Saturday, March 8, 2014

FX Indices Review for 10/03/14

Monthly: Trend ranging / upwards. I’m still seeing a possible bearish ‘double top’ formation. The new monthly candle is currently printing a bullish coloured ‘spinning top’ candle.

Monthly Ichimoku: The new monthly candle is currently within the monthly Cloud. The Cloud here is still rather narrow and flat and, thus, may not offer much support.

Weekly: Trend chopping/sideways. The weekly candle closed as a bullish coloured Doji candle and below the weekly 200 EMA.

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 BUT some downward pressure/shift is starting to form up here. Whether this holds is another matter. I have my sights on the low set back last October @ 79.0 and have drawn this in as a trend line. Any break and hold below this level would suggest to me of more bearish action.

Daily Ichimoku Cloud chart: The daily Ichimoku chart shows how price has chopped around, or within, the Cloud since last November. Price is still trading below the daily Cloud but the Cloud band remains very narrow and horizontal thus offering little resistance. Price has still 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/down. Price pulled back up to the 61.8% fib of last week’s bear move but this, and the monthly pivot, proved to be too much resistance and price subsequently fell.  Price got a bit of a lift following the decent jobs data but the uptick with the unemployment rate seems to have kept any bullish potential in check. This resulted in an indecision-style Doji candle printing for Friday.

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

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 this level but the February candle closed above. The new monthly candle is currently printing a large bullish candle and trading above this support as well.

Monthly Ichimoku: Price had been held back by the monthly Cloud for most of 2013 but has been attempting to push up through this resistance zone for the past few months. Price might be close to achieving this as it is currently trading just below the top edge of the Cloud.

Weekly: Trend up, overall.  The weekly candle closed as a bullish engulfing candle AND above the monthly 200 EMA. The support trend line is also intact but I’m still seeing a bit of a bearish Head and Shoulder pattern though and keeping an eye on it.

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

Daily: Trend choppy. Price chopped sideways until Thursday’s ECB meeting but rallied hard from that point. The positive NFP jobs data obviously didn't upset the EURX too much and it printed a bullish candle on Friday.

Daily Ichimoku Cloud chart: Price traded under the daily Cloud until the ECB meeting but rallied from then to close the week above the Cloud.

4 hr: Trend choppy:  Price chopped sideways in a narrow range until Thursday’s ECB meeting. It rallied from there and closed well above the support of the bull trend line and the monthly 200 EMA.

4 hr Ichimoku Cloud chart: Price chopped around in the Cloud for most of the week until Thursday’s bullish move saw price emerge up and out from the Cloud. This is aligned with the daily chart and suggests ‘risk on’.

USDX: the USDX closed lower for the week and is still below the weekly 200 EMA key S/R level. I continue to watch this level for guidance though as I believe that any hold above this level would support bullish continuation but a sustained breach would be rather bearish. The USDX continues looking rather weak as it falls down into the monthly Ichimoku Cloud and I’m on the lookout for any continued weakness. I am a bit surprised that there wasn't more bullish follow through following the reasonable NFP. I have heard some commentary saying that the Ukraine tension, whilst many might assume would promote a flight to safety and a higher USD, is actually harming the USD.

NB: Any escalation of events within the Ukraine though could trigger a ‘flight to safety’ move for the USD and needs to be monitored.

EURX: Whilst the EURX gapped lower to open the week on Ukraine concern, this pessimism didn't last too long. It managed to close higher for the week on optimism following from the ECB meeting. The EURX continues to look bullish as it maintains its push up through the monthly Ichimoku Cloud. A successful push up through the monthly Cloud would mean that the EURX is trading above the Cloud on the 4hr, daily, weekly and monthly time frames which would be a rather bullish development.

NB: This rally could be undermined by events in the Ukraine though.

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 Ukraine, 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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