FX Indices Review for April week 1

USDX

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

Monthly Ichimoku: The March monthly candle is trading at the top edge of the monthly Cloud.

Weekly: Trend chopping/sideways. The weekly candle closed as a bullish coloured ‘spinning top’ style candle AND  still below the weekly 200 EMA.

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

Daily: Trend choppy/sideways. 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. I am starting to see a possible bullish ‘inverse H&S’ pattern building up here though. The neck line, quite appropriately, is the weekly 200 EMA!

Daily Ichimoku Cloud chart: Price traded below the Cloud all week. The daily Ichimoku chart shows how price has chopped within or near the Cloud since last November. Price is still trading just below the daily Cloud and the Cloud band is broadening and it has also flipped to being bearish. 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 sideways last week and formed up to trade within a symmetrical triangle pattern. Price edged up on Friday to test the upper trend line of the triangle.

4hr Ichimoku Cloud chart: Price traded above the Cloud all week.  This chart 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 this level but the February candle closed above. The March monthly candle is still printing a bullish candle and, although it has a bit of bearish reversal ‘shooting star’ look to it now, it is still trading above this key support.

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 is trading within the Cloud.

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

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

Daily: Trend choppy. Price action chopped lower for most of last week and edged down to test the support trend line. Price bounced up off this support on Friday though.

Daily Ichimoku Cloud chart: Price dipped back down into the Cloud on Thursday but closed the week sitting at the top edge of the Cloud.

4 hr: Trend choppy:  Price edged lower for most of the 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 trading within the Cloud but fell below the Cloud on Wednesday where is stayed to see out the week.  This is divergent from the daily chart and suggests choppiness.

Comments:

USDX: the USDX closed slightly higher for the week but is still below the weekly 200 EMA key S/R level. This remains a major S/R level for this index and I continue to watch it 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! A breakout from this range would be much appreciated so as to deliver some trending markets.

EURX: the EURX closed lower for the week. Like so many of the FX pairs, this index is trading at a pivotal region. There is the 61.8% fib of the 2008-2012 bear move and the monthly chart triangle bear trend line above current price. There is the bull triangle trend line and monthly 200 EMA just below current price. The index is now back down quite close to this support trend line of the monthly chart triangle pattern. A breach of this level, and of the monthly 200 EMA, could trigger the start of a significant bearish move.

I’m also on the lookout though for any bullish switch though and for an approach back up to the December high and the possible ‘double top’ concern that this would no doubt bring. The 61.8% fib level isn’t too far above this level either and any move back up there would then be suggesting possible breakout potential. I do realise that the ECB would not wish to see such a strong Euro though and, thus, this resistance zone could prove to be a bearish turning point for the index.

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.