Trade Week Analysis for 29/07/13

Last week: There were a few 4hr TS signals last week but the markets were still choppy. The Euro index daily chart still explains broader market sentiment....undecided, range bound and, thus, choppy!

This week: The Ichimoku Charts have moved into alignment for ‘risk on’. I’m watching to see if this alignment will hold and develop and, then, I’ll be looking for TS signals in line with this momentum.

I still believe that the direction of the USD will be key here; further falls will help this momentum to develop.

BTW: I'm traveling interstate on Monday and Tuesday so updates might be delayed.

Stocks and broader market sentiment: 

I do believe that Forex traders need to be aware of the sentiment with stocks and other trading instruments as the momentum there can often influence that with currencies. I am a trend follower and I'm waiting for the next momentum trend with stocks to emerge so that I can, hopefully, catch a slice of it. I would then look to see if the same trend develops in Forex. I do look for a confluence of technical signals that might point to any new market direction. Stocks have had a bit of a pullback but now look to be turning bullish again. BTW: the dude who was sending emails suggesting that the 'Henny Penny' of the markets were here and that the 'trading sky' was about to fall in is now LONG the market! LOL! Anyway, I prefer my own analysis and the signals I'm watching out for include: 

S&P500 daily chart: a break and hold below the daily trend line. The trend line was broken temporarily but price has now closed back above this support. A ‘Bull Flag’ evolved and now price is struggling at a ‘double top’ area. 

Ichimoku S&P500 chart: a clear cross and hold of the blue Tenkan-sen line below the pink Kijun-sen line. There was a bearish Tenkan/Kijun cross recently but these crosses, positioned above the Cloud, are deemed ‘weak’ signals. There was not a lot of bearish follow through with this cross and price has now moved back above the Cloud after giving a bullish Tenkan/Kijun cross, albeit a ‘weak’ signal too.

EURX monthly chart: a break of the monthly support trend line (see monthly chart).

S&P500 monthly chart: a break of the monthly support trend line (see monthly chart). 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 2000 and 2007. Elliott wave suggests a significant correction here though. The July monthly candle is currently forming a 'bullish engulfing' candle. I'm wondering if 1,600 might be the new 'floor' for the S&P500. If so, I'd expect this level to be tested again over coming weeks:

BTW: I have updated my Stocks:July+ page over the w/e.

Some key events to watch out for include:

• New monthly pivots and monthly candles this coming Thursday.
• Mon 29^th: USD home sales data.
• Tue 30^th: AUD building approvals, USD consumer confidence.
• Wed 31^st : NZD consumer confidence, USD non farm employment data & GDP, USD FOMC.
• Thurs 1^st: Chinese PMI, GBP PMI & Bank rates, EUR ECB press conference, USD unemployment data and PMI.
• Fri  2^nd : AUD PPI, USD NFP.

E/U: Price moved up from the 1.32 level and gave a new TS signal. Price struggled once it reached the weekly 200 EMA though. The weekly bull trend line is still supporting price. Price is trading above the Cloud on the daily and now also on the 4 hr Ichimoku charts which supports ‘risk on’. The weekly candle closed as a bullish candle and price closed just under the weekly 200 EMA. There was a TS signal late last week and I’ll be looking to see if price can close above the weekly 200 EMA.

• There is an open TS signal on this pair.

E/J: Price has been up and down this week but slowed down once it hit the 4hr chart’s 200 EMA. It seems to be forming up into a symmetrical triangle on the daily chart. Price is trading above the Cloud on the daily but is now in the bottom edge of the 4 hr Ichimoku Cloud which suggests choppiness. The weekly candle closed as a bearish coloured ‘inside’ candle which suggests indecision. Trend line breaks might give the best clues here as to the next directional move.

• I’m watching the triangle trend lines and for a new TS signal. I still see 140 as a possible target area.

A/U: The Aussie has, so far, managed to hold above the 0.90 level. There has been a lot of negative budget talk here this w/e though so price might suffer from this chatter on market open. For now though, it is still holding out and up from a descending trading channel. The daily chart shows a possible ‘bear flag' pattern could be forming though. So, trend line breaks, either up or down, will give clues as to what the next momentum move might be.

For any continued bearish moves if the 0.90 level fails: 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.

A/U Ichimoku: Price is still trading below the Cloud on the daily but is now above the Cloud on the 4hr chart which suggest choppiness but with a bullish bias. The daily Ichimoku chart has given a bullish Tenkan/Kijun cross as well although this has cross has occurred below the Cloud and, thus, is deemed a ‘weak’ signal.... BUT...it is still a signal. The weekly candle closed as another bullish candle though. That makes three in a row now after many weeks of decline.

• I’m watching the flag pattern trend lines.

A/J: Like the E/J, this pair seems to be forming up into a symmetrical triangle pattern on the daily chart. Price has continued to hold above the 0.89 area but the current daily chart pattern does have a bit of a ‘bear flag’ look to it so this level may come under pressure again. The 0.89 area 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 is still trading below the Cloud on the daily and on the 4hr time frame which is bearish. As with the E/J, the weekly candle closed as a bearish coloured ‘inside’ candle which suggests indecision. Trend line breaks might give the best clues here as to the next directional move.

• I’m watching the triangle trend lines, the 0.89 area and for any new TS signal.

G/U: Price has chopped upwards this week in what looks like an ascending trading channel forming on the 4hr chart. Price is now trading in the Cloud on the daily and is above the Cloud on the 4hr time frame which suggests choppiness but with a bullish bias. As with the A/U, the daily Ichimoku chart has given a bullish Tenkan/Kijun cross as well although this has also crossed below the Cloud and, thus, is deemed a ‘weak’ signal. BUT...it is still a signal. The weekly candle closed as a bullish candle.

NB: Go Market charts have an error for my weekly 200 EMA with the G/U. I have advised them about this.

• I’m watching for any new TS signals.

Kiwi: NZD/USD: Price broke out of a ‘bull flag’ this week. Price is now trading in the Cloud on the daily chart and above the Cloud on the 4hr charts which suggest choppiness but with a bullish bias. Like with the Aussie, the daily Ichimoku chart has given a bullish Tenkan/Kijun cross as well although this too has crossed below the Cloud and, thus, is deemed a ‘weak’ signal. BUT...it is still a signal. The weekly candle closed as a bullish candle and is now above the 0.80 S/R level. The 0.80 level is a key support level as can be seen on the weekly chart. 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.

Kiwi Daily chart: I do tend to 'see' things but there might be the start of a bullish 'cup and handle' pattern starting on the daily chart. If so, the 0.80 would probably be visited again and might be a good place to go 'LONG'. What do you think?

• I have an open TS signal on this pair.

EUR/AUD: Price still seems to be trading in trading channel on the daily chart. It is still trading above the Cloud on the daily BUT and on the 4hr time frame which is still bullish. The weekly candle closed as a 'spinning top', or almost Doji, candle which suggests indecision. 

• I’m still watching the 1.40 level and the flag pattern.

The Yen: U/J: Price struggled to hold up near the 100 level this week and has drifted lower. Price might be forming up into a triangle pattern on the daily chart here too so trend line breaks might be helpful. Price is now trading in the Cloud on the daily but below on the 4hr time frame which suggests choppiness with a bearish bias. The weekly candle closed as a bearish, almost engulfing’ type candle.

• I’m watching for a new TS signal and the triangle trend lines.

AUD/NZD: The daily chart reveals another descending trading channel. It is trading below the Cloud on the daily chart and on the Cloud on the 4hr chart which is bearish. The weekly candle closed as a large bearish candle.

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

GBP/AUD: Price seems to be trading now within another symmetrical triangle pattern on the daily. The breakout from last week's triangle gave up to 150 pips. It is still trading above the Cloud on the daily and on the 4hr chart which is bullish. The weekly candle closed as a 'spinning top' style candle. 

• I’m watching the triangle trend lines and the 1.65 area.

Silver: Silver has broken below the long term monthly support triangle trend line. Silver gave a triangle break and TS signal last week. Further choppiness though has meant that it is trading in a new triangle pattern on the daily chart now. Price closed the week below the key $20 level but the weekly candle closed as a bullish, almost ‘engulfing’ candle. Trend line breaks might help to determine the next directional move here. 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. Gold gave a triangle break last week that yielded up to 500 pips. Subsequent choppiness though has meant that it is now trading in a new triangle pattern on the daily chart. Price closed the week above the key $1,300 level though and I see that as significant. 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 bullish candle. Trend line breaks might help to determine the next move here. Note the Gold monthly Ichimoku chart though; price has bounced off the Cloud!