Friday, April 25, 2014

Something big brewing?

Fri 25th April (4 pm)
Something big brewing! I am getting the feeling that a big market move is brewing:

The EURX continues to chop towards the apex of the daily chart triangle. It is also holding on above the major support of the monthly chart bull trend line and the monthly 200 EMA, for now at lest:

The USDX continues to chop sideways:

I have received very momentum based TS Forex signals over the last few weeks and this observation, along with the look of the EURX index, has me suspecting that something big might be brewing. By 'big' I mean a big, broad-based directional move.

I have no idea which way this move will be but, if pressed, I would have suspected towards bullish or 'risk on' if it were not for two factors: these two being the Ukraine situation and the back ground voices saying 'sell in May and go away'. The Ukraine situation, if it develops and worsens, has the potential to undermine all technical analysis and create a flow all of its own.

So why on earth would I think 'risk on'? I can hear you thinking 'she's crazy!' My view can sort of be summed up by looking at the Aussie stock market index of the XAO. This index of the top 500 Aussie stocks has made a hugely bullish close above the major resistance of 5480. This is the highest weekly close since mid 2008. Price had been consolidating under this level for the last 6 months and this is also the region of the 61.8% fib level of the 2007-2009 bear move. The Aussie market has lagged that of the USA as the S&P500 has already recovered above and beyond that of the 100% fib level. I believe that this uptick with the XAO is, possibly, hinting at a new round of bullish stock market movement. I would expect the 78.6% fib level, up near the 6,000 region, to be the destination for any bullish continuation here:

XAO daily

 XAO weekly

I've also been seeing a lot of bullish momentum with moves across FX pairs as well. One example is with the E/U as it keeps peppering away at the upper region of the monthly chart triangle pattern:

The Cable also looks bullish as it continues to trade, for now at least, above the monthly 200 EMA:

Other pairs, the E/J as one example, also look bullish and setting up with 'Bull Flag' type of patterns:

I want to underscore here that I have no idea what lies ahead for the broader markets. I am simply saying that it looks to me like a big move is brewing. I have no idea which way any such move would head but, if pushed, I'd suspect higher and some of those reasons are stated above. Price could just as easily  reverse though from all of these major levels that I have noted above. I do understand that, but, there just doesn't seem to be enough continuous bad news emerging to trigger such a major sustained reversal. The Ukraine situation, if it worsens, could change all that in a heart beat though!

Caveat here? One tension I have though with any bullish continuation picture is with the image printed on the monthly chart of the S&P500. I have been posting the S&P500 monthly chart in my weekly updates for months now. I would still prefer to see a test of the 'previous high' and major S/R level of 1,577 level before being entirely confident of any bullish continuation. A short, sharp dip to this level by way of any Ukraine situation may resolve this tension:

S&P500 monthly

Summary: Charts of the USDX and EURX indices, Forex pairs and stocks have me suspecting that a major market move is brewing. I have no idea if this move will evolve and, if it does, which way it will head BUT I'm continuing to watch the charts for clues as to any new momentum move.

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