Saturday, April 19, 2014

FX Indices Review for 21/04/14

Monthly: Trend ranging. I’m still seeing a possible bearish ‘double top’ formation. The April monthly candle is currently printing a bearish coloured 'spinning top' candle reflecting 'indecision'.

Monthly Ichimoku: The April candle is still trading within the monthly Cloud.

Weekly: Trend chopping/sideways. The weekly candle closed as a bullish coloured ‘inside’ candle BUT below the weekly 200 EMA. These candle patterns reflect either consolidation before the next move and / or some 'indecision'.

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

Daily: Trend choppy/sideways. The daily chart continues to show how price has chopped sideways, since last September, in a range bound by the 79 and 81.50 levels. Price had closed near the bottom of this range in the previous week. The index subsequently bounced off this low and then traded higher each day of last week. 

Daily Ichimoku Cloud chart: Price traded below the Cloud for most of the week and finished the week just below this resistance zone. The daily Ichimoku chart shows how price has chopped within or near the Cloud since last November. The index 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 slightly higher last week. It struggled twice on reaching the monthly pivot though and subsequently retreated from there.

4hr Ichimoku Cloud chart: Price chopped sideways towards a descending Cloud and eventually drifted into this Cloud on Friday. 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 April candle is still printing a bullish candle, albeit an indecision style ‘spinning top’, but it is still above the monthly 200 EMA.

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 April candle is still trading within the Cloud.

Weekly: Trend up, overall.  The weekly candle closed as a bearish coloured ‘spinning top’ and also as an ‘inside’ candle. This candle print may be reflecting some ‘indecision’ but it could also just be consolidation before the next big move, either up or down! The index is still trading above the monthly 200 EMA and the major support triangle trend line for the time being though.

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

Daily: Trend: chopping higher. The EURX gapped lower to start the week and fell back down within the confines of the previous triangle pattern. The upper boundary of this triangle has now been relaxed upwards to capture this latest S/R level. Price bounced off the lower monthly support trend line and then proceeded to chop sideways, within this revised daily triangle pattern, for the rest of the week.

Daily Ichimoku Cloud chart: Price chopped sideways above the Cloud for most of the week. Note how the Cloud has flipped to being 'bullish'.

4 hr: Trend choppy:  Price gapped lower to start the week and traded down to the major support of the monthly chart triangle bull trend line. Price then bounced off this support and continued to chop sideways within the revised triangle pattern. Next week might be interesting though as the index trades closer towards the apex of this revised triangle. The index closed the week sitting at the monthly pivot and still above the support of the monthly 200 EMA.

4 hr Ichimoku Cloud chart: A narrow band of horizontal Cloud formed the backdrop for choppy sideways action with this index for most of the week. Price closed the week just below the Cloud. This is divergent from the daily chart and suggests choppiness.


General comment: Not a lot has changed on either index since last week and, actually, not much has changed for a number of weeks. The USDX keeps chopping along between the 81.50 and 79 levels and has done so since last October. The EURX is coiling along within a triangle that is now of 6 weeks duration. Hence, these weekly technical description updates of the indices are becoming quite repetitive!

USDX: the USDX closed higher for the week BUT still below the weekly 200 EMA key S/R level. 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 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! We probably won't see any new broader market trends emerge until this index makes a breakout from this trading range.

EURX: the EURX closed slightly lower for the week. Price has again bounced off the support of the bull triangle trend line from the monthly chart. A breach of this support trend line, and of the monthly 200 EMA, could trigger the start of a significant bearish move. A sustained hold above is bullish though. I’ll continue watching these levels closely in the coming weeks.

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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