Saturday, January 18, 2014

FX Indices Review for 20/01/14

NB: My charts may look a little different as I have transferred platforms to a new lap top.
NB: I am away next w/e for the Australia Day holiday and there will not be any w/e updates. 

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

Monthly Ichimoku: The new January candle is trading above the monthly Cloud.

Weekly: Trend chopping/sideways. The weekly candle closed as a bullish engulfing candle and above the weekly 200 EMA.

Weekly Ichimoku: Price is still trading below the weekly Cloud, but only just.

Daily: Trend choppy/sideways. Price chopped higher this week but had struggled to get above the daily 200 EMA until Friday. In fact, price had not managed to close clear of the daily 200 EMA since back in August of last year. Friday’s bullish engulfing candle saw price move above the daily 200 EMA and, thus, that seems to be some achievement!

Daily Ichimoku Cloud chart: Price chopped within the Cloud, or just nearby, for most of November and December.  Price had not managed to break up and free from the daily Ichimoku Cloud apart from a brief period last July. I’m still on the lookout to see which way the USDX will head following this latest patch of being ‘Cloud bound’. A bullish break and hold might signal continued upwards momentum but further failure would be a rather bearish signal. The New Year saw price move above the Cloud and Friday’s bullish activity has seen price rally up and away from the Cloud. The current momentum does seem rather bullish now.

4hr: Trend choppy/up. Price, again, traded higher and then stalled at the 81 level and daily 200 EMA, but now for long. Friday was a bullish day and saw price push up through these resistance levels.

4hr Ichimoku Cloud chart: Price continued to trade either just above or in the top edge of the Cloud for much of the week.  Friday’s bullish performance saw it close the week well above the Cloud. This is aligned with the daily chart and suggests a bullish USD.

Monthly: Trend down overall. Price closed for November and December with bullish candles above the monthly 200 EMA. November was the first monthly close above this huge S/R level for 2 ½ years! The new January candle is now a bearish candle and trading just below the monthly 200 EMA but above the monthly triangle support trend line. It is looking a bit vulnerable now.

Monthly Ichimoku: Price had been held back by the monthly Cloud for most of 2013 but had been attempting to push up through this resistance zone. It is back to trading in the the bottom edge of the monthly Cloud though now.

Weekly: Trend up, overall.  This week’s candle was a bearish engulfing candle but has still held above the major support trend line, albeit only just.

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

Daily: Trend choppy. Price chopped sideways until Friday. Friday was a very bearish day and saw price fall to test the monthly 200 EMA and the monthly support trend line.

Daily Ichimoku Cloud chart: Price was trading above the Cloud until Friday but closed the week trading within the Cloud. There was also a bearish Tenkan/Kijun cross during the week.

4 hr: Trend choppy/down:  Price had been chopping sideways for most of the last two weeks. Friday was a very bearish day though and price fell to close the week below the support of the monthly 200 EMA but above the support of the monthly trend line.

4 hr Ichimoku Cloud chart: Price started the week below the Cloud, flirted with this briefly but finished the week well below the Cloud. There was a recent bearish Tenkan/Kijun cross on this time frame as well. This chart is divergent from the daily chart for now though and suggests choppiness.

USDX: the USDX closed higher for the week and held above the key support of the weekly 200 EMA. A hold above the weekly 200 EMA would support bullish continuation but a further breach might be rather bearish. Price rallied on Friday to put the index further above this S/R zone and, also, further above the daily Ichimoku Cloud. Price also closed well clear of the daily 200 EMA for the first time in over 5 months and, so, all of this is painting quite a bullish picture for the USD.  As seen quite often in trading though, ‘One swallow does not a summer make’ so I’ll be watching to see if this bullish rally holds and / or continues.

EURX: the EURX closed much lower for the week following on from a very bearish Friday. Price had continued to hold above the major S/R level of the monthly 200 EMA and the weekly support trend line until now but Friday's activity saw the index close the week planted between these two key levels. The November monthly candle close above the monthly 200 EMA was the first in 2 ½ years and not something to ignore and the December candle closed above this key level too! I see the EURX as a kind of ‘risk barometer’ and these bullish monthly candles closing above the monthly 200 EMA as quite significant. I have been saying that I would not be surprised to see this major level tested again though, even if there is to be bullish continuation. The index has now closed right down at these levels and is at a major junction indeed. I believe that any continued hold above these S/R levels might help to support continued ‘risk appetite’ but a breach, along with continued USD strength and any break of the support trend line, could spell the end to this bullish run.

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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