Saturday, December 28, 2013

FX Indices Review for 30/12/13

I'm away at the moment and the poor internet here means that I'm not able to load charts.

Monthly: Trend ranging / upwards. I’m still seeing a possible bearish ‘double top’ formation. The monthly candle, with just a few days to go, is printing a bearish candle.

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

Weekly: Trend up/sideways. The weekly candle closed as a bearish candle but with a long lower shadow, almost reversal 'hammer' style like, suggesting indecision. It did close below the support of the weekly 200 EMA though which is also bearish.

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

Daily: Trend choppy/down. Price chopped sideways until Friday at which point it fell quite heavily. It did regain most of this loss by the end of the day though. 

Daily Ichimoku Cloud chart: The boost with FOMC last week put price back up in the Cloud but Friday’s bearish action has seen it slip back down to just below the Cloud. Price has not managed to break up and free from the daily Ichimoku Cloud since last July and, then, that was only brief. I’m still on the lookout to see which way the USDX will head following this latest Cloud activity. A bullish break might signal continued upwards momentum but further failure would be a rather bearish signal. It is looking bearish just at the moment but lighter New Year trading volume and news may skew this somewhat.

4hr: Trend choppy/down. This chart shows the severe action from Friday.

4hr Ichimoku Cloud chart: Fridays bearish action sent price back below the Cloud but it clawed some of this loss back to close the week above Cloud  This is divergent from the daily chart and suggests choppiness.

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. Price is getting up close to the major monthly triangle trend line. I would expect choppiness as price approaches this major resistance but a break above this level would be very bullish.

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 just over half way up through the monthly Cloud. I would expect choppiness as price approaches the major resistance of the top edge of the loud but a break above this level would be very bullish.

Weekly: Trend up, overall.  This week’s candle was bullish and has still held above the monthly 200 EMA and weekly support trend line. The weekly candle did have a bit of a bearish reversal 'shooting star' look to it though. 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 five out of six weekly candles close above this significant level.

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

Daily: Trend choppy. Price chopped higher this week with a bit of a bullish spike on Friday.

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

4 hr: Trend choppy/up:  Price chopped sideways until Friday at which point it spiked higher but it retraced a bit after that. It has still closed above the support of the monthly 200 EMA. I would not be surprised to see price at least test this key level before any bullish continuation but this does not seem likely at the moment.

4hr Ichimoku Cloud chart: The bullish action on Friday pushed price up and out of the Cloud and triggered a new bullish Tenkan/Kijun cross. This chart is aligned with the daily chart and suggests long EUR (risk on).

USDX: the USDX traded lower this week.  I’m reading that the cause of this was due to Euro strength based on 2 main events: some ECB talk and also safe haven flows in from Turkey after some recent political unrest there. The overall sentiment for next year though is for USD strength. This may evolve but I’m not seeing it on the index charts just yet. The USDX closed for the week below the key support of the weekly 200 EMA and I’ll be watching this level next week for guidance. A hold above the weekly 200 EMA would support bullish continuation but a breach might be rather bearish. Price just hasn't strayed too far, either way, from this key level just yet.

EURX: the EURX traded higher this week, as explained above, and it 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’. I would not be surprised to see this major level tested again though even if there is to be bullish continuation.

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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