Saturday, March 22, 2014

FX Indices Review for 24/03/14

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

Monthly Ichimoku: The March monthly candle is currently trading just under the top edge of the monthly Cloud. The Cloud here is still rather narrow and flat.

Weekly: Trend chopping/sideways. The weekly candle closed as a large bullish engulfing candle BUT 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. Price did get down to near the low set back last October @ 79.0 but FOMC reversed this downward trend. The 79 and 81.50 levels have contained price action since last September!

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 just 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 sideways last week until FOMC. The news about QE tapering boosted the USD and the USDX rallied to break up through a bear trend line that had contained price for the last 6 weeks. This bullish momentum stalled, though, as price reached back up to the resistance of the weekly 200 EMA.

4hr Ichimoku Cloud chart: Price rallied above the Cloud after FOMC.  This chart is divergent from the daily chart and suggests short choppiness.

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 March monthly candle is still printing a 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 pulled back a bit this week as the top of the monthly Cloud offers significant resistance to this index.

Weekly: Trend up, overall.  The weekly candle closed as a bearish candle, almost an indecision style ‘spinning top’, BUT still above the monthly 200 EMA and the support trend line is also still intact.

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

Daily: Trend choppy. Price action was choppy last week and closed slightly lower for the week.

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

4 hr: Trend choppy:  Price chopped sideways at the start of last week but then fell after Wednesday’s FOMC. The index still managed to hold above the support of the bull trend line and the monthly 200 EMA.

4 hr Ichimoku Cloud chart: Price fell down through the Cloud last week with FOMC but then closed back up in the bottom edge of the Cloud. This is divergent from the daily chart and suggests choppiness.

USDX: the USDX closed higher for the week but is still below the weekly 200 EMA key S/R level. The USDX weakness, that had been evident for the last 6 weeks, faded after FOMC but the new bullish momentum stalled once price reached back up to the weekly 200 EMA. This is a major S/R level for this index but I am still a bit surprised at how how quickly this bullish move faded. I continue to watch the weekly 200 EMA for guidance as I believe that any hold above this would support bullish continuation but a sustained breach would be rather bearish. The USDX can’t seem to make a clean break away from this zone though and has essentially traded in a range between the 81.50 and 79 levels since last September! A breakout from this range would be much appreciated so as to deliver some trending markets.

EURX: the EURX closed lower for the week following USD strength and no doubt due to some continuing Ukraine concern. I have drawn fib levels on the EURX chart for the bear move of 2008 to 2012. The daily chart here shows how the high from last December came close up to the key 61.8% fib level of this bear move. I have highlighted the December 'high' on the daily EURX chart. Whilst price action was bearish for last week, the EURX still looks fairly bullish overall. I’ll be watching for any approach back up to the December high and the possible ‘double top’ concern that this will no doubt bring. I’m also watching for any continued bullish momentum up to test the 61.8% fib level as this isn’t too far below the triangle trend line which would then be offering possible breakout potential. I do realise the ECB would not wish to see such a strong Euro though and, thus, this resistance region could then prove to be a bearish turning point for the index. 

Ichimoku Alignment: this has faded once again.

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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