FX Indices Review for 12/08/13

USDX

Monthly: Trend ranging / upwards. The June reversal ‘Hanging Man’ candle was right on the money! July was bearish and August is shaping up that way as well. The monthly 200 EMA and the 84 area continue to be resistance.

Weekly: Trend up overall. The weekly support trend line has been tested this week.  This is a major support level that has been in play since Aug 2011. The weekly candle closed as a large bearish candle sitting right on top of this weekly support level.

Daily: Trend choppy/ranging. Price traded down all week until it met the weekly support trend line. Price rallied a little on Friday, the only bullish candle for the week, to close just above this significant support.

Daily Ichimoku Cloud chart: Price traded below the Cloud all week.

4hr: Trend down overall. Price drifted down all week until it met the weekly support trend line on Thursday. Price then chopped mostly sideways, and up a little, to close just above this support.

4hr Ichimoku Cloud chart: Price traded in the Cloud to start the week but drifted below the Cloud on Tuesday where it has stayed.  This is in alignment with the 4 hr chart and supports short USD or ‘risk on’.

EURX

Monthly: Trend down overall but 9 of the last 12 months have been bullish. The current August candle is now printing a bearish coloured, indecision style, ‘inside candle’. Price action is really starting to get squeezed now between the monthly 200 EMA and the weekly support trend line.

Weekly: Trend up, overall. Price failed to move above the monthly 200 EMA back in January. Price is back struggling at this area again now. 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 19 weeks. The weekly candle closed as a large bearish, almost ‘engulfing’ style, candle candle. Price action is becoming increasingly wedged between the resistance of the monthly 200 EMA above price and the weekly support trend line below price.

Daily: Trend up. Price stalled late last week as it approached the resistance of the monthly 200 EMA again. Price has drifted downwards since then. There is a smaller daily triangle pattern in place now too.

Daily Ichimoku Cloud chart: Price chopped downwards for the week but is still above the Cloud.

4 hr: Trend ranging/choppy:  Price chopped downwards this week.  It seems to be forming up into a bit of a triangle on the 4hr chart. The last two 4hr candles were indecision style, Doji candles and they closed just below the bottom triangle trend line and below the monthly pivot. I can also see a bit of bearish ‘Head and Shoulder’ pattern forming here, albeit a wonky one!

4hr Ichimoku Cloud chart: Price started the week above the Cloud but drifted down and through the Cloud as the week progressed. It finished the week below the Cloud. This is divergent from the daily chart and suggests choppiness.

Thoughts:

USDX: The USD looks to be in the driver’s seat once again. I’m still hoping to see this index either clear the 84 level or break below the weekly support trend line. It is testing the weekly support trend line at the moment but I am keeping an open mind here. Price has bounced and rallied from this strong support level before and could easily do so again. A USD rally from here would most likely send stocks, and other 'risk instruments', tumbling.

The EURX: The EURX is struggling at the resistance of the monthly 200 EMA again.  The weekly support trend line is closing in on price as well and is wedging this index into an increasingly confined trading region. I’m looking for a break out either way, up or down!

Ichimoku Alignment:The Index charts are not in alignment at the moment but,as always, I'm on the lookout for any changes to this situation.

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.