Trade Week Analysis for 24/06/13

Last week: There were a few 4hr TS signals last week: G/A= 170, E/U=120, E/J=200, E/A=380, A/U=300 and G/U=50.

This week: The Ichimoku Charts are back to being divergent. I’m watching to see if any alignment will return and then I’ll be looking for more TS signals in line with this momentum.

Stocks and broader market sentiment: A few more bearish signals have evolved on the S&P500. This could point to a more severe pullback. Some shorter term trend lines have broken and I'm watching out for any further longer term signals. The signals I am watching for include:

• S&P500 daily chart: a break of the daily trend line. This trend line has now been broken.

• Ichimoku S&P500 chart: a clear cross of the blue Tenkan-sen line below the pink Kijun-sen line. There has been a bearish Tenkan/Kijun cross.
• Ichimoku S&P500 chart: price to dip below the Ichimoku Cloud. Price has now had a daily close below the Cloud.

• EURX monthly chart: a break of the monthly support trend line (see monthly chart). This has not broken yet.

• S&P500 monthly chart: a break of the monthly support trend line (see monthly chart). This has not broken yet. A break of this support level would suggest to me of a more severe pull back or correction. The look of this ‘market top’ appears quite different to that of the previous two market tops from back in 200 and 2007. Elliot wave suggest a big correction here though. The May monthly candle looks bearish but is not technically a ‘shooting star’ pattern as the upper shadow is not more than 2x the length of the body.

S&P500 weekly chart: I'm actually wondering...is this another Bull Flag in the making?

Please check your trading calendar for key events this week.

E/U: Price broke through the daily support trend line with FOMC. The weekly bull trend line is still supporting price for the time being. Price is trading above the Cloud on the daily but below the Cloud on the 4 hr Ichimoku chart which suggests choppiness. The weekly candle closed as a bearish engulfing candle. There is still the suggestion of a bearish ‘Head and Shoulder’ pattern building on the weekly chart but this has not developed fully as yet. The 1.33 and weekly 200 EMA level seem to be the right hand shoulder of this pattern and a clear break of this level might void this developing pattern. I do find all this strange though as there is a bullish ‘inverse Head and Shoulder’ pattern building on the Euro index chart!

• There is an open TS signal up 120 pips here.

E/J: Price broke out of the bullish descending broadening wedge this week, gave a new TS signal and 200 pips before stalling at the larger, flag pattern trend line. Price is trading in the Cloud on the daily but above on the 4hr time frame which suggests further choppiness but with a bullish bias. The weekly candle closed as a bullish coloured ‘inside’ candle.

• I’m watching the larger flag pattern at the moment. I still see 140 as a possible bullish target.

A/U: The Aussie fell heavily after FOMC but found some support at the 0.92 level.  For any continued bearish moves: I don’t see much support until down at the 0.83 level! The 0.83 is the monthly 200 EMA. After that there is the 80 level that is near the 61.8% fib retrace from the last swing low to high level so this isn’t too ridiculous a notion! Any continued pause or pull back with the stock market might see price visit these low levels. Price is back below the Cloud on the daily and 4hr chart which is bearish. The weekly candle closed as a large bearish engulfing candle.

• There is an open TS signal up 300 pips here.

A/J: The A/J has continued its slide after breaking down through the 100 level some weeks ago. I mentioned last week to watch out for the 0.89 level. This is because this level is the 61.8% fib level from the recent swing high to the last swing low, a previous triangle breakout zone and a major S/R level for the A/J. Price hovered above this 0.98 support level all week. Price is back below the Cloud on the daily and 4hr chart which is bearish. The weekly candle closed as an indecision style ‘spinning top’ candle.

• I’m watching for any new TS signal near whole numbers, the 0.89 level and the 4hr Ichimoku Cloud.

G/U: Price broke through the daily support trend line after FOMC. It is trading above the Cloud on the daily but now below the Cloud on the 4hr chart which suggests choppiness. The weekly candle closed as a large bearish engulfing candle. Price has now closed below the 4hr 200 EMA.

• NB: Go Market charts have an error for my weekly 200 EMA with the G/U. I have advised them about this.
• There is an open TS signal up 50 pips here.

Kiwi: NZD/USD: I have been writing for weeks how the 0.78 level might be some support and reaction area for the Kiwi. This is because this is the region of the weekly 200 EMA. Price fell back to test this level again after FOMC. Price is back below the Cloud on the daily and 4hr chart which is bearish. The weekly candle closed as a large bearish engulfing candle. As with the A/U, any recovery with risk sentiment might help to boost the Kiwi but a fall in stocks would most likely see the Kiwi fall heavily. The monthly 200 EMA, at around 0.68, would seem to be the next level of support if this pair returns to being bearish.

• I’m just watching this pair at the moment.

EUR/AUD: Price rallied out of a triangle pattern this week and also gave a new TS signal that has yielded up to 380 pips. It is still trading above the Cloud on the daily and on the 4hr time frame which is bullish. The weekly candle closed as a large bullish candle. Price has now moved 1,400 pips from the original channel and 1.30 break out and I wish I had simply taken the trade back then!

• I’m just watching this pair at the moment.

The Yen: U/J: Price rallied this week after FOMC within a broadening descending trading channel. Price is still  trading below the Cloud on the daily but is above on the 4hr time frame which suggests choppiness with a bullish bias. The weekly candle closed as a bullish engulfing candle.

• I’m watching this pair for a flag pattern break and new TS signal.

GBP/AUD: I dredged this chart up last week after considering the bullish bias on the GBP and the bearish bias on the AUD. Price, then, was trading just under the upper trend line of a monthly chart descending trading channel. Price broke out shortly after and gave a new TS signal on the 4hr chart. This pair has now moved 800 pips since the TS signal! Price rallied out of a triangle pattern this week and also gave a new TS signal that has yielded up to 170 pips. It is 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’m just watching here for now.

Silver: Silver has broken below the long term monthly support triangle trend line. Silver fell heavily after FOMC. The weekly candle closed as a bearish engulfing candle. Price fell down to test the S/R $20 level and closed the week just above this key support level. The next major support after $20 seems to be down at $15, near the monthly 200 EMA.

Gold: Gold has also broken down through major monthly triangle support that dates back to early 2008. That was a major break down for the metal. Price also fell heavily after FOMC and broke down and out of two symmetrical triangle patterns. Price fell through the $1,300 support level and closed the week just below this support. The $1,300 level is the 50% fib pullback from the last swing low to swing high. The next major support after $1,300 seems to be down at the whole number, $1,000 level and, after that, at $850 in the monthly 200 EMA. The weekly candle closed as a bearish engulfing candle.