Last week: There were no TC signals of note last week as most FX pairs chopped sideways in the lead up to Friday’s Jackson Hole event. The US$ rallied after hawkish Fed sentiment but the focus will now be on next Friday’s NFP to see whether ‘Jobs data’ can further underpin this rally. Whilst I haven’t had many 4hr-chart FX related TC signals I have been active on the stock side and selling Option premium/theta. Next week also brings the August monthly close and this may help to define further stock movement depending on where the NASDAQ closes. I note also that the NASDAQ managed to carve out a narrowly bullish day on Friday whereas the S&P500 and DJIA failed.
US$: The US$ closed higher for the week but failed to break back above the 95.50 S/R threshold which will be the level in focus heading into next week. A review of the FX Indices can be found through the following link.
Monthly candles: August monthly candles will form up after Wednesday’s close so watch to see how these form up and for new monthly pivots.
Data: US NFP is slated for next Friday and there is a batch of CNY and European PMI data to note on Thursday as well.
Gold: continues to struggle under a major 5-year bear trend line but managed to hold up rather well despite Friday’s bullish US$ action.
AUD/USD: also continues to struggle under a major 3 ½ -year bear trend line but, whilst the 0.76 level gave way on Friday, the Aussie managed to hold above a 13-week support trend line.
Indecision candles: there were a lot of indecision-style weekly candles with either ‘Inside’, ‘Spinning Top’ or ‘Doji’ candles printed across many instruments: the S&P500, NASDAQ, DAX, FTSE, TSX, XJO, Crude Oil, EUR/JPY, AUD/JPY, NZD/USD and even the VIX to name just some. There is also a distinct lack of momentum across many instruments which can result in sharp moves during these periods of low liquidity and so more trading caution than usual is required at the moment.
NASDAQ: this index remains above the key 5,200 level and will be the main instrument in focus for me in the coming week. This is because any new monthly close above 5,200 would support a longer-term bullish breakout, following in the wake of those already seen on the S&P500 and DJIA.
NB: I am away from Thursday next week for a long w/e break and so updates will be brief and few during that period.
Stocks and broader market sentiment:
Most of the majors closed the week again with either small bearish indecision-style candles and with only the Russell 2000 index printing a bullish coloured candle, albeit an indecision-style Doji though. The NASDAQ is still testing the air above 5,200 though and I’m keenly watching to see if it can hold above this resistance with only three more trading days before the August monthly close.
I also note that the US Tech and Semi-conductor sectors look to be in favour at the moment, with recent breakouts on both, and I will continue looking for trading opportunities on stocks within these particular sectors:
XLK : Technology Sector ETF
SMH: Semiconductor Sector ETF
I continue to watch out for further clues as to any new momentum move, long or short though! In particular I’m looking out for:
S&P500 daily chart: The index continues to hold up from the Bull Flag and above the 2,135 breakout level but there still isn’t a huge amount of ADX momentum just yet. Keep an eye out for any test of the 2,135 level in coming sessions.
S&P500 weekly: The index closed with an indecision-style bearish coloured ‘Spinning Top’ candle but continues to hold above the Bull Flag’s upper trend line.
S&P500 monthly: I’m still on the lookout for any completion of this bullish triangle breakout move to test 2,500 but the Aug candle is printing an indecision-style bearish coloured ‘Doji’ candle with just a few days until it closes. I am also open minded about a test of the 1,600 level as per the longer-term chart:
Russell 2000 Index: this small caps index is considered a US market ‘bellwether’ and continues to hold above the Flag supporting a bullish breakout but last week’s candle was a bullish coloured ‘Long Legged Doji’ candle reflecting indecision.
VIX Index: The ‘Fear’ index has printed bullish coloured ‘Spinning Top’ candle but is still below the 14 threshold level.
Oil: Oil continues holding above the 2009 low of $33.50 but printed an indecision-style bearish coloured ‘Inside’ weekly candle. Watch now for any test of the $50 level as this is ‘neck line’ for my bullish-reversal Inverse H&S pattern.
Trading Calendar ‘High Impact’ data Items to watch out for:
- Sun 28th: Jackson Hole Symposium continues. JPY BoJ Kuroda speech.
- Mon 29th: GBP Bank holiday.
- Tue 30th: AUD Building Approvals. USD CB Consumer Confidence.
- Wed 31st: USD ADP NFP & Crude Oil Inventories. CAD GDP.
- Thurs 1st: CNY Manufacturing, Non-Manufacturing PMI & Caixin Manufacturing PMI. AUD Private Capital Expenditure & Retail Sales. GBP Manufacturing PMI. EUR Spanish, Italian, French, German & FINAL Manufacturing PMIs. USD Unemployment Claims & ISM Manufacturing PMI.
- Fri 2nd: GBP Construction PMI. CAD Tarde Balance. USD NFP.
EUR/USD: The E/U chopped up and down within a small wedge last week ahead of the Friday Jackson Hole event but all the time holding above the key 1.12 level. Hawkish Fed sentiment on Friday though boosted the US$ which punished this pair pushing it down through a recent support trend line and just below the key 1.12 level but not below a recent 61.8% fib.
The 1.12 level remains a key level to keep in focus as it is the monthly chart’s 61.8% fib of the 2000-2007 swing high move. The chart below shows how we are up to the 20th monthly candle chopping around near this key 1.12 level:
Any hold below 1.12 will have me looking for a test of the 4hr chart’s 61.8% fib which is down near 1.11.
The daily chart shows that price has been consolidating in a range bound by the 1.15 and 1.045 levels for the last 18 months though and so the following key levels remains the ones to monitor on the EUR/USD:
- The 1.12: this is a major S/R level from the monthly chart as it is the 61.8% fib of the 2000-2007 swing high move.
- The 1.15: a recent resistance level.
- The 1.18: this is major long term S/R level.
- The 1.22: near weekly 200 EMA, a previous monthly triangle trend line and it is the 50% of the weekly chart’s 2014-2015 swing low move.
- The 1.045 /1.040: the recent & longer term support levels marking the lower boundary of a potential Bear Flag.
Price is trading below the 4hr Cloud but above the daily and weekly Cloud.
The weekly candle closed as a bearish coloured ‘Inside’ candle.
Traders need to watch how next Friday’s NFP data impacts the US$ and, thus, this pair. There is also a batch of European PMI data released on Thursday that could impact price action on this pair and, remember, Monday is a UK Bank Holiday.
- I’m watching for any new TC signal on this pair, 1.12 and the 1.11 level.
EUR/JPY: This pair chopped sideways again last week in a continued triangle pattern but held below the key 115 level in the lead up to Friday’s Jackson Hole event. The 115 remains a key level as it is near the weekly chart’s 61.8% fib.
The 4hr chart shows a possible triangle breakout starting, and with a new TC signal trying to form as well, so I will be watching for any follow-through with this.
The AUD/JPY continues to look like it is consolidating before its next big move and I remain open minded about the next direction here and will use the 115 S/R level as my guide. I would read any new move back above this level as bullish.
Price is trading above thin Cloud on the 4hr chart but below the Cloud on the daily, weekly and monthly charts.
The weekly candle closed as a bearish coloured Doji candle reflecting indecision.
Yen pair traders need to be mindful that there was a BoJ Kuroda speech over the w/e and this might impact sentiment at market open. There is also a batch of European PMI data released on Thursday that could impact price action on this pair.
- I’m watching for any new TC signal on this pair, the 4hr chart’s triangle trend lines and the 115 level.
AUD/USD: The 4hr chart of the A/U for the last three weeks shows that this pair had been consolidating within a descending Flag in the lead up to Friday’s Jackson Hole event. This price action formed up under the 31/2 -year bear trend line but above the key 0.76 level and price also continued to hold above both an 8-month and a 13 week support trend line.
Hawkish Fed sentiment on Friday boosted the US$ which put pressure on this pair however. Price spiked higher and then lower on Friday but closed the week lower with a breakdown through the key 0.76 level BUT not below the recent 13-week support trend line and this is keeping the pattern of the higher HIGHs and higher LOWs, evident since June, intact.
Price action is still essentially consolidating under this major 31/2 -year bear trend as August draws to a close but it is hard to see how the Aussie might break this resistance by Wednesday as there is only AUD Building Approval and USD ADP data of note before the monthly candle will close and I don’t expect these would trigger such a move.
However, I will be keenly watching next Wednesday to see where the Aussie closes for August:
- Any bullish breakout above 0.76 and the 31/2 year bear trend line for August will have me looking up towards the 0.95 cents level. This is near the 61.8% fib of the recent swing low move (see weekly chart) and also near the other major bear trend line, since 2011, for added confluence. The 0.80, 0.85 and 0.90 would be obvious draw-cards as well of course.
- Any bearish respect of this 31/2 year trend line and reversal for August would have me looking for a test of the daily chart’s triangle trend line which is near the key 0.74 level and 4hr chart’s 61.8% fib (see this highlighted on the 4hr chart).
Price is trading below the Cloud on the 4hr chart but above the daily and weekly Clouds.
The weekly candle closed as a small bearish candle with long upper shadow following last week’s bearish-reversal ‘Shooting Star’ candle.
AUD traders need to watch out for impact from Tuesday’s AUD Building Approvals, Thursday’s AUD Private Capital Expenditure and Retail Sales and CNY PMI data as well as all of the US data, especially Friday’s NFP.
- I’m watching for any new TC signal on this pair, the 4hr chart’s Flag trend lines, the monthly chart’s bear trend line and the 0.76 level.
AUD/JPY: Price action essentially chopped sideways last week in the lead up to the Jackson Hole event but it started to drift higher on Friday and into the weekly close. This choppy price action has formed up a triangle pattern on the daily chart giving us trend lines to watch for any momentum-based breakout.
I continue looking for any hold above the major 75 level as this is near the weekly chart 61.8% fib support level. Any bullish daily-chart triangle breakout will have me looking for a test of the key 80 level and, after that, the weekly chart’s bear trend line.
Price is trading in the Cloud on the 4hr chart but just below the Cloud on the daily chart.
The weekly candle closed as a small bullish coloured ‘Inside’ candle reflecting indecision.
Yen pair traders need to be mindful that there was a BoJ Kuroda speech over the w/e and this might impact sentiment at market open. AUD/JPY traders also need to watch out for impact from Tuesday’s AUD Building Approvals, Thursday’s AUD Private Capital Expenditure and Retail Sales and CNY PMI data as well as all of the US data, especially Friday’s NFP.
- I’m watching for any new TC signal on this pair, the daily chart’s triangle trend lines and the key 75 level.
Kiwi: NZD/USD: The NZD/USD chopped around either side of the key 0.73 level last week in the lead up to Friday’s Jackson Hole event but the hawkish Fed sentiment lifted the US$ which punished this pair, much like with the EUR/USD and AUD/USD. The NZD/USD ended up closing the week below a recent 5-week support trend line and below the key 0.73 level.
The 0.73 level is long-term S/R and a look at the monthly chart shows the multiple highlighted regions where price has reacted at this level over the years. This remains the level to watch for any make or break activity in coming sessions but it should be remembered that the monthly, weekly and daily charts still show a broader Bear Flag pattern brewing here.
The NZD/USD is now trading below the 4hr Cloud but above the daily Cloud and it is still holding above the weekly Cloud but printed a bearish-reversal weekly candle.
The weekly candle closed as a bearish-reversal ‘Shooting Star’ candle.
The bearish-reversal weekly candle will have me looking for any bearish follow-through at market open. If so, the 4hr chart’s 50% fib near 0.715 and 61.8% fib near 0.71 would be obvious targets.
There isn’t any NZD ‘high impact’ data of note but traders need to watch for impact from the Chinese PMI and US data, especially Friday’s US NFP.
- I’m watching for any new TC signal on this pair and the 0.73 level.
The Yen: USD/JPY: The USD/JPY continued ‘sitting on the fence’ last week in the lead up to Friday’s Jackson Hole event by holding along the key 100.50 region. This remains a key battle ground for the U/J as it is the weekly chart’s 50% Fibonacci retracement level and I’m still on the lookout for any hold above this level to shape up a potential weekly-chart ‘Inverse H&S’ pattern.
Price action during this time had also been forming up under a 4hr chart descending bear trend line and this, with the recent low near 99, gave us trend lines to watch for any momentum-based breakout. A bullish trend line breakout evolved on Friday following the Fed speeches and momentum looks to be increasing now as well. There is a new TC LONG signal trying to form here too and so I will see how this develops at market open next week. Any bullish follow through might target the 61.8% fib of this recent swing low move as this is near previous congested S/R zone at 104.5 and so that would make an obvious first target; this is some 250 pips above current price so worth stalking! (see 4hr chart). Note how this 104.5 region also intersects with an 8-month bear trend line evident on the daily chart!
Price is now trading above the Cloud on the 4hr chart but below the Cloud on the daily chart.
The weekly candle closed as a bullish candle.
Yen pair traders need to be mindful that there was a BoJ Kuroda speech over the w/e and this might impact sentiment at market open. There is also US data to impact this pair, especially Friday’s NFP.
- I’m watching for any new TC signal on this pair, the 100/101.50 region and the 104.5 region.
USD/CAD: The USD/CAD continued with its bounce up off the bottom trend line of the three month wedge pattern last week. I had been watching for a test of the 1.30 level last week as this is a major S/R region and near the 4hr chart’s 50% fib and 200 EMA. Friday’s hawkish Fed rhetoric supported the US$ and helped this test of 1.30 to evolve, in fact, price closed the week sitting right on top of this level.
I’m still watching these wedge trend lines and the 1.30 region for any make or break activity.
Price is now trading above the Cloud on the 4hr and daily (just) charts.
The weekly candle closed as a bullish candle.
NB: USD/CAD traders need to keep an eye on Oil though as any break above the key $50 level could help to support the CAD$ and keep pressure on the USD/CAD. Just FYI: I’m stalking a bullish-reversal ‘Inverse H&S on Oil with the ‘neck-line’ at $50.
There is also CAD GDP on Wednesday to monitor as well as CAD Trade Balance on Friday plus all of the US data especially Friday’s NFP.
- I’m watching for any new TC signal, the wedge trend lines and 1.30 level.
Other FX pairs: I have not had time to assess the following pairs in detail but, with the August monthly candle closing in a few days, I thought I’d show the key monthly levels I’m watching into this close:
GBP/AUD monthly: watching the 61.8% fib near 1.75:
GBP/CAD monthly: watching the 1.70 S/R level:
GBP/JPY monthly: watching the 134 level near the 78.6% fib:
GBP/NZD monthly: watching the 1.77 S/R level:
EUR/AUD monthly: watching for any hold above the monthly chart’s triangle trend line:
AUD/NZD monthly: watching the 1.045 level, yet again, to see if my ”Inverse H&S’ pattern holds:
Gold: Gold chopped lower last week and gave some spike action with Friday’s Fed speeches but still managed to close within the revised 4hr chart wedge pattern. The precious metal also continues to consolidate under a major 5-year bear trend line and this is keeping the following S/R levels in focus:
- The major 5-year bear trend line that intersects near the $1,380 level.
- The bottom of the monthly Cloud that is also near the $1,380 level.
- The whole-number $1,400 level.
Any monthly bullish break and hold above these levels will have me looking for a test of the monthly chart’s 2011-2015 swing low 61.8% fib near $1,600.
Any monthly bearish failure to break up through this bear trend line will have me looking for a test back down at the psychological $1,300 level and then the 4hr chart’s 61.8% fib near $1,265.
Gold is trading below the Cloud on the 4hr chart but in the Cloud on the daily chart.
The weekly candle closed as a bearish candle.
- I’m watching for any new TC signal here, the 4hr chart’s wedge trend lines and the 5-year bear trend line.