Crunch time? US$ & many instruments at major S/R levels

Last week:  There were five new TC signals last week that I posted on my blog: U/J = 50 (closed), GBP/JPY =130 (closed), EUR/AUD = 0 (closed), AUD/USD = 50 (open) and GBP/AUD = 300 (open). There was another signal on the EUR/AUD on Friday that I missed but this has delivered 190 pips and is also still open. Friday’s ECB commentary has also triggered a new signal on the EUR/JPY.

This week:

The US$ index remains under the key 100 level and a review of the FX indices can be found through this link. A break or respect of this level is being closely watched by traders as many instruments trade at their own key levels; the EUR/USD, AUD/USD, AUD/JPY, Copper, Oil, Gold and even the S&P500 as just some. The success or otherwise of the US$ at this 100 resistance level might then dictate the next trend for some of these instruments.

Trading volumes might be lighter to start and finish the week with Monday being a JPY Bank holiday and Thursday being the Thanksgiving holiday in the USA.

AUD/JPY: The AUD/JPY sauntered rather slowly up to the 89 level last week and this is a major S/R level for this pair. However, given this pair is closely aligned with the risk appetite displayed for stocks, the potential warning for the stock market is just as important and worth heeding here too!

EUR/USD: this was a victim of some more ECB jawboning on Friday and looks to be headed to the 1.045 S/R level. Watch for reaction here as any break would support the ‘Bear Flag’ theme but ‘respect’ might help form a ‘Double Bottom’ circa 1.40.

I am away for a few days either side of next w/e and there will only be very brief w/e updates, if at all, as between the Test cricket and wine tasting I don’t expect to have much spare time.

Stocks and broader market sentiment:

Many global stock indices closed higher for the week despite the tragic events of last weekend: S&P500, DJIA, NASDAQ, RUT, FTSE, DAX, TSX, SENSEX and XAO . It seems that the US Fed rhetoric of a slow and gradual rate hike, if and when it does come, has eased stock trader concern. The DAX and XAO actually printed bullish engulfing candles and the DAX looks to have attempted a Bull Flag breakout:

DAX weekly chart:

DAXweekly

XAO weekly chart:

XAOweekly

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 closed just below the psychological 2,100 level.

S&Pdaily

S&P500 weekly: this still has a bit of a Bull Flag appearance and traders need to keep watch of the 2,135 level for any breakout or respect.

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 just below the 2,100 level:

S&PdailyCloud

Ichimoku S&P500 weekly chart: the weekly candle closed as a bullish candle and back above the weekly Cloud. I would want to see a sustained bearish move below the Cloud to support bearish sentiment. Note how the weekly Cloud remains aligned along the key 2,000 level. There is also a bearish Tenkan/Kijun cross still open here but the lines are fairly flat and closely aligned so I’ll be watching for any new bullish cross:

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 bullish candle.

RUTweekly

VIX Index: The ‘Fear’ index is back below the 20 level and has printed a bearish weekly candle.

VIXweekly

Copper: closed with another bearish weekly candle and below the potential bullish descending wedge. The 2.0 level looks rather crucial here as fib and whole-number support. If this is going to try and bounce then this might be the place to attempt such a recovery:

HGmonthly HGweekly

Oil: The ‘Triple Bottom’ continues to look possible here but the $40 level remains as key support. The bullish coloured ‘Spinning Top’ weekly candle closed above this $40 level.

CLmonthly CLweekly

Trading Calendar Items to watch out for:

  • Mon 23rd: JPY Bank Holiday, EUR French & German Flash Manufacturing PMI. OPEC Meetings Eurogroup Meetings. USD Fed Announcement.
  • Tue 24th: EUR German Ifo Business Climate. AUD RBA Gov Stevens speaks. USD Prelim GDP and CB Consumer Confidence.
  • Wed 25th: USD Core Durable Goods & Weekly Unemployment Claims.
  • Thurs 26th: USD Bank Holiday: Thanksgiving. NZD Trade Balance. AUD Private Capital Expenditure.
  • Fri 27th:  GBP Second Estimate GDP.

Forex:

E/U: The E/U chopped lower to start last week as the US$ continued to strengthen, however, the 100 level remains as considerable resistance for the US$ index and this allowed some mid-week reprieve for the EUR/USD. The E/U even managed to print a 4 hr candle close above a bear trend line that had been in force for almost six weeks but this rally effort was short lived as ECB commentary on Friday about further stimulus potential undermined the EUR$. As a result, the E/U remains under this bear trend line and is close to printing a new bearish TC signal.

The E/U also remains below the broken Bear Flag trend line but above the previous low of 1.045 and these will be the two levels in focus next week. Any close and hold below the 1.045 level would continue to endorse the Bear Flag but I’ll also be watching for any effort to put in a ‘Double Bottom’ bounce here as well. I note with interest on the longer-term monthly EUR/USD chart below how the 1.40 region is a long-term S/R region. My MT4 chart only goes back to 1991 but my Profit Source chart goes back to 1986. From this chart then it seems the 1.045/1.040 region might be a closely watched zone in coming sessions:

EUR/USD: monthly chart:

EUmonthly

Some EUR/USD recovery effort however, even if only temporary, would not surprise here though following these six bearish weeks and traders would be well advised to monitor this bear trend line. Any 61.8% retrace of this six-week swing low move would bring price back up to the previously broken Bear Flag trend line, the monthly pivot and the monthly chart’s major 61.8% fib level near 1.12. Clearly, this is a most congested zone and would be an obvious target for any bullish bounce effort here.  It is also worth keeping in mind that any failure of the US$ index to break up through 100 might allow the E/U to continue to recover.

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 bearish candle.

Traders need to watch for data that impacts the US$ as well as for the two EUR Flash Manufacturing PMI data prints on Monday and German Ifo Business Climate data on Tuesday.

  • I’m watching for any new TC signal on this pair, the Bear Flag trend line, the 1.045/40 and 1.12 levels.

EU4

EUdaily EUweekly EUmonthly

E/J: The E/J continued chopping around near the key 132 level and within a wedge pattern for much of last week but ECB dovish commentary on Friday sent this pair lower and it finished the week below this wedge and with a new TC SHORT signal. 

The daily chart’s triangle breakdown is still in progress here and there have been almost 400 pips of a potential 2,000 pip move delivered from this move so far.

I’m also still seeing the monthly Cloud’s bearish Tenkan/Kijun cross and note that these crosses have been few and far between so they are worth noting!

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 candle.

As for the E/U, traders need to watch for data that impacts the US$ as well as for the two EUR Flash Manufacturing PMI data prints on Monday and German Ifo Business Climate data on Tuesday.

  • There is a new TC SHORT signal on this pair as well as the daily chart’s triangle breakdown.

EJ4

EJdaily

EJweekly EJmonthly

A/U: The A/U had a good week and, with some mid-week US$ weakness helping it along, it managed on Thursday to break up and out from a recent six-week descending trading channel and to trigger a new TC signal. Price action paused a bit on Friday during the Asian session as it butted up against the previously broken monthly support trend line but it eventually closed the week above this key S/R region. I’m still seeing this bullish recovery as part of the greater Turnbull Turnaround Effect.

When you look at the monthly chart just below you can see that price is have a right battle here at a long-term S/R zone and the fibs of two major, monthly-chart based swing high moves. That of:

  • the 61.8% fib of the major swing high move from 2000 to 2011 near 0.715 and
  • the 78.6% fib of the 2008-2011 swing high move near 0.71.

Thus, if price action is going to try and recover then this would be a decent place to start:

AUmonthlyCloud

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

The weekly candle closed as a bullish candle following last week’s bullish engulfing candle.

Traders need to watch for data that impacts the US$ as well as for the RBA Gov Stevens speech on Tuesday and Private Capital Expenditure data on Thursday.

  • There is an open TC LONG signal on this pair.

AU4 AUdaily AUweekly AUmonthly

A/J: The A/J closed the week just below the key 89 level and it had earlier broken up and out from a triangle pattern, however, without much momentum.

The 89 level is the one to keep in focus though here next week as this is a major demarcation zone which can be easily seen on the weekly and monthly charts. The 89 level is also the upper trend line of a potential bullish ascending triangle pattern that has been brewing here for some time. This triangle is worth up to 600 pips and any bullish continuation of 600 pips above 89 would price action at the 95 level which just happens to be near the 61.8% fib retracment of the recent, weekly-chart swing low move….all for added confluence.

Any close and hold above 89 would suggest bullish continuation and, given that A/J sentiment often trades hand in glove with that for stocks, this would be a strong vote of confidence for stocks as well. Conversely, failure at the 89 level might be a bearish signal for stocks.

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

The weekly candle closed as a bullish candle.

As for the A/U, traders need to watch for data that impacts the US$ as well as for the RBA Gov Stevens speech on Tuesday and Private Capital Expenditure data on Thursday.

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

AJ4 AJdaily AJweekly AJmonthly

G/U: The relief rally continued on the Cable for much of the week despite Thursday’s weaker than expected Retails Sales data. Price dipped on Friday though as the US$ picked up some support and some second tier GBP data disappointed. Price remains within a daily chart triangle pattern BUT a new TC SHORT signal is trying to form.

I adjusted the daily chart’s triangle trend lines mid-week and the new pattern is worth about 1,600+ pips. I note that any bearish breakdown and follow through would bring price down to the 2008 low near 1.35.

Whilst I have removed the weekly chart’s bearish H&S from this analysis I am still seeing this potential pattern on the charts.

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

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

Traders need to watch for data that impacts the US$ as well as for Friday’s GBP Second Estimate GDP.

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

GU4 GUdaily GUweekly GUmonthly

GBP/JPY: The GBP/JPY chopped higher last week and broke up and out from the daily chart’s wedge pattern and gave a TC LONG signal that delivered 130 pips before closing off.

I’ve reviewed the trend lines here though now and see a 1,600 pip triangle pattern evolving on the daily chart and note, with interest, that the apex here is just above the 184 level, a level that remains of key interest as it is near the 50% fib of the huge 2007-2011 swing low move. It remains to be seen whether this will prove to be a launching pad for a move higher or lower! Interestingly, any bearish triangle breakdown and 1,600 pip move would bring price down to the 167 S/R region that I have written about in previous posts. This level is also near the weekly 200 EMA for added confluence!

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

The weekly candle closed as a bullish coloured ‘Doji’ candle.

Traders need to watch for data that impacts the US$ as well as for Friday’s GBP Second Estimate GDP.

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

GJ4hr

GJdaily

GJweekly GJmonthly

Kiwi: NZD/USD:  The NZD/USD chopped lower to start last week but then recovered a bit when some US$ weakness crept in. The 4hr 200 EMA kept up some pressure but any close and hold above this resistance would support a move up to test the 0.67 S/R region as this is also near the monthly pivot and 61.8% fib of the recent swing low move and so may act as a magnet for price action.

I’m still seeing either a potential Bear Flag or basing-style bullish ‘Inverse H&S’ forming up on the weekly chart with no clear winner just yet.

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

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

Traders need to watch for any impact from US$-sensitive data and from Thursday’s NZD Trade Balance data.

  • 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.

Kiwi4 KiwiDaily KiwiWeekly KiwiMonthly

The Yen: U/J: The U/J chopped up and out from a recent descending wedge pattern and triggered a new TC signal that gave just 50 pips before closing off. The 124 level remains above current price and continues to put pressure on the U/J.

Monthly Chart Bullish Cup’ n’ Handle pattern: There looks to be a 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 (just), daily, weekly and monthly charts.

Traders need to watch for any impact from US$-sensitive data.

The weekly candle closed as a small bullish candle with a long upper shadow.

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

UJ4 UJdaily UJweekly UJmonthly

USD/CAD: The USD/CAD has continued chopping sideways under the monthly chart’s 61.8% fib resistance level.

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 any impact from US$ and/or Oil-sensitive data.

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

Loonie4hr LoonieDaily LoonieWeekly LoonieMonthly

GBP/AUD: This pair chopped around under the daily chart’s Flag trend line but some weakness at the upper boundary triggered a new TC SHORT signal on Friday that went on to give 300 pips. Unfortunately, I took the correlated A/U TC signal which has only given 50 pips thus far :-(

This was how the chart appeared when I announced the new TC signal:

GA4

This is how the chart appears now:

GA4hr Cloud

This choppy daily chart Flag action continues to support the pattern I’m seeing on the monthly chart, that of a ‘Cup’ pattern with a neck line near 2.07. However, any resumption of bullish momentum could 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 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 coloured candle.

Traders need to watch for any impact from data that affects the AUD and GBP: this includes the RBA Gov Stevens speech on Tuesday and AUD Private Capital Expenditure data on Thursday as well as Friday’s GBP Second Estimate GDP.

  • There is an OPEN TC Short signal on this pair.

GA4hr Cloud GAdaily GAweekly GAmonthly

EUR/AUD: Price chopped a bit lower last week but kept bouncing up off the daily-chart’s trading channel support trend until Friday. One new TC ‘SHORT’ signal here failed last week as price held within the trading channel but a subsequent one on Friday, a signal which I sadly missed, picked up steam and has delivered pips.

The EUR/AUD still remains below the monthly chart’s 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 chart and in the top edge of the Cloud on the monthly chart.

Traders need to watch for data that impacts the EUR$ and AUD$: this includes the two EUR Flash Manufacturing PMI data prints on Monday and German Ifo Business Climate data on Tuesday as well as the RBA Gov Stevens speech on Tuesday and AUD Private Capital Expenditure data on Thursday

The weekly candle closed as a bearish candle.

  • There is an OPEN TC Short signal on this pair.

EA4 EAdaily EAweekly EAmonthly

Silver: Silver closed a bit lower last week despite some recent US$ weakness and it 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, a battle that has yet to be resolved.

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 a bearish coloured ‘Spinning Top’ candle reflecting some indecision.

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

SilverWeekly SilverMonthly

Gold:  Gold also closed slightly lower for the week despite the bit of US$ weakness and remains below the $1,100 support level.

I’m still seeing a bullish-reversal descending wedge here as well though and 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 another bearish coloured ‘Spinning Top’ candle reflecting some indecision here.

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

GoldWeekly GoldMonthly

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