FX Indices Review for 22/07/13

USDX

Monthly: Trend ranging / upwards. The current monthly candle is printing a bit of a ‘reversal style’ inverted hammer candle. The monthly 200 EMA and the 84 area continue to be resistance.

Weekly: Trend up overall. The weekly support trend line is still supporting price. The weekly candle closed as a bearish candle. The bearish ‘double top’ evolved. Price closed the week just above the 82.59 area which is the 61.8% fib pull back level from the last major swing high back in mid 2010. This has been a popular ‘hangout’ spot for this index. Kind of like how 'Subway' is for my son and his mates!

Daily: Trend ranging. Price chopped mostly sideways this week.

Daily Ichimoku Cloud chart: Price traded in and out of the Cloud all week. It finished the week trading above the Cloud though.

4hr: Trend up/flat. Price chopped mostly sideways this week.

4hr Ichimoku Cloud chart: Price traded below the Cloud all week. This is divergent from the daily charts and suggests further choppiness.

EURX

Monthly: Trend down overall but 9 of the last 12 months were bullish. The current monthly candle is printing a bullish candle.

Weekly: Trend up, overall. Price failed to move above the monthly 200 EMA back in January. This level had been major resistance so it was no surprise that price had paused here. Price action had been quite parabolic for ‘risk on’ and subsequently pulled back to the mean of the support trend line. Price bounced off this major support level and has held up for the last 16 weeks. The weekly candle closed as a bullish candle. Price is sitting above the 108.5 S/R level.  The significance of this 108.5 level can be seen if you cast your eyes across the weekly chart. Price really needs to make a clear break away from this area, either up or down, to enable a new momentum move to evolve. There is also still a possible bullish inverse Head and Shoulder’ pattern brewing here though. The neck line looks to be at around the 108.5 level so there would need to be a decisive close and hold above this level to enable it to fully evolve. Price looks like it might try and make another attempt at breaking up through the monthly 200 EMA though.

Daily: Trend ranging. Price action from this week has now meant that price seems to be chopping around in more of a rising trading channel than a rising triangle.

Daily Ichimoku Cloud chart: Price chopped sideways above the Cloud all week.  The point to note here now is how the Cloud, below price, is thinning and won’t offer as much support to future price action.

4 hr: Trend choppy & ranging. Price action chopped around above the 108.5 level for most of the week. 

4hr Ichimoku Cloud chart: Price traded above the Cloud all week. This is in alignment with the daily chart and supports ‘risk on’.

Thoughts:

Choppy markets + Ichimoku: The Ichimoku charts chopped in and out of alignment during the week. The indices have finished the week divergent though. Previous alignment has often resulted in extended trending periods. I’ll be watching closely to see if any alignment returns, for ‘risk on’ or ‘risk off’, and if this is able to develop more fully.

The EURX: The EURX is holding up above the Ichimoku Cloud which is bullish but needs to break clear out of the trading channel, either up or down!, before any decent momentum can build.  

USDX: I’m still hoping to see this index can either clear the 84 level or break the weekly support trend line. It’s in a bit of ‘no man’s land’ at the moment.

Note: The analysis provided above is based purely on technical analysis of the current chart set ups. As always, Fundamental style events, by way of any Euro zone based dramas and/or news announcements, continue to be unpredictable triggers for price movement on the indices.  These events will always have the potential to undermine any technical analysis.