FX Indices Review for 28/04/14

EURX and USDX Indices:

Another week has passed where not a lot has changed on either USDX or EURX index. In fact, as noted last week, not much has changed for a number of weeks. The USDX keeps chopping along between the 81.50 and 79 boundaries and has done so since last October. The EURX is still coiling along within a triangle that is now of 7 weeks duration. Hence, the technical descriptions remain much the same as for recent weeks! I wrote a piece yesterday where I discussed how I think that a big move is brewing and the behaviour of these two indices contributes to this thinking.

USDX

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

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

Weekly: Trend chopping/sideways. The weekly candle closed as bearish coloured and as, essentially, an ‘inside’ candle which was almost a ‘spinning top’ as well. Both of these patterns suggest that there is a lot of indecision with this index. The candle closed below the key weekly 200 EMA as well.

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

Daily: Trend choppy/sideways. Price chopped sideways to a bit lower last week. Nothing new here as the daily chart continues to show how price has chopped sideways since last September in a range bound by the 79 and 81.50 levels.

Daily Ichimoku Cloud chart: Price traded just below the Cloud for most of the week. The index edged up towards the daily Cloud last week but this Cloud is offering a fair bit of resistance as price has not managed to break up into the Cloud. The daily Ichimoku chart shows how price has chopped within or near the Cloud since last November. The index 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 chopped sideways all of last week. The 4 hr 200 EMA and the monthly pivot continued to be too much resistance for this index.

4hr Ichimoku Cloud chart: Price chopped sideways and within the Cloud for most of the week. This chart is divergent from the daily chart and suggests further 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 and March monthly candles closed as a bullish candles above this key support. The April candle is still printing a bullish candle, albeit an indecision style ‘spinning top’, but it is still above the monthly 200 EMA for the time being.

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 within the Cloud.

Weekly: Trend up, overall. The weekly candle closed as a bullish coloured ‘spinning top’ candle. This reflects ‘indecision’ BUT the index is still trading above the monthly 200 EMA and support trend line, although it is trading only just above the support trend line.

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

Daily: Trend choppy. Check out the small candle bodies and all of the spikes! The EURX chopped sideways and within the triangle pattern all of last week. Price is edging closer to the apex of this triangle and I’m watching for any breakout here; up or down.

Have a look at the daily chart though with a couple of labels thrown in. It is a bit of a stretch for sure but there is some bullish 'Cup 'n' Handle look to this:

Daily Ichimoku Cloud chart: Price chopped sideways in the top edge of the Cloud for most of the week.

4 hr: Trend choppy:  Price chopped sideways all week. I had though last week might be interesting as the index traded closer towards the apex of this triangle but no breakout has evolved as yet. Next week may offer some development here. The index closed the week, again, sitting just above the monthly pivot and above the support of the monthly 200 EMA.

4 hr Ichimoku Cloud chart: A narrow band of horizontal Cloud continued to form a backdrop for the sideways action of the index last week. Price closed the week just above the Cloud. This is divergent from the daily chart and suggests further choppiness.

Comments:

USDX: the USDX closed slightly lower for the week AND still 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! There is a bit of 'red flag' Economic data for the USD this coming week (GDP, FOMC and NFP) and perhaps these may get the USD moving.

EURX: the EURX closed slightly higher for the week. Price has again bounced 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 over the coming weeks.

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.