FX Indices Review for 14/04/14

USDX

Monthly: Trend ranging. I’m still seeing a possible bearish ‘double top’ formation. The April monthly candle is now printing a bearish candle.

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

Weekly: Trend chopping/sideways. The weekly candle closed as a large bearish engulfing candle AND back below the weekly 200 EMA.

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

Daily: Trend choppy/sideways. Price traded lower each day of last week until Friday. 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 levels.

Daily Ichimoku Cloud chart: Price traded below the Cloud for most of the week. The daily Ichimoku chart shows how price has chopped within or near the Cloud since last November. Overall though, 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. Price drifted lower all week but stalled on Friday as it neared the 79 level.

4hr Ichimoku Cloud chart: Price drifted down through the Cloud earlier in the week and closed well below the Cloud.  This chart is aligned with the daily chart and suggests short USD.

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 and March monthly candles closed as a bullish candles above this key support. The April candle is now printing a bullish candle and 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 in the Cloud.

Weekly: Trend up, overall.  The weekly candle closed as a bullish engulfing candle AND still above the monthly 200 EMA and support trend line.

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

Daily: Trend choppy. The EURX bounced off the support trend line earlier in the week and rallied from that point on. Price has closed up and out from a daily triangle pattern.

Daily Ichimoku Cloud chart: Price chopped above the Cloud for most of the week.

4 hr: Trend choppy:  Price bounced up off the major support of the monthly chart triangle bull trend line earlier in the week and then continued to rally. Price made a bullish break up and out from a symmetrical triangle on Friday. Price is also still holding above the support of the monthly 200 EMA.

4 hr Ichimoku Cloud chart: Price started the week below the Cloud but moved up through the Cloud towards mid-week. This is aligned with the daily chart and suggests long EUR.

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 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! The index closed for the week just above the bottom of this trading range which might make for some interesting viewing next week. Declining US bond yields seem to be trumping the impact of reasonable US data and thereby contributing to overall USD weakness.

EURX: the EURX closed higher for the week due to the weaker USD and on some reduced concern about ECB easing. Price has bounced, yet again, 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.

Ichimoku Alignment: Strange, but true, the EURX and USDX are both aligned for ‘risk on’  with their 4hr and daily Ichimoku charts. Such alignment can, at times, trigger good momentum moves. I’m on the lookout to see if this alignment holds and develops at all.

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.