currencies:

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! I would just like to note here that I have been pointing out bullish trades on the E/U since July last year. Price has broken out and up from trading within the smaller symmetrical triangle on the weekly chart. It has now also closed above major resistance in the weekly 200 EMA. Price is still trading above the Cloud on the daily Ichimoku chart and on the 4hr chart which is bullish. Apart from the psychological whole numbers, there is very little resistance in the path of the E/U now until the next major triangle trend line. The weekly candle closed as a large bullish candle and with price just under the psychological whole number level of 1.37. The current TS signal is still open and has given over 150 pips. This pair has yielded 330 pips since my Ichimoku Cloud alignment started on Friday of last week! A pull back to 1.35 or even the weekly 200 EMA would be lovely!

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

E/J: I would also like to note here that I have been pointing to bullish trades on the E/J since the major triangle trend line break last year. Price opened the week trading within a flag pattern. This pattern broke and a new TS signal was given on Wednesday. Price rallied and broke through the 123 level as well. Price is still trading above the Cloud on the daily and on the 4hr chart which is bullish. The weekly candle closed as a large bullish candle. There is an open TS signal on the E/J that has given up to 330 pips. This pair has yielded up to 700 pips since my Ichimoku Cloud alignment started on Friday of last week! Price is still a couple of hundred pips away from the monthly 200 EMA BUT this is a resistance level which will be sure to test this pair. Have a look at the monthly chart. price has moved over 2,300 pips since the break out from my triangle pattern. How I wish now that I placed a buy back then and just left it! A pull back to the 123, or even the 120, level would be lovely.

I will look to LONG the E/J on any new TS signal and hold above the 125 level.
I STILL WON’T SHORT the E/J this week given the ongoing stimulus.

A/U: Price continues to be choppy on this pair as many traders would be conscious of the Aussie Governments desire to see the AUD trading lower and, thus, the prospect of lower interest rates. Price broke down through a weekly support trend line this week. The 1.04 psychological, whole number, level has been significant for this pair this week and that is where price closed for the week. Price is below the Cloud on the daily and 4hr time frame which is bearish. The weekly candle closed as a 'spinning top' candle. This seems to reflect the confusion for this pair: "do I join the 'risk on' rally or fall, due to possibly lower interest rates this week....hmmm decisions decisions!"

I will look to SHORT the A/U on any new TS signal, if ‘risk off’ returns and if price closes and holds below the 1.04 level.
I will look to LONG the A/U on any new TS signal and if ‘risk on’ returns.

A/J: Yen weakness continues to help this pair. Price traded in bullish flag pattern for most of the week. I had been emphasising to watch out for the 95 level for some time as it was a HUGE level for this pair. 95 represented the 78.6% fib retrace from the last major swing high for this pair. Price chopped around this key 95 level for much of the week but moved higher on Friday. Price is still trading above the Cloud on the daily and on the 4hr chart which is bullish. The weekly candle closed as a large bullish candle. I was shaken out of a signal from the 95 level, at b/e, earlier in the week. Then, I ignored another signal on Friday and this then went on to deliver 100 pips. The story of my week!

I WON’T SHORT the A/J this week given talk of further BoJ stimulus.
I will look to LONG the A/J on any new TS signal and if ‘risk on’ returns.

G/U: I really don’t like this pair. I've adjusted the trend lines on this pair to fit properly across all time frames. Price fell down to touch a monthly support trend line during the week. It then climbed back up over the 1.58 level and gave a new TS LONG signal that delivered up to 80 pips. It fell again on Friday after poor data and gave a new signal to SHORT. It is now back to sitting just above the major monthly support trend line. It is trading below the Cloud on the daily and on the 4hr chart which is bearish.

I won’t look to the LONG G/U on any new TS signal.
I MIGHT look to the SHORT the G/U on the new TS signal IF price closes and hold below the major support trend line.

Kiwi: NZD/USD: Price chopped sideways for most of the week and is still trading just under the bear trend line of a major symmetrical triangle on the monthly chart. It is trading above the Cloud on the daily and on the 4hr chart which is bullish. The weekly candle closed as a bullish candle.

I MIGHT look to LONG the Kiwi on any new TS, if ‘risk on’ returns and price closes and holds above the triangle trend line.
I MIGHT look to the SHORT the Kiwi on any new TS signal and if ‘risk off’ returns.

EUR/AUD: Price has now closed above the neckline, the 1.3 level, of the bullish ‘inverse Head and Shoulder’ pattern on the weekly chart. It is now trading above the Cloud on the daily and on the 4hr chart which is bullish. The weekly candle closed as a large bullish candle. The current TS signal, that I got shaken out of, has yielded up to 200 pips. This pair has yielded over 440 pips since my Ichimoku Cloud alignment started on Friday of last week! A pullback to the 1.3 or even the 1.28 level would be lovely.

I will look to LONG the EUR/AUD on any new TS signal.
I will look to SHORT the EUR/AUD on any new TS signal and a close below the 1.3 level.

The Yen: U/J: I’ve started watching this pair again. This pair traded down in a bullish flag pattern, like the E/J, to start the week. Price broke out from this flag and gave a couple of signals, the latest is up 100 pips. It is trading above the Cloud on the daily and on the 4hr chart so is bullish. The weekly candle closed as a bullish candle. Look at the monthly chart. The 105 area looks like a possible target....61.8% fib retrace from the last swing high AND near the monthly 200 EMA.

I won’t trade the USD/JPY

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. Price has traded up and then down on both pairs throughout the week. For Gold, price is back down near the major monthly support trend line that dates back to 2008.
Silver weekly: