Saturday, March 15, 2014

FX Indices review for 17/03/14

Monthly: Trend ranging / upwards. I’m still seeing a possible bearish ‘double top’ formation. The new monthly candle is still 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 large bearish 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 still forming up here. Whether this holds is another matter. I still 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 chopped lower last week.

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 still 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 has struggled this week as it trades just below the top edge of the Cloud. The top of the monthly Cloud will offer significant resistance to this index.

Weekly: Trend up, overall.  The weekly candle closed as a bullish coloured Doji BUT still 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 up and down this week, hence the weekly Doji candle.

Daily Ichimoku Cloud chart: Price traded above the Cloud all week.

4 hr: Trend choppy:  Price chopped sideways this week but is still well above the support of the bull trend line and the monthly 200 EMA.

4 hr Ichimoku Cloud chart: Price chopped above the Cloud all week. 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 hasn't been some bullish movement this week though but concern with the Ukraine situation might be skewing technicals here. There is FOMC next Wednesday and this may be the trigger event for the USD next week.

EURX: the EURX closed flat for the week. I'm not at all surprised by this though as the index is pushing up against the major resistance of the top edge of the monthly Ichimoku Cloud. The EURX continues to look bullish as it maintains its push up through this major region. 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. Also, Wednesday's FOMC will most likely impact on the EURX.

Ichimoku Alignment:The index charts are still aligned for 'risk on' across the 4 hr and daily Ichimoku charts. Price action across some FX pairs might not seem in sync with this momentum though but the 'risk off' momentum, that did creep in late last week with Ukraine concern, was less marked across currencies than with stocks.  

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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