FX Indices Review for 24/02/14

USDX

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

Monthly Ichimoku: The February candle is still sitting just above the monthly Cloud.

Weekly: Trend chopping/sideways. The weekly candle closed as a bullish candle BUT still 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 and this has not changed this week. Price edged up during the week and closed back on top of the previously broken trend line.

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 is very narrow and horizontal, thus, offering little support or 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 higher this week as US QE ‘taper’ decisions were reinforced. This move stalled though once the index ran into the resistance of the weekly 200 EMA.

4hr Ichimoku Cloud chart: Price traded below the Cloud all week but edged up to just below the Cloud on Friday when a new bullish Tenkan/Kijun cross was noted. This cross evolved below the Ichimoku Cloud and so is deemed a ‘weak’ signal. Price closed for the week sitting in the bottom section of the Cloud. This is divergent from the daily chart and suggests choppiness.

EURX

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 the major support of both the monthly 200 EMA and the monthly triangle trend line. The February candle, with just one week to go now, is printing a large bullish candle and is back above the monthly 200 EMA.

Monthly Ichimoku: Price had been held back by the monthly Cloud for most of 2013 and had been attempting to push up through this resistance zone. It is back to trading up in the monthly Cloud.

Weekly: Trend up, overall.  Last week’s candle was a bullish engulfing candle and it closed back above the monthly 200 EMA. The support trend line has managed to hold price up again this week.  I’m still seeing a possible 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 higher last week and broke up and out from a bear trend line that had been in play since last December. This move generated a bullish breakout from a symmetrical triangle.

Daily Ichimoku Cloud chart: Price chopped around within the daily Cloud for most of the week. It closed the week in the upper section of the daily Cloud.

4 hr: Trend choppy:  Price chopped higher last week and broke up and out from the triangle.

4 hr Ichimoku Cloud chart: Price moved up and out of the Cloud this week and gave yet another Tenkan/Kijun cross. This was a bullish cross within the Cloud so is deemed a ‘neutral’ signal. This is divergent from the daily chart and suggests choppiness.

Comments:

USDX: the USDX closed higher for the week but still below the weekly 200 EMA key S/R level. I continue to watch this level for guidance as I believe that any hold above this level would support bullish continuation but a sustained breach would be rather bearish. The bullish moves here on the USDX last week were not been very convincing and I’m on the lookout for any renewed weakness.

EURX: the EURX chopped higher for the week as well. It broke up and out from the triangle pattern and is back above the major S/R level of the monthly 200 EMA. The EURX is starting to look bullish again. The Cloud-bound nature of the EURX on the daily chart last wek contributed to a lot of choppiness seen on many FX pairs. Watch then for any breakout of the EURX from the daily Cloud, either up or down, as this may free up movement across these FX pairs.

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 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.