Saturday, April 5, 2014

FX Indices Review for 07/04/14

Monthly: Trend ranging / upwards. I’m still seeing a possible bearish ‘double top’ formation. The March candle closed as a small bullish candle and almost as an indecision-style ‘inside’ candle. The new April monthly candle is printing a small, but bullish, coloured candle.

Monthly Ichimoku: The April monthly candle is currently trading above the monthly Cloud.

Weekly: Trend chopping/sideways. The weekly candle closed as a bullish candle AND back above the weekly 200 EMA, albeit only just. This is a significant bullish development though.

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

Daily: Trend choppy/sideways. Even though the USDX has had a bullish week, the daily chart continues to show how price, basically, has chopped sideways since last September in a range bound by the 79 and 81.50. There was a break above the ‘neck line’ of the bullish ‘inverse H&S’ pattern on Thursday with the ‘neck line’ being at the weekly 200 EMA.  I’m watching for any bullish continuation here to further develop this pattern but, for the moment, price is sitting just above the 'neck line'.

Daily Ichimoku Cloud chart: Price traded up towards the Cloud all week. The daily Ichimoku chart shows how price has chopped within or near the Cloud since last November. Price finished the week trading in the daily Cloud but the Cloud band is broadening and is bearish. Overall though, 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. Price chopped sideways within the symmetrical triangle pattern until Thursday. A weaker EURX and thoughts of NFP seemed to boost the index at that point and the index broke up and out of the triangle. Price also broke up through the key S/R level of the weekly 200 EMA. 

4hr Ichimoku Cloud chart: Price traded above, or near, the top of the Cloud all week but rallied higher after Thursday.  This chart is divergent from the daily chart and suggests 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 and March monthly candles closed as a bullish candles above this key support. The new April candle is currently printing a bearish coloured ‘spinning top’

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. The March candle closed trading within the Cloud. The new April candle is also trading in the Cloud.

Weekly: Trend up, overall.  The weekly candle closed as a bearish coloured Doji candle BUT still above the monthly 200 EMA and the support trend line.

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

Daily: Trend choppy. The EURX chopped up and then down last week.

Daily Ichimoku Cloud chart: Price chopped above the Cloud for most of the week but slipped on Friday to close down in the top edge of the Cloud.

4 hr: Trend choppy:  Price chopped up and down last week but the index still managed to hold above the support of the triangle trend line and the monthly 200 EMA.

4 hr Ichimoku Cloud chart: Price started the week below the Cloud but moved up into the Cloud by midweek. Price slipped below the Cloud in the final candles for the week.  This is divergent from the daily chart and suggests choppiness.

USDX: the USDX closed higher for the week AND back above the weekly 200 EMA key S/R level. This is a moderately bullish development for this index. One could be forgiven, though, for thinking that the USD index should be trading higher than it currently is, given the pathway for tapering of US stimulus. Whilst the NFP data was slightly weaker than expected, it was not weak enough to suggest a deviation from the current tapering plan. In fact, US stocks took a huge hit on Friday based on these very thoughts of the onset of QE tapering!

I continue to watch this weekly 200 EMA level for guidance as I believe that any hold above this would support bullish continuation but that a sustained breach would be rather bearish. The USDX still 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 slightly lower for the week. Some USD strength and ECB talk of stimulus halted the index on its recent bullish pathway.  Price has edged back down towards the support of the bull triangle trend line and the monthly 200 EMA. A breach of this support trend line, and of the monthly 200 EMA, could trigger the start of a significant bearish move though. I’ll be watching these levels closely this coming week.

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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