FX Indices review for 17/02/14

USDX

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

Monthly Ichimoku: The February candle is sitting right on top of the upper boundary of the monthly Cloud.

Weekly: Trend chopping/sideways. The weekly candle closed as a bearish candle AND below the weekly 200 EMA. I’m noting an uptick with the ADX here now too. There does seem to be a break of the recent support trend line here.

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

Daily: Trend choppy/sideways. The daily chart shows how price, basically, has chopped sideways since last November. A recent daily support trend line was broken on Friday, albeit only marginally.

Daily Ichimoku Cloud chart: The daily Ichimoku chart shows how price has chopped around, or within, the Cloud since last November. Price is now back trading below the daily Cloud but it still has not managed to make a clean and decisive break away from this zone, either up or down! I remain on the lookout to see which way the USDX will head following this period of being ‘Cloud bound’. A bullish break and hold above the Cloud might signal continued upwards momentum but a sustained failure would be a rather bearish signal.

4hr: Trend choppy/up. Price chopped a bit higher to start the week but then struggled following the Janet Yellen speech. The Federal Reserve ‘accommodation’ approach to monetary policy seems to have been interpreted as ‘continued easing’ and this, along with some recent poor US data, has weakened the USD.

4hr Ichimoku Cloud chart: Price traded below the Cloud all week. This is aligned with the daily chart and suggests short USD.

EURX

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 January candle closed as a bearish candle and below the major support of both the monthly 200 EMA and the monthly triangle trend line. The February candle is currently printing a bullish candle sitting just below the monthly 200 EMA.

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

Weekly: Trend up, overall.  This week’s candle was a bearish coloured candle that closed as either a ‘spinning top’ or ‘inside’ style candle, take your pick. Either way, both of these candle patterns reflect the ‘indecision’ that exists here.  The point to note is that the weekly candle closed below the key S/R level of the monthly 200 EMA. The new support trend line, relaxed at the end of last week to catch recent bearish sentiment, has managed to support price this week though.  I’m still seeing a bit of a bearish Head and Shoulder pattern and I’m keeping an eye on it.

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

Daily: Trend choppy. Price has chopped up and down this week at the mercy of the USD. Price has traded under a bear trend line since last December and this has now formed up into a symmetrical triangle. The index is edging along the monthly 200 EMA and on towards the apex of this triangle.

Daily Ichimoku Cloud chart: Price chopped around under the daily Cloud for most of the week. It closed the week sitting just below the daily Cloud.

4 hr: Trend choppy/down:  Price chopped up and down this week within the triangle and either side of the key S/R level of the monthly 200 EMA. This has been the case for much of the last 4 weeks though. Next week will be interesting to watch as price becomes increasingly squeezed as it moves towards the apex of the triangle.

4 hr Ichimoku Cloud chart: Price chopped in and out of the Cloud this week and gave another Tenkan/Kijun cross but this time a bearish one above the Cloud so this is also deemed a ‘weak’ signal. The index closed within thin Cloud. This is divergent from the daily chart and suggests choppiness.

Comments:

USDX: the USDX closed lower for the week. This followed on from the new Federal Reserve chair person, Janet Yellen, stating that the Fed would maintain an accommodative stance with monetary policy. This comment, followed by some weak US data, seemed to suggest that QE tapering may be more protracted than first thought and this brought about USD weakness. I continue to watch the weekly 200 EMA for guidance though as I believe that any hold above this level would support bullish continuation but a sustained breach would be rather bearish.

EURX: the EURX chopped around last week but mostly at the mercy of USD movement. Even with some positive Euro data the index has not managed to close back above the major S/R level of the monthly 200 EMA. The index is becoming increasingly squeezed as it edges towards the apex of a symmetrical triangle. Be on the lookout for any possible break out action next week; up or down.

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.