Monday, December 16, 2013

Trading Week 16/12/13

Sat 21st Dec (5.45 am)
USDX:this has been back in the mess of the daily Cloud for the last two days. 'So what' you might say. I would say though that this is why the U/J and E/U have been choppy:

USDX daily:

E/U: chopped around and closed off now for -20: 

U/J: ditto and closed for -30 

As often happens when the USDX or EURX are in their daily Cloud, the cross pairs do better. The AUD/NZD signal is limping along:
A/J: ditto here:

GBP/AUD: this just gave a new signal off my 5 am candle:

Aussie: looks like this is trying desperately to close back above the key 0.89 level. No new signal here yet though:

Fri 20th Dec (5 pm)
Cable: this TS signal has now closed off too.

A/J: this gave a signal off my 1 pm candle but I missed seeing it back then. It seems to be struggling at the 4hr 200 EMA:

Fri 20th Dec (2.35 pm)
U/J: Cup 'n' Handle pattern
Many of you will know how I have been tracking a bullish Cup 'n' Handle pattern on the U/J weekly chart for some time now, even prior to the 'Handle' breakout. The 'Handle' of this weekly chart pattern was also watched as a 'Bull Flag' or 'Triangle' breakout pattern on the daily chart. Price broke up and out of this 'Handle' (or Flag) back in early November and this break has, so far, yielded up to 550 pips:

Now, the theory behind Cup 'n' Handle patterns is that the extent of the possible bullish breakout is predicted to be equivalent to the depth of the 'Cup'. The following graphic illustrates this theory:

The depth of the 'Cup' for the weekly U/J is about 2,400 pips:

This is where it gets really interesting! A 2,400 pip move up from the 'Handle' breakout of this pattern would project price to be up near the 124 level. The 124 level just happens to be the last major swing high for this pair AND the 100% fib re-tracement for the U/J with the 2007 move down to the lows in 2012: 

Now that's what I call confluence!

Fri 20th Dec (1.15 pm)
A few TS signals have closed off:

Fri 20th Dec (6.30 am)
Indices: The USDX has continued to rally and the EURX has continued to slide:

Gold: I had suggested yesterday that Gold might be the biggest loser out of FOMC and this seems to be the case. The metal is down about $25 since yesterday and has punched down through the triangle trend line support:
Gold 4hr
Gold daily:
Gold weekly:
Gold monthly:

The next obvious support here might come from the previous lows of around $1180 set back in June. After that though, it's probably the 61.8% fib at $1150 and then the whole number $1000 and, then, the monthly 200 EMA near $850.

AUD/NZD: this is a pair that much of the planet is watching and wondering if and when it might turn. I have had a TS signal off the 4hr chart and I'm watching a reversal style weekly candle try to form up here. I am wary though given I thought that if it had fallen this far then it might try to test the 2005 lows and will wait to see how the weekly candle closes:
A/N 4hr:
A/N weekly:
A/N monthly:

E/U: I did end up getting a proper TS signal off my 1 am candle. I'd prefer to see a close below the S/R level of 1.365 though:

Other signals are little changes though:

Thurs 19th Dec (5.30 pm)
Indices: The USDX is paused at the 61.8% fib of its recent down move. The EURX is lower but there is little momentum at the moment:

EURX: I would not be surprised to see this try and test the monthly 200 EMA before any bullish continuation:

The open TS signals are little changed from the previous update:
G/U: 130 on a spike:
Kiwi: now 40
GBP/AUD: 130

AUD/NZD: I'm on the lookout for any bullish recovery here:

Stocks: I have some long Calls and short Puts but I'm waiting a day or two to see how momentum unfolds here before taking new trades.

Thurs 19th Dec (9.55 am)
Indices: The USDX is enjoying the afterglow of FOMC. Not so the EURX:

S&P500: the much warned about sell off with any taper has not evolved yet. In fact, as I suspected, quite the opposite!

E/U: down but no signal yet: 

E/J: trying to from a signal but will need a green candle for the 1pm close: 
A/U: look out 0.80!
Kiwi: down too:

Cable: the TS signal peaked at 130 during the spike: 

U/J a big candle triggered a new signal but I'd be wary of any pull back to test the monthly 200 EMA: 

AUD/NZD: choppy with both AUD and NZD weakness: 
GBP/AUD: signal still going:
Silver: choppy
 Gold: ditto

Thurs 19th Dec (8.35 am)
Lots of spikes across FX. The TS signals so far are all positive though. The U/J will trigger but I'm wary after a big candle. 

Gold: The biggest loser of the day might end up being Gold! I've got a new triangle in place reflecting latest S/R and the bottom trend line might be coming under some pressure:
Gold monthly:

Gold weekly:

Gold daily:

Gold 4hr:

I think it might take a while for this FOMC 'dust' to settle.

Thurs 19th Dec (6.15 am)
Tapering has been announced and initial reactions have been for 'risk on'. I'm waiting for the dust to settle and the hype to die down. I am liking the look of the Cable long though with sights on that 1.8 region of the 61.8% fib I've been on about!

Thurs 19th Dec (5.45 am)
Indices: still fairly flat ahead of FOMC:

S&P500: slipping ahead of FOMC 

AUD/NZD: had closed off: 

A/U: below 0.89 for now 

Cable: up 50 but I'm very wary ahead of FOMC: 

Kiwi: a new short on my 5 am candle: 

GBP/AUD: gave a new TS long on my 1 am candle: 

I'm not taking any trades before FOMC.

E/U flat:

E/J: looks like it's trying to form a new TS long: 
U/J: ditto here:

Wed 18th Dec (9.40 pm)
Cable: Positive GBP data has boosted the Cable and this has triggered a new TS signal:

I would be wary/avoid taking ANY new trades before FOMC though. 

AUD/NZD: this TS signal looks to have just about closed off now:

Wed 18th Dec (8.20 pm)
USDX: messy on the 4 hr Cloud chart:

Wed 18th Dec (7.35 pm)
Very little has changed today. GBP interest rate data is due out in an hour.

AUD/NZD: this trade is still open:

A/U:  I'm waiting until after FOMC to see how the Aussie reacts to any taper news. FOMC news is at 6 /6.30 am here.

Wed 18th Dec (9 am)
A/U daily chart H&S completed!
The price action on the Aussie today has completed the daily chart H&S pattern. The height of the 'head' of this pattern was around 400 pips and this was then the expected move below the neck line. The obvious target was the previous Aug lows at the 0.89 level and this region was touched during the US session. This bearish H&S move was 'spotted' here some weeks ago and stalked, rather closely, here on my blog. This move also came with a few TS signals as well:

Weekly chart H&S?
I noted this possible weekly chart H&S set up in my w/e write up. I'm waiting until after FOMC to see if there is going to be bearish follow through on the Aussie. It is currently sitting right on top of the 0.89 which is the neck line for the possible weekly H&S. The height of the 'head' here is around 850 pips or so and this would suggest a move down to near the 0.80 level. The 0.80 level is also the 61.8% fib pull back level of the last major move higher ( 2008-2011). That's confluence for you!

It is important to note that any delayed taper FOMC news could trigger a relief rally here though. It is MOST important to be patient and wait until after FOMC to see how the Aussie reacts! 

NB: The A/U did end up closing for the day just above the key 0.89 level.

There is much talk about a major stock correction and 'risk off' move that will evolve following on from FOMC. I am a trend follower and will wait for the next momentum move to develop and then, as usual, I'll tag along....long or short. However, I am not seeing signs of this major bearish correction just yet. In fact, I am wondering whether the big surprise might not end up being the exact opposite, a 'risk on' rally! I have a long drive today with Gen Z son and will no doubt have to listen to his music BUT I am going to make him join in with me on this one!

Wed 18th Dec (6.30 am)
Indices: still chopping sideways ahead of the big FOMC:

S&P500: I'm interested to see how any selling seems to be bought into!

AUD/NZD: TS signal now up to 120 pips. I still think 1.04 will be seen here! See w/e notes.

A/U: I have had a new TS signal here and it is struggling to hold it above the 0.89. This will be a major bearish break if this 0.89 does not hold. See w/e notes. I think our Ashes win has got folks a little cranky here hence this latest sell off ????? I'm waiting until after FOMC to take this signal or any signal for that matter. A delayed taper announcement could spark a relief rally here. This is a case where 'technical' meets 'fundamental' and....'fundamental' will usually trump.

I am watching for any H&S to evolve on the weekly; post FOMC:

E/U: chopping under the 1.38 ahead of FOMC.

Cable: chopping under the major triangle trend line ahead of FOMC.

U/J: chopping under the monthly 200 EMA ahead of FOMC.

A/J daily: looking a little ugly!
 Kiwi: looking perky

I have close out most of my naked Put positions for profit but have left my long Calls in profit although most of these are not due to expire until Feb or April.

I have to travel again today so will update later this afternoon.

Tuesday 17th (9.15 pm)
No new TS signals for this week so far but.......... no surprises there!

AUD/NZD: the only open TS signal from last week:

Tuesday 17th (8.15 pm)
I'm just home from my trading meeting. Not a whole lot happening so I'm off to watch Ashes highlights!

Tuesday 17th (4 pm)
Indices and Ichimoku Alignment:
There isn't much movement ahead of FOMC BUT it is worth remembering that the USDX and EURX Index charts are currently aligned on the daily and 4 hr time frame for 'risk on'. This means that price is trading below the Ichimoku Cloud on the USDX daily and 4 hr chart: 

....and that price is trading above the Ichimoku Cloud on the EURX daily and 4 hr chart:

Now, any decision to taper early could be met with a major USD rally and totally dismantle this alignment. This would most likely trigger a 'risk off' rally. However, any caution or slow/no early taper could just as easily be met with a further USD slide. This would most likely trigger a 'risk on' continuation rally. It's wait and see time.

I'm out for a few hours at a trading meeting. No TS signals building at the moment though.

Tuesday 17th (12.50 pm)
S&P500: yesterday's bullish action has meant that I did not receive any bearish TS 'sell' signal on the S&P500:

BTW: most Asian markets are up today. Nikkei is still above 15,000.

Tuesday 17th (12.30 pm)
A/U weekly: The Aussie is still looking vulnerable for a possible bearish H&S on the weekly chart. I've got the 'neck line' in at 0.89 and I'm watching for any break and close below that level with, hopefully, a new TS signal for support. Early taper news could trigger this move but a delayed taper could see price bounce form there so, like with the bush fires, I'm in 'watch and act' mode. I'll go with whatever the new momentum, post FOMC, dishes up:

Possible take profit areas on any bearish weekly H&S follow through:
  • 0.85 a much talked about value for the Aussie.
  • 0.83 area: monthly 200 EMA.
  • 0.80 area: the projected move for this weekly H&SAND the 61.8% fib pull back on the last big move up (2008 -2011).

Tuesday 17th (11/30 am)
I had significant withdrawal symptoms without my computer for 24 hrs. Anyway, as suspected, not too much happened but the surprise must have been the strength with stocks! 

Indices: are little changed:

FX: many pairs are drifting along key S/R levels and clearly waiting for guidance from FOMC. Little has changed since my two w/e write ups:

E/U: holding steady under the 1.38 and blow the major monthly chart triangle trend line:

A/U: the TS short signal has closed off after 140 pips: 

A/J daily: still chopping in a channel: 

Cable: chopping under its major monthly triangle trend line: 

U/J:  chopping under its major monthly 200 EMA: 
Kiwi daily: still chopping in a channel: 

AUD/NZD: TS signal still heading lower: 
GBP/AUD: drifting: 

Monday 16th Dec (1.50 pm)
I have put my lap top in for a service and won't have this back until Tuesday morning. I'm not expecting much to happen anyway.

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