FX Indices Review for 18/11/13

USDX

Monthly: Trend ranging / upwards. I’m still seeing a possible ‘double top’ formation here.

Monthly Ichimoku: Price is holding above the monthly Cloud.

Weekly: Trend up overall. Price traded lower this week but has held up above the recently broken bear trend line. The weekly candle closed as a bearish candle. The current pattern on the weekly USDX is setting up as a possible bearish ‘Dark Cloud Cover’ pattern. Next week’s candle is needed as the ‘confirmation’ candle to complete this possible pattern.

Weekly Ichimoku: Price is now trading just below the weekly Cloud and seems to have been rejected by the Cloud this week.

Daily: Trend choppy/down. Price chopped sideways for most of this week but held above the broken daily bear trend line. It traded above the 80.70 level (the 50% fib pull back level) and just under the daily 200 EMA and weekly pivot.

Daily Ichimoku Cloud chart: Price pulled back to spend most of the week trading in the Ichimoku Cloud. There was a ‘weak’ bullish Tenkan / Kijun cross last week but the index is struggling to get up and out of the Cloud.

4hr: Trend choppy. Price chopped sideways/down for much of the week. The index doesn't seem to want to move too far from the half way mark of the last major down move (mid 2010-mid 2011). It closed the week above this 50% fib level and the weekly 200 EMA so it’s still got some support beneath.

4hr Ichimoku Cloud chart: Price moved down into the Cloud on Thursday and gave a new bearish Tenkan/Kijun cross.  

EURX

Monthly: Trend down overall. The November candle has evolved from printing a bearish 'engulfing' candle to a bearish 'hanging man'. The monthly candle may still manage to close back up within the monthly triangle pattern though! That would be some ‘come back’!

Monthly Ichimoku: The new November monthly candle is still trading below the Cloud. You can see how the monthly Cloud has offered resistance to the index.

Weekly: Trend up, overall.  Price had failed to move above the monthly 200 EMA after several previous attempts earlier throughout the year. There were two weekly candle closes above this key S/R level recently but price has had another close below this level this week. This week’s candle is a bullish engulfing candle but has still closed below the monthly 200 EMA AND below the support trend line, albeit only just. This triangle trend line has been in play since July 2012 so this breach was significant but a close back above these levels would be even more so!

Weekly Ichimoku: Price is still trading above the weekly Cloud and is only below the Tenkan line now.

Daily: Trend choppy. Price continued to trade higher this week after bouncing off the previous S/R level of 108.5. This importance of this 108.5 level is best seen on the weekly chart.

Daily Ichimoku Cloud chart: Price is trading above the Cloud.

4 hr: Trend choppy/down:  Price chopped higher this week but ran into some stiff resistance in the form of the monthly 200 EMA, the 50% fib retrace level of the recent down move, the monthly pivot and 4hr 200 EMA. Price shaped up on Friday into a bullish looking ‘inverted Head and Shoulder’ pattern. The neck line of this pattern looks to be at the 50% fib level which is also the 4 hr 200 EMA. Price closed the week above this ‘neck line’ and I see that as fairly significant.

4hr Ichimoku Cloud chart: Price moved up from below the Cloud to finish the week up and out of the Cloud! There was a new bullish Tenkan/Kijun cross during the week as well. This is deemed a weak signal though as it evolved below the Cloud. This chart is aligned with the daily chart and suggests long Euro.

Thoughts:

USDX: the USDX traded lower for the week as QE tapering thoughts faded.  Price did manage to hold above the broken bear trend line that had been in play since June 2013 but has fallen to trade within the Ichimoku Cloud on the 4hr and daily time frames.

EURX: the EURX traded higher this week mostly due to USD weakness. This resulted in the index moving back up to trade just below the major S/R level of the monthly 200 EMA and the major support trend line of the monthly chart triangle pattern. 

I still believe that a continued hold below these two key levels will prove to be a demarcation level for continuing risk appetite in FX. A move back above these resistance levels though would be quite a bullish signal. I see the EURX as a kind of ‘risk barometer’ and so I’m watching these levels very closely. It is important to note that the EURX is also trading above the Ichimoku Cloud on the 4hr, daily and weekly time frames.

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 or Middle East events 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.