Saturday, December 7, 2013

FX Indices Review for 09/12/13

Monthly: Trend ranging / upwards. I’m still seeing a possible bearish ‘double top’ formation. The new monthly candle is printing a bearish candle.

Monthly Ichimoku: Price is trading just above the monthly Cloud.

Weekly: Trend up/sideways. Price traded lower this week following on from last week’s confirmed bearish ‘Dark Cloud Cover’ pattern. The weekly candle closed as a bearish candle. The ‘neck line’ of the possible ‘Double Top’ pattern at 78.80 happens to be right on the 38.2% fib level of the most recent major down move (2010-2011). This might be a possible target for any continued bearish move with the USDX.

Weekly Ichimoku: Price is still trading below the weekly Cloud.

Daily: Trend choppy/down. Price chopped down for most of this week. Price had held above the weekly 200 EMA for the last month but it broke down through this support on Thursday and, although Friday’s candle closed as a Doji candle suggesting indecision, price still closed the week below this key S/R level.

Daily Ichimoku Cloud chart: Price has again traded within the Ichimoku Cloud for the entire week. That makes the best part of the last 3 weeks that the USDX has traded within the resistance of the daily Cloud! There was a new bearish Tenkan/Kijun cross, of sorts as angles skewed, this week as well.

4hr: Trend choppy/down. Price chopped sideways this week, above the support of the weekly 200 EMA, until Thursday. Euro strength after ECB news seemed to push it lower though. It closed the week below the weekly 200 EMA, even with positive NFP data.

4hr Ichimoku Cloud chart: Price tried to break up through the Cloud early in the week but struggled with this and eventually closed the week out below the Cloud.  There was another new bearish Tenkan/Kijun cross on the 4hr chart towards the end of the week as well. This chart is not aligned with the daily chart though and suggests further choppiness for the USD.

Monthly: Trend down overall. The most significant point to remember here though is that price closed for November above the monthly 200 EMA. This was the first monthly close above this huge S/R level for 2 ½ years! The new December candle is bullish as well.

Monthly Ichimoku: Price had been held back by the monthly Cloud for most of this year but is now attempting to push up through this resistance zone.

Weekly: Trend up, overall.  This week’s candle was another bullish candle that has closed above the monthly 200 EMA. 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 followed by three closes below. We have now had three consecutive weekly candles close above this significant level. There is a bit of a ‘double top’ look to the weekly chart building though as price reaches levels attempted back in October. A break above this 'double top' region would suggest that the next target might be the 61.8% fib at 113 if bullish momentum continues!

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

Daily: Trend choppy. Price chopped higher this week with the support of the monthly 200 EMA firmly below price action.

Daily Ichimoku Cloud chart: Price spent much of the week in the Cloud but emerged from this following ECB rate news and closed the week above the Cloud.

4 hr: Trend choppy/up:  Price chopped sideways along the support of the monthly 200 EMA until ECB news on Thursday. Price rallied after this news release and closed above this support for another week.

4hr Ichimoku Cloud chart: Price fell into the Cloud early in the week but ECB news helped to lift price up and out of the Cloud where it closed for the week. This chart is aligned with the daily chart and suggests long Euro.

USDX: the USDX traded lower for the week following the confirmed bearish ‘Dark Cloud Cover’ pattern of the week before. The index has now also closed below the support of the weekly 200 EMA and I’ll be watching next week for any bearish follow through. Further bearish movement could see price move down to test the ‘neck line’ of the ‘double top’ pattern again. It could also see price emerge from the bottom of the daily Ichimoku Cloud. If so, this would put the EURX and USDX back into ‘risk on’ alignment which might support the Santa Rally many are speculating about.

EURX: the EURX traded higher this week. There have been recent bullish crosses again on both the 4hr and daily Ichimoku charts. More significantly, though, this index has continued to hold above the major S/R level of the monthly 200 EMA. The November monthly candle close above this major S/R level was the first in 2 ½ years and not something to ignore! I see the EURX as a kind of ‘risk barometer’ and this bullish monthly candle close above the monthly 200 EMA as quite significant. I believe that a continued hold above this S/R level might help to support continued ‘risk appetite’.

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.

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