Last week: The TC signal on Gold was short lived but delivered 100 pips before reversing. Another signal on the A/U failed and has closed off for no gain but no loss either. The signal on the U/J is still open and has given over 100 pips. The FX Indices remain aligned for ‘risk on’ but with the Easter Week ahead there may not be too much movement.
Last week’s FOMC took most traders by surprise with the dovish tone and the reduced forecast for any further US interest rate increase. This news has kept stocks bid and many indices are trading up near key resistance levels. A number of stock/ETF charts show pressure being applied for upward bullish breakouts but, until there is either a break or respect of these S/R levels, the path ahead remains unclear.
There seems to be so much turmoil across the globe with the on-going Middle East conflict, a worrying US Presidential campaign, the possibility of a Brexit, migration / refugee issues across Europe and global growth concern that it’s hard to image this period as being supportive of a ‘risk-on’ environment. Whilst Easter is a period that is generally symbolic of New Life I do regard a Lazarus moment might be more in order here! Regardless though, I’ll watch the charts for clues and try to keep an open mind to all possibilities.
Next week is fairly quiet for data and a shortened week due to Easter.
My Trade Charting updates will brief over the Easter weekend.
Trading Calendar Items to watch out for:
- Mon 21st: JPY Bank Holiday.
- Tue 22nd: AUD RBA Gov Stevens speaks. EUR German Ifo Business Climate. GBP CPI. EUR German ZEW Economic Sentiment.
- Wed 23rd: USD Crude Oil Inventories.
- Thurs 24th: NZD Trade Balance. GBP Retail Sales. EUR Targeted LTRO. USD Core Durable Goods Orders & Weekly Unemployment Claims.
- Fri 25th: Good Friday. USD Final GDP.
- Mon 28th: Easter Monday.
Gold: Gold has been buoyed by a mixture of a weaker US$ and some ‘Flight to Safety’ activity over recent weeks but the shift to risk-on with stocks has undermined this support for Gold somewhat. The metal is currently poised just under the resistance of the weekly 200 EMA and it hasn’t made a weekly close above this level since May 2013! Price action is currently consolidating within a Flag just under this S/R level and I’m watching for either of the following:
- a pull back from the weekly 200 EMA would have me looking for a test of the daily chart’s 61.8% swing high fib down near the $1,150/45 S/R region. Gold could suffer a bit, even the US$ remains offered, if yield-bearing stocks remain more in favour.
- a breakout above the weekly 200 EMA would have me looking for a test of the monthly bear trend line and, then, the $1,500 region which is near the weekly chart’s 61.8% swing low fib region.
EUR/USD: the EUR/USD continues to consolidate in both a daily and monthly chart triangle but has closed the week above the key 1.12 level. FOMC gave a surprise boost to this pair and with a dovish Federal Reserve and ECB then the next directional move here isn’t too clear.
The EUR/USD closed the week with a bullish candle though and is above the 4hr and daily Cloud which is bullish.
- I’m watching for any new TC signal and the daily chart’s triangle trend lines.
EUR/JPY: the E/J continues to consolidate around the key 126 S/R level and the importance of this level can be seen on the monthly chart.
The E/J closed the week with a bearish coloured Inside candle and is in the 4hr Cloud and below the daily Cloud. All of which spells ‘INDECISION’!
The 126 level remains the region to watch in coming sessions and if risk appetite remains supported then I’d expect to see this pair move higher.
- I’m watching for any new TC signal the the 126 level.
AUD/USD: the A/U has been bid of late following US$ weakness and the bounce back with commodities.
The monthly chart shows the 0.80 level as decent S/R so might be the next target if bullish momentum continues.
The weekly candle was bullish and price is above the 4hr and daily Cloud. However, I would not be surprised to see the 0.74 S/R level tested again even if there is to be bullish continuation.
The RBA won’t be happy with this US$ weakness leaving the prospect of a further rate cut as a possibility.
- I’m watching for any new TC signal and the 0.74 level.
AUD/JPY: price is consolidating in a 4hr triangle and above the key 80 S/R level.
The weekly candle closed as a bearish coloured ‘Inside’ candle and price is in the 4hr Cloud but just above the daily Cloud. All of which spells ‘INDECISION’ here too!
- I’m watching for any new TC signal and the 80 level.
GBP/USD: the Cable gave a great technical bounce up off the 4hr chart’s 61.8% fib last week in a move that suggested there was some fatigue with bearish Brexit fear. This sentiment could rear its ugly head again though and, unless there is rampart continued US$ weakness, this pair could remain choppy.
Price action is edging back up towards the key 1.46 level and any new close and hold above this level would have to be read as bullish.
The weekly candle closed as a bullish candle and although price is above the 4hr Cloud it is below the daily Cloud.
- I’m watching for any new TC signal and the 1.46 level.
NZD/USD: the Kiwi is setting up in one of two possible patterns on the monthly chart: either a bullish trend line breakout or a very serious and large Bear Flag. Traders need to watch how price reacts as these Flag trend lines to try and gauge which sentiment will dominate.
The weekly candle closed as a bullish engulfing candle and price is above the 4hr and daily Cloud which is bullish. However, price closed just below the resistance of the upper Flag trend line and this remains the level to watch in coming sessions.
There is Trade Balance data this week that might help to tip the balance at this upper Flag trend line.
- I’m watching for any new TC signal and the Flag trend lines.
USD/JPY: the U/J is currently trading at the S/R level of 111 and this remains the level to watch in coming sessions.
The weekly candle closed as a large bearish candle and price is trading below the 4hr and daily Cloud.
- There is an open TC SHORT signal that has already given over 100 pips but price is holding above 111 support for now.
GBP/JPY: the GBP/JPY continues to chop sideways under the 167 S/R level and this is a level best inspected on the monthly chart.
The weekly candle closed a bearish engulfing candle and price is in the 4hr Cloud but below the daily Cloud.
- I’m watching for any new TC signal and the 4hr chart’s wedge trend lines.
EUR/NZD: the EUR/NZD is consolidating within a triangle around the long-term S/R level of 1.675, a level best spied on the monthly chart.
The weekly candle closed a bullish coloured Doji and price is above the 4hr Cloud but in the daily Cloud. All of which spells ‘INDECISION’ here too!
- I’m watching for any new TC signal, the daily chart’s triangle trend lines and the 1.675 level.
USD/CAD: The USD/CAD has been bearish for the last nine weeks and closed the week sitting right on the major 1.30 S/R level.
Any close and hold below 1.30 will have me looking for a test of the weekly chart’s 61.8% fib region which is down near 1.155.
The weekly candle closed as a bearish candle and price is below the 4hr and daily Cloud.
- I’m watching for any new TC signal and the 1.30 level.
GBP/AUD: Price action had been trading below a bear trend line for the last 6 weeks but made a bullish break and close above this resistance to end the week.
The weekly candle closed as a bearish coloured Doji and price is below the 4hr and daily Cloud.
- I’m watching for any new TC signal.
GBP/NZD: The GBP/NZD bounced back down from the daily chart’s 7-month duration bear trend line. The 2.10 level proved to be a strong S/R region again though and price bounced right back up after testing this key level.
The weekly candle closed as a small bearish candle with a long lower shadow and price is just above the 4hr Cloud but below the daily Cloud. All of which spells ‘INDECISION’ here too!
- I’m watching for any new TC signal, the 2.10 level and the daily chart’s bear trend line.
EUR/AUD: The EUR/AUD chopped sideways last week as both the EUR$ and AUD$ strengthened.
The 4hr chart shows that price has been trading under a bear trend line for the last 6 weeks and, whilst price is up testing this resistance, it remains below the trend line for the time being.
The weekly chart shows a support trend line that has been in effect for over three and a half years.
The weekly candle closed as a small bullish coloured ‘Inside’ candle and price is trading in thin 4hr Cloud but below the daily Cloud.
The 1.55 level remains a critical S/R level for this pair and is an S/R region best viewed on the monthly chart.
- I’m watching for any new TC signal and the triangle trend lines.
EUR/GBP: I’m still expecting a test of the 0.80 level at some stage in the coming weeks.
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