FX Indices Review for 03/03/14

USDX

Monthly: Trend ranging. I’m still seeing a possible bearish ‘double top’ formation. The February candle closed as a large bearish candle, almost engulfing the January candle.

Monthly Ichimoku: The February candle closed lower and within the monthly Cloud. The Cloud here is rather narrow and horizontal and, thus, might not offer much support.

Weekly: Trend chopping/sideways. The weekly candle closed as a large bearish candle, almost engulfing the previous candle, and 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, again, this has not changed this week. A new support daily chart trend line, drawn in at the end of last week, was broken on Friday.

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 and the Cloud band remains 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.

4 hr: Trend choppy. Price chopped up and down this week but the weekly 200 EMA proved, once again, to be too much resistance. Price fell through a support trend line during Friday’s trade.

4hr Ichimoku Cloud chart: Price traded near the bottom edge of the Cloud to start the week, edged higher to pop out of the Cloud temporarily, but then finished below the Cloud on Friday.  A few Tenkan/Kijun crosses were noted with the latest being a bearish cross on Friday. This cross evolved below the Ichimoku Cloud and so is deemed a ‘strong’ signal. This chart is aligned with the daily chart and suggests short USD (risk on).

EURX

Monthly: 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 support of the monthly 200 EMA. The February candle closed though as a bullish candle and back above the monthly 200 EMA.

Monthly Ichimoku: Price had been held back by the monthly Cloud for most of 2013 but has recently been attempting to push up through this resistance zone. The February candle had more success than January did as it closed up in the middle of the monthly Cloud.

Weekly: Trend up, overall.  Last week’s candle was a bearish coloured Doji candle BUT it closed back above the monthly 200 EMA. The support trend line is also intact but I’m still seeing a bit of a 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 up and down last week but held above the support trend line.

Daily Ichimoku Cloud chart: Price chopped in and out of the Cloud throughout the week but finished back up in a region of thinning Cloud.

4 hr: Trend choppy: Price chopped lower for most of last week but still managed to hold above the support of the bull trend line and the monthly 200 EMA. Price rallied up from the support of both of these levels on Friday.

4 hr Ichimoku Cloud chart: Price started the week above the Cloud then fell to be below the Cloud but closed the week above the Cloud.  This is divergent from the daily chart and suggests choppiness.

Comments:

USDX: the USDX closed lower for the week and back below the weekly 200 EMA key S/R level. I continue to watch this level for guidance though as I believe that any hold above this level would support bullish continuation but a sustained breach would be rather bearish. The USDX is looking rather weak as it falls down into the monthly Ichimoku Cloud and I’m on the lookout for any continued weakness. Any escalation of events within the Ukraine though could trigger a ‘flight to safety’ move for the USD and this situation needs to be monitored.

EURX: the EURX chopped only slightly lower but, more significantly, it managed to close above the major S/R level of the monthly 200 EMA. The EURX is starting to look bullish as it continues to push up through the monthly Ichimoku Cloud. This rally could be undermined by events in the Ukraine though.

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.