FX Indices Review for 16/12/13

USDX

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 until Thursday’s US retail sales data. The strong result renewed QE taper thoughts and this lifted the USD. The weekly candle closed as a bearish coloured candle BUT with some bullish reversal style ‘hammer’ look to it. 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 until Thursday. Thursday was a bullish day but Friday saw a Doji, indecision style candle printed. Price was not able to get back above the weekly 200 EMA and closed the week below this key S/R level for a second week.

Daily Ichimoku Cloud chart: Price fell through the bottom of the Cloud on Thursday but rallied to close the week out just below the bottom edge of the Cloud.  

4hr: Trend choppy/down. Price chopped down until Thursday. It then rallied back up to the 50% fib level where it paused. It closed the week near the 38.2% fib pull back level of this latest down move.

4hr Ichimoku Cloud chart: Price closed the week out below the Cloud BUT there was a new bullish Tenkan/Kijun cross on Friday. This was a ‘weak’ signal though as it formed below the Cloud.  This chart is aligned with the daily chart and suggests short USD. I’m wary here though as both charts have price ticking upwards.

EURX

Monthly: Trend down overall. The most significant point to remember here 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 December candle is still bullish as well and trading above this key level.

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. It is now about half way up through the monthly Cloud.

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 four consecutive weekly candles close above this significant level. The possible ‘double top’ looks to have been avoided.

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

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 closed the week above the Cloud.

4 hr: Trend choppy/up: Price chopped higher all week above the support of the monthly 200 EMA. There was some indecision on Friday though with a few consecutive bearish candles.

4hr Ichimoku Cloud chart: Price traded above the Cloud all week. This chart is aligned with the daily chart and suggests long Euro.

Comments:

USDX: the USDX traded lower for the week, but only just.  This was the third consecutive bearish week following the confirmed bearish ‘Dark Cloud Cover’ pattern. Thoughts of an early QE taper towards the end of the week helped to boost the USD.  Price did emerge through the bottom of the daily Ichimoku Cloud last week and this has put the EURX and USDX back into ‘risk on’ alignment.  This might support the Christmas Rally that some were speculating about BUT next week’s FOMC will be crucial here and will most likely decide the fate of the next USD move. An FOMC announcement to start an early QE taper will most likely boost the USD and undermine this alignment. Delayed taper talk might result in further bearish movement though and could see price move down to test the ‘neck line’ of the ‘double top’ pattern again.

EURX: the EURX traded higher this week. 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’. Next week’s FOMC might dictate whether the EURX holds these gains though.

NB: My Trade Week Analysis may not be posted until Monday 16th Dec as I am away for the w/e.

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.