Chart analysis: a form of therapy during challenging times

Last week: Last week closed with terrible atrocities being committed against the people of Paris. One can’t help but feel this may be a defining global moment, in much the same way that the events of 2001 September 11 were for all people and not just those in the USA. I expect the world and political agenda will be shaped rather differently in the coming weeks and months. My thoughts and prayers are added to those of so many in support of the people in Paris.

This blog started out as a form of therapy for me during my battle with cancer and, in much the same way, it is some therapy for me in this current period of challenge. Much of this analysis was formulated before the Paris attacks but I suspect that global stock markets might trade lower and the US$ higher in the wake of this event in a ‘risk-off‘ style response. This potential reaction needs to be taken into account when considering ANY technical analysis as well as that within this post. 

The weakness with the US$ last week created some choppy price action that was more conducive to bounce trades but not so much for my 4hr-chart based trend trading.

This week:

Warning: post Paris attacks: the chart action for this analysis formed up before the full extent of the Paris attacks was known. Thus, there may be gaps at market open on some FX pairs and I would not be surprised to see this occur on the EUR and USD based pairs. As mentioned above, I would also not be surprised to see a ‘risk off‘ style reaction across all markets.

The US$ index remains under the key 100 level and a review of the FX indices can be found through this link. These charts also evolved before the full extent of the Paris attacks was understood and this needs to be taken into consideration when reading the analysis.

Indecision Candles: Indecision-style weekly candles were printed on the EUR/USD, EUR/JPY, GBP/USD, NZD/USD, USD/JPY, GBP/AUD and Gold. So, if you’ve been struggling to pick direction…..you’re not alone!

Gold: Gold may attract some buyers in the wake of the weekend terrorist attacks in Paris.

Stocks and broader market sentiment:

US stocks closed lower for the week with concern focused on falling commodity prices and a potential December US rate hike. This momentum may gather some steam now though in the wake of the Paris attacks.

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 has closed lower but just above the psychological 2,000 level yet back below the daily support trend line.

S&Pdaily

S&P500 weekly: this still has a bit of a Bull Flag appearance but the previous suspected bullish breakout didn’t gain ADX momentum and so the trend lines have been adjusted. Traders need to keep watch of the 2,135 level though for any breakout or respect. Respect may signal a bearish ‘Double Top’:

S&Pweekly

Ichimoku S&P500 daily chart: a clear cross of the blue Tenkan-sen line below the pink Kijun-sen line. The bullish Tenkan/Kijun cross remains open and price is above the Cloud and key 2,000 level but below the 2,100 level:

S&PdailyCloud

Ichimoku S&P500 weekly chart: the weekly candle closed as a bearish candle and back within the weekly Cloud. I would want to see a sustained bearish move below the Cloud to support bearish sentiment. Note how the weekly Cloud continues to remains aligned along the key 2,000 level:

S&P500weeklyCloud

S&P500 monthly chart: a break of the monthly support trend line. The monthly trend line remains intact for now but a break of this support level would suggest to me of a more severe pull back. Bearish divergence on the monthly chart had warned of recent weakness and I, like the Elliott Wave indicator, had been looking for a test of the 1,600 region but this might not evolve.

S&Pmonthly

Russell 2000 Index: this small caps index is considered a US market ‘bellwether’ and does have a bit of a potential bearish H&S brewing but any new close and hold back above $1,220 would void this. The weekly candle closed as a bearish candle.

RUTweekly

VIX Index: The ‘Fear’ index is back up near the 20 level and has printed a large bullish weekly candle.

VIXweekly

Copper: closed with a bearish weekly candle but still within the bullish descending wedge, although it is down near support. This wedge is set within a larger triangle pattern and I’m watching the wedge trend line for any support here.

HGmonthly HGweekly

Oil: The ‘Triple Bottom’ continues to look possible here but the $40 level is now key support. The bearish weekly candle closed just above this $40 level though and this will be the level to watch in coming sessions.

CLmonthly CLweekly

Trading Calendar Items to watch out for:

  • Mon 16th: NZD Retail Sales. JPY Prelim GDP. EUR ECB Draghi speaks. CAD Manufacturing Sales.
  • Tue 17th: AUD Monetary Policy Meeting Minutes. NZD Inflation expectations. GBP Inflation Report Hearings & CPI. EUR German ZEW Economic Sentiment. USD CPI and NZD GDT Price Index.
  • Wed 18th: USD Building Permits & FOMC Meeting Minutes.
  • Thurs 19th: JPY Monetary Policy Statement & Press Conference. GBP Retail Sales. USD Weekly Unemployment Claims & Philly Fed Manufacturing Index.
  • Fri 20th: EUR ECB Draghi speaks. CAD Core CPI & Retail Sales.

Forex:

E/U: The E/U chopped sideways last week following five weeks of lower price action but this reprieve was more due to US$ weakness as the US$ index consolidated under the key 100 level.

The potential 3,500 pip EUR/USD Bear Flag has not really got going just yet but remains the pattern in focus at the moment with the previous low near 1.045 still in focus. A break and hold below 1.045 would be very bearish but if price reaches down to this level I’ll be watching for any possible ‘Double Bottom’ support action as well. I’m certainly no economist BUT a small part of me can’t help but think that a tiny US rate rise, somewhere in the future, just won’t be enough to sustain bearish divergence between the EUR and USD. I’m a trend follower though and will keep an open mind!

Descending triangle on the monthly chart: There is still an overall bearish pattern in play on the E/U monthly chart: a 4,300 pip bearish descending triangle breakdown on the monthly chart. The descending triangle pattern is a bearish continuation pattern and has a base at around the 1.18 level. The height of this triangle is about 4,300 pips. Technical theory would suggest that the bearish breakdown of this triangle below 1.18 might see a similar move. It is worth noting that this would bring the E/U down near 0.80 and to levels not seen since 2000/2001!

Price is trading below the Cloud on the 4hr, daily, weekly and monthly charts.

The weekly candle closed as a bullish coloured ‘Spinning Top’ and almost ‘Inside’ candle with both patterns reflecting some indecision.

Traders need to watch for possible impact from the two ECB Draghi speeches on Monday and Friday as well as for data that impacts the US$. US$ sensitive data includes Tuesday’s CPI, Wednesday’s Building Permits and FOMC Meeting Minutes, Thursday’s Weekly Unemployment Claims and Philly Fed Manufacturing Index as well as a few Fed speeches throughout the week.

  • I’m watching for any new TC signal on this pair, the Bear Flag trend lines and the key 1.045 level.

EUmonthly

EUweekly EUdaily EU4

E/J: The E/J continued chopping either side of the key 132 level last week and finished the week sitting right on top of this level.

I’m still seeing the monthly Cloud’s bearish Tenkan/Kijun cross and these crosses have been few and far between so they are worth noting! This paints a rather bearish picture so I’ll keep this in mind too.

EJmonthlyCloud

Price is trading below the Cloud on the 4hr, daily & weekly charts but above the Cloud on the monthly chart.

The weekly candle closed as bearish coloured ‘Spinning Top’ candle reflecting some indecision.

Traders need to watch for any impact from the ECB Draghi speeches on Monday and Friday and from Thursday’s BoJ Rate Statement. US$ sensitive data might impact too and includes Tuesday’s CPI, Wednesday’s Building Permits and FOMC Meeting Minutes, Thursday’s Weekly Unemployment Claims and Philly Fed Manufacturing Index as well as a few Fed speeches throughout the week.

  • I’m watching for any new TC signal on this pair and the 132 level.

EJmonthly EJweekly EJdaily EJ4

A/U: The A/U bounced up off the 78.6% fib support last week in response to the better than expected AUD jobs data. I’m still subscribing to the ‘Turnbull Turnaround’ factor here as price action sure looks to be trying to base. However, recent price action remains in a recent descending trading channel and below the previously broken monthly trend line.

Price is trading just above the 4hr Cloud, in the Cloud on the daily chart but below the Cloud on the weekly and monthly charts.

The weekly candle closed as a bullish engulfing candle.

Traders need to watch for any impact from Tuesday’s RBA Monetary Policy Meeting Minutes and data that impacts the US$. US$-sensitive data includes Tuesday’s CPI, Wednesday’s Building Permits and FOMC Meeting Minutes, Thursday’s Weekly Unemployment Claims and Philly Fed Manufacturing Index as well as a few Fed speeches throughout the week.

  • I’m watching for any new TC signal on this pair and the trading channel trend lines.

AUmonthly AUweekly AUdaily AU4

A/J: The A/J remains below the key 89 level but it broke up and out from a triangle pattern mid-week following the AUD jobs data. This breakout move didn’t develop though as U/J and stock weakness weighed in here.

Price is trading above the Cloud on the 4hr and daily (just) charts but below the weekly and monthly Cloud.

The weekly candle closed as a bullish candle.

Traders need to watch for any impact from Tuesday’s RBA Monetary Policy Meeting Minutes and Thursday’s BoJ Monetary Policy Statement as well as for data that impacts the US$. US$-sensitive data includes Tuesday’s CPI, Wednesday’s Building Permits and FOMC Meeting Minutes, Thursday’s Weekly Unemployment Claims and Philly Fed Manufacturing Index as well as a few Fed speeches throughout the week.

  • I’m watching for any new TC signal on this pair and the 89 level.

AJmonthly AJweekly AJdaily AJ4

G/U: The Cable put in a relief rally last week following the huge fall from the week before. Price action rallied back up to test this broken triangle trend line and closed the week just under this resistance zone. Unless there is a huge US$ move in reaction to the Paris attacks it might take until either Tuesday’s GBP CPI or Thursday’s GBP Retail Sales to trigger a reaction move off this level.

This daily chart triangle pattern is worth about 1,100 pips though and there could be more in this move. Price has now tested the broken trend line and, any failure to keep moving higher, might deliver the remaining quota. The monthly chart shows that the target for this move is down near the 1.40 area which is the low from back in 2008 and 2001 and, thus, a region of some importance.

Weekly chart H&S: There is still a possible bearish H&S pattern forming on the weekly chart but the failure to break below the ‘neck line’ is holding this pattern off the time being. The height of the pattern is about 2,400 pips and suggests a similar move lower with any break and hold below the ‘neck line’. I would consider that any close and hold back above 1.60 would void this pattern.

Price is trading in the Cloud on the 4hr chart, in the bottom edge of the Cloud on the weekly chart but below the Cloud on the daily and monthly charts.

The weekly candle closed as a bullish coloured ‘inside’ candle reflecting some indecision.

Traders need to watch for any impact from Tuesday’s GBP CPI and Thursday’s GBP Retail Sales as well as for data that impacts the US$. US$-sensitive data includes Tuesday’s CPI, Wednesday’s Building Permits and FOMC Meeting Minutes, Thursday’s Weekly Unemployment Claims and Philly Fed Manufacturing Index as well as a few Fed speeches throughout the week.

  • I’m watching for any new TC signal on this pair, the daily chart’s triangle trend line and the 1.50 / 1.55 levels.

GUmonthly GUweekly GUdaily GU4

GBP/JPY: The GBP/JPY chopped higher last week and back up to the daily chart’s wedge trend line…..yet again. It also continues to hold above the key 184 level which is the region of the 50% fib from the major 2007-2012 swing low move.

Price is trading above the Ichimoku Cloud on the 4hr chart, in the Cloud on the daily chart but above the Cloud on the weekly and monthly charts.

Traders need to watch for any impact from Tuesday’s GBP CPI and Thursday’s GBP Retail Sales and BoJ Monetary Policy Statement. US$ data may impact here too and includes Tuesday’s CPI, Wednesday’s Building Permits and FOMC Meeting Minutes, Thursday’s Weekly Unemployment Claims and Philly Fed Manufacturing Index as well as a few Fed speeches throughout the week.

The weekly candle closed as a small bullish candle.

  • I’m watching for any new TC signal on this pair, the 184 level and the revised daily-chart wedge pattern.

GJmonthly GJweekly GJdaily GJ4hr

Kiwi: NZD/USD: The NZD/USD chopped sideways last week whilst holding within a 4hr chart wedge pattern that is sitting within either a daily-chart Bear Flag or Inverse H&S.

Price is trading above the Cloud on the daily chart but below the Cloud on the 4hr, weekly and monthly charts.

The weekly candle closed as a small bullish coloured, almost ‘Inside’, candle reflecting some indecision.

Traders need to watch for impact from Monday’s NZD Retail Sales and Tuesday’s NZD Inflation Expectations and GDT Price Index data. US$ data may impact here too and includes Tuesday’s CPI, Wednesday’s Building Permits and FOMC Meeting Minutes, Thursday’s Weekly Unemployment Claims and Philly Fed Manufacturing Index as well as a few Fed speeches throughout the week

  • I’m watching for any new TC signal on this pair, the 4hr chart’s wedge trend lines and the daily chart’s Flag trend lines.

KiwiMonthly KiwiWeekly KiwiDaily Kiwi4

The Yen: U/J: The U/J chopped a bit lower under pressure from the key 124 level and the fall with the US$ and stocks.

Monthly Chart Bullish Cup’ n’ Handle pattern: There looks to be a new bullish Cup ‘n’ Handle forming up on the monthly chart. The theory behind these patterns is that the height of the ‘Cup’ pattern is equivalent to the expected bullish move from the ‘handle’ breakout. The height of the Cup for the U/J weekly chart is around 4,800 ~ 4,900 pips. This may seem like a massive move but the longer term chart below shows this move to be reasonable as it would take the U/J up near the 50% fib of the 1985-2012 swing low move. Note the 101.5 level on the other monthly MT4 chart though. Any pullback down to this level, apart from helping to form up a huge Handle for the Cup ‘n’ Handle, would also help to develop a bullish ‘inverse H&S’ pattern.

UJmonthly

Price is trading above the Cloud on the 4hr, daily, weekly and monthly charts.

The weekly candle closed as a small bearish, almost ‘Inside’, candle.

Traders need to watch for any impact from Thursday’s BoJ Monetary Policy Statement. US$ data might impact here too and includes Tuesday’s CPI, Wednesday’s Building Permits and FOMC Meeting Minutes, Thursday’s Weekly Unemployment Claims and Philly Fed Manufacturing Index as well as a few Fed speeches throughout the week

  • I’m watching for any new TC signal on this pair and the 124 level.

UJmonthly UJweekly UJdaily UJ4

USD/CAD: The USD/CAD chopped sideways last week due to both CAD Oil-related weakness and US$ weakness.

I’m still seeing a ‘Cup’ pattern forming up on the monthly chart and this might help explain this extended choppiness around the 1.30 region as price action creates the ‘Handle’.

Monthly Chart Cup ‘n’ Handle? The monthly chart shows a possible bullish Cup ‘n’ Handle pattern forming up under the 1.30 level. This is worth keeping an eye on as the pattern would be worth up to 3,500 pips if it was to evolve as this is the height of the ‘Cup’. The interesting point is that the target for this pattern would put price up at the highs reached back in 2002 and this is equal to a 100% Fib retracement of the 2002-2007 bear move.

Price is trading above the Cloud on the 4hr, daily, weekly and monthly charts.

The weekly candle closed as a small bullish candle.

Traders need to watch for impact from Monday’s CAD Manufacturing Sales and Friday’s CAD Core CPI and Core Retail Sales as well as for data that impacts the US$. US$ data includes Tuesday’s CPI, Wednesday’s Building Permits and FOMC Meeting Minutes, Thursday’s Weekly Unemployment Claims and Philly Fed Manufacturing Index as well as a few Fed speeches throughout the week

  • I’m watching for any new TC signal on this pair and the 1.30 and 61.8% fib levels.

LoonieMonthly LoonieWeekly LoonieDaily Loonie4hr

GBP/AUD: This pair chopped up to the daily chart’s Flag trend line and then down again last week helped, initially, by some weird bullish interpretation of the GBP employment data and, then, undermined by the strong AUD$ following the upbeat AUD jobs data.

There is still the look of a ‘Cup’ pattern on the monthly chart which could support continued choppiness around the 2.07 region as a potential ‘Handle’ forms up. Any continued bullish momentum may bring an alternative monthly chart pattern into focus though. A continued push up to the 2.40 region near the 61.8% fib would help to form up a possible bullish ‘Inverse H&S’ pattern. I would then be looking for any pullback back down to the ‘Shoulder’ region of 2.07.

Price is trading in the Cloud on the 4hr chart, below the Cloud on the daily chart but above the Cloud on the weekly and monthly charts.

The weekly candle closed as a bearish coloured ‘Spinning Top’ candle.

Traders need to watch for any impact from Tuesday’s RBA Monetary Policy Meeting Minutes as well as from Tuesday’s GBP CPI and Thursday’s GBP Retail Sales.

  • I’m watching for any new TC signal on this pair, the daily chart’s Flag trend lines and the 2.07 level.

GAmonthly GAweekly GAdaily GA4

EUR/AUD: Price chopped a bit lower last week but bounced up off the daily chart’s trading channel support trend line. The EUR/AUD still remains below the monthly charts congested zone bound by 1.75 and 1.55.

Price is trading below the Cloud on the 4hr and daily charts but above the Cloud on the weekly and monthly charts.

The weekly candle closed as a bearish candle.

Traders need to watch for possible impact from the two ECB Draghi speeches on Monday and Friday as well as for any impact from Tuesday’s RBA Monetary Policy Meeting Minutes.

  • I’m watching for any new TC signal on this pair, the daily chart’s trading channel and the 1.55 level.

EAmonthly EAweekly EAdaily EA4

GBP/NZD: The GBP/NZD continued to trade above the breakout 2.30 level last week and bounce trades up off this region would have been profitable on two occasions.

Price action continues to consolidate under the monthly chart’s major bear trend line though and it might try and target this region again if the bullish hold above 2.30 continues. However, any resumption of bearish momentum might target the 61.8% fib and, after that, the previous breakout and S/R region of 2.10 which happens to be near the weekly 200 EMA.

The GBP/NZD is trading below the Cloud on the daily chart but above the Cloud on the 4hr, weekly and monthly charts.

The weekly candle closed as a bullish candle.

Traders need to watch for impact from Monday’s NZD Retail Sales and Tuesday’s NZD Inflation Expectations and GDT Price Index data as well as for any impact from Tuesday’s GBP CPI and Thursday’s GBP Retail Sales data. 

  • I’m watching for any new TC signal on this pair and the 2.30 level.

GNmonthly GNweekly GNdaily GN4hr

Silver: Silver closed lower again last week despite some recent US$ weakness and remains below $15 support.

I’m still seeing a bullish-reversal descending wedge here but this will probably depend on whether the US$ index respects or breaks the 100 level. Any sustained hold back below $15 would be bearish though and would bring the $11 and $9 levels back into focus. $11 is previous S/R and the $9 area is the 100% fib level.

Silver is trading below the Cloud on the 4hr, daily, weekly and monthly charts.

The weekly candle closed as another bearish candle.

  • I’m watching for any new TC signal, the $15 level and the weekly chart’s descending wedge trend lines.

SilverMonthly SilverWeekly

Gold:  Gold closed lower for the week despite the weaker US$ too and remains below the $1,100 support level.

I’m still seeing a bullish-reversal descending wedge here as well but this will also probably depend on whether the US$ index respects or breaks the 100 level. The weekly hold back below $1,100 is bearish and, if this continues, will bring the recent low near $1,050 back into focus. Bearish targets below $1,100 include this recent low near $1,050, the $1,000 psychological level and, then, the 78.6% fib near $950.

Gold is trading below the Cloud on the 4hr, daily, weekly and monthly charts.

The weekly candle closed as a bearish ‘Spinning Top’ candle reflecting some indecision here.

  • I’m watching for any new TC signal, the wedge trend lines and the $1,100 level.

GoldMonthly GoldWeekly

The post Chart analysis: a form of therapy during challenging times. appeared first on www.forextell.com.

Leave a Reply