Last week: What a week it has been! I noted two weeks ago how a flurry of TC signals might have been best taken as some kind of warning and that they were! The markets kicked back with some decent trends last week; some of this was captured with new 4hr-based TC signals and some with simple trend line breakouts. We might be entering a period of further decent trend trading opportunities and so I’m keeping an eye out for any warning signals.
Almost 3,500 pips worth of trades have been flagged on this blog site recently. Last week there were four TC signals: the EUR/NZD for 400 pips, EUR/AUD for 270 pips and two losses on the E/J for 60 and U/J for 20 pips. All of these TC signals have closed off now. There were also great trend line break out trades on the Kiwi for 240 pips, A/U for 270 pips, A/J for 350 pips and GBP/AUD for 440 pips. This weekly haul totals 1,890 pips! Add to this that the last few weeks have also seen the GBP/NZD deliver 1,200 pips and the pull back on the USD/CAD gave 400 pips then the recent trend trade total is 3,490 pips!
NB: I have been away for the w/e at a funeral and quite busy so please excuse any typos etc.
- AUD/USD: is this the ‘Turnbull Turnaround’ recovery or a ‘dead cat bounce‘. I’ve got levels to watch here to help decide.
- Gold: seems to have started a bullish-reversal wedge breakout and raises questions about whether the metal has now carved out a base for itself. This article is well worth the read and supports a bullish bias for the precious metal.
- Commodity Comeback? The charts of the AUD/USD, NZD/USD, Silver, Gold and Oil all seem to be suggesting there could be a bit of a comeback, or even just relief rally, across commodities. There are never any guarantees with life or trading but these chart set-ups are still something to keep an open mind to in coming weeks. Many traders remain bearish on the Commodity space BUT if the US$ continues to weaken then this just might support a Commodity Comeback!
- Fibonacci and S/R levels: traders who ignore major Fibonacci and S/R levels do so at their peril. Fib levels helped to target the recent turnaround on the USD/CAD and S/R levels then helped to identify a target for this move that gave 400 pips. S/R levels helped to identify last week’s breakout on the NZD/USD and also the target for this bullish move that went on to give 240 pips. These are just two recent examples to highlight the value of including a study of Fibs and S/R levels in your trade planning.
- Monday is a Public Holiday in the USA (Columbus Day), Canada (Thanksgiving) and Japan.
- S&P500: A Bull Flag breakout might be evolving on the weekly chart but I’m looking for more momentum to confirm.
- For any AUD traders: The Boyer Series Lectures are well worth listening to and the third of four lectures is now available through this link. The lectures were written prior to the recent change in Prime Minister and, whilst this is noted as a problem phenomenon in itself, I’d be curious to find out whether the author might not have adopted a slightly more upbeat outlook had he known what was to come!
Stocks and Commodities:
The S&P500 has had its best week this year and, as one of the major market metrics, this index is worth keeping an eye on to help gauge broader market sentiment. I’m reading some commentary suggesting that this is the start of the next Bull market but others suggesting this is simply a Dead Cat Bounce. The 2,000 level has been key for me here and we have now had a weekly close back above this level. That is encouraging but a monthly close above 2,000 and a move back above the weekly Ichimoku Cloud would help to sway me that this recovery might have more legs on it. Continued US$ weakness and a return to the ZIRP style of trading we have seen over recent years would help to support a stock recovery. Any continued Commodity recovery would help to support this S&P500 rally as well given the large number of commodity-related stocks within the index.
Thus, 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 bounced back above the psychological 2,000 level but is still trading between previous daily and monthly support trend lines, although, it has broken above a recent Bear trend line. I do also note the uptick with buying momentum and so I may have to give up on my hope for a test of 1,600
S&P500 weekly: this weekly chart does have a bit of a ‘Bull Flag’ look to it BUT I would prefer to see more of an uptick with weekly buying (+DMI) momentum along with any Flag breakout and, so, I’m a bit cautious here!
Ichimoku S&P500 daily chart: a clear cross of the blue Tenkan-sen line below the pink Kijun-sen line. The bearish Tenkan/Kijun cross remains open but a new bullish cross might be trying to form here! Price is back above the daily Cloud and key 2,000 level:
Ichimoku S&P500 weekly chart: the weekly candle closed as a bullish candle and back up in the weekly Cloud. A new close and hold above the weekly Cloud would help to support a recovery effort here. 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:
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 this recent weakness and I, like the Elliott Wave indicator, am looking for a test of the 1,600 region but this might not evolve. A monthly close back above the 2,000 level would help to support the recovery thesis here:
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 a new close and hold back above $1,220 would void this. The weekly candle was a large, essentially, bullish engulfing candle.
VIX Index: The ‘Fear’ index is below the 30 level but has printed a bearish weekly candle.
Oil: The ‘Triple Bottom’ is really starting to take shape with the weekly candle closing as a large bullish candle.
Trading Calendar Items to watch out for:
- Sun 11th: CAD BoC Gov Poloz speaks.
- Mon 12th: JPY, CAD, USD Bank Holiday. CAD BoC Gov Poloz speaks.
- Tue 13th: AUD NAB Business Confidence. CNY Trade Balance. GBP CPI. EUR German ZEW Economic Sentiment.
- Wed 14th: CNY CPI. GBP Employment and Wages data. USD Core Retail Sales, PPI, Retail Sales.
- Thurs 15th: AUD Employment data. USD CPI, Core CPI, Unemployment Claims & Philly Fed Manufacturing Index.
- Fri 16th: NZD CPI. CAD Manufacturing Sales. USD Prelim UoM Consumer Sentiment.
EUR/USD: the E/U has rallied to break up through a recent bear trend line. Any continuation with this move would have me looking for this pair to test the previous S/R region of 1.18:
E/U 4hr: a bullish TL breakout evolved on the 4hr chart on Friday.
E/U 30 min: this gave a great 30 min trend trade late on Friday:
E/U daily: this has triggered a daily TL breakout as well:
E/U daily + fibs: this expanded daily chart with Fibonacci added shows how price closed the week just under the 50% fib of the recent swing low (triangle) move and, also, under the daily 200 EMA and some pivots. Many traders will look to SHORT here now BUT any close and hold above this congested 1.14 region would, IMHO, support a move back up to 1.18:
E/U weekly: this could still be a huge Bear Flag brewing but we don’t have any confirmation of that just yet!
EUR/JPY: the E/J rallied on Friday and moved up to test the daily chart’s triangle trend line. This will be the resistance level to watch in coming sessions for either a respect, and bounce back lower, or for a breakout:
E/J daily: watch for any momentum-based breakout:
AUD/USD: I’d mentioned a few weeks ago that the recent change with the Australian Prime Minister might provide a positive boost to Aussie confidence, markets and the currency. Well, I’m labeling this recent A/U move as the Turnbull Turnaround! Since Malcolm Turnbull was elected as the new Australian Prime Minister on September 14th 2015 the A/U has tested and held a recent ‘Double Bottom’ level and looks set to try for further gains. There is ‘neck line’ resistance with this technical move just ahead of current price and so we may soon get a clearer picture of whether this A/U move has more fight in it.
The A/U made a clean and predictable bullish triangle breakout last week that gave 270 pips. Price stalled at the end of the week just under the previous S/R zone of 0.735. I’m noting how this level looks to be the ‘neck line’ for a possible daily-chart ‘Double Bottom’! Thus, any daily close and hold above 0.735 might offer continued bullish trading opportunity in the coming week or so.
Watch out for next week’s AUD and CNY data as they could have a significant impact here. Any continued commodity bounce would help to support this pair too.
A/U 4hr: the bullish breakout gave 270 pips:
A/U daily: note the look of of a possible bullish ‘Double Bottom’. A close and hold above 0.735 would support this technical pattern:
A/U monthly: FYI: Price is back above the previously broken monthly trend line and two key Fib levels:
- The 61.8% fib of the major swing high move from 2000 to 2011 near 0.715.
- The 78.6% fib of the 2008-2011 swing high move near 0.71.
A/U bullish targets? So, if there is going to be more to this Turnbull Turnaround move then where should we look for possible targets? The daily and weekly charts are some help here:
- Daily chart: the A/U daily chart below shows that the 61.8% fib of the recent swing low move is back up near 0.77. This is also near the daily 200 EMA for added confluence and so would be the first major target to look towards for any bullish continuation move:
- Weekly chart: For any bullish continuation past 0.77 then the weekly chart might help to identify further targets. The A/U weekly chart below shows that the 61.8% fib of the larger swing low move is back up near 0.95. The 50% fib is near the weekly 200 EMA and the 0.90 level so these would be two areas that would have my interest on any bullish continuation past 0.77:
A/J: The A/J also made a clean triangle breakout last week that gave 350 pips last week. Price stalled at the end of the week just under a previous S/R zone of 89 and this is the level to watch in coming sessions.
As for the A/U, watch out for next week’s AUD and CNY data as they could have a significant impact here and any continued commodity and S&P500 bounce would help to support this pair as well:
Cable: the Cable has bounced off TL support but stalled at the 50% fib level of the recent swing low move. Some weaker than expected Trade Balance data on Friday didn’t help here either. Any resumption of bullish trend though would be likely to target the 1.55 region:
NZD/USD: The NZD/USD was another pair that gave a clean triangle breakout trade last week and this 240 pips. I had suggested that the previous S/R region of 0.67 might be a target for any bullish move and this is exactly where price headed and then parked for the week!
Whilst this pair has been bearish for some time and looking like it might develop a ‘Bear Flag’ the daily chart is now suggesting a possible basing pattern with a bullish ‘inverse H&S’ forming up. Thus, I’m open to some possible short-term weakness here but will then keep an open mind about the potential bullish and bearish outcome possibilities.
Any continued commodity bounce would help to support this pair too.
NZD/USD 4hr: note the target area of the previous S/R at 0.67:
NZD/USD daily: a Bear Flag or bullish ‘inverse H&S’? Time and the 0.67 and 0.62 levels might help tell!
- NZD/USD Bullish targets? For any bullish continuation past 0.67 then the daily chart might help to identify further targets. The NZD/USD daily chart below shows that the 50% fib of the recent swing low move is back up near 0.70 and is also near the daily 200 EMA. Past this then there is the 61.8% fib near 0.715. These would be the two areas of interest for me if there is any bullish continuation past 0.67:
U/J: there isn’t too much to get excited about here just yet. I do note however that this pair bounced on Friday despite US$ weakness. It might decide to tag along with the stock rally!
GBP/JPY: this pair has made a subtle triangle breakout and close back above the key 184 level. I’m looking to take this trade next week if it holds above 184:
EUR/NZD: This TC signal delivered up to 400 pips before closing off but the weekly chart suggests there could be more in this move:
USD/CAD: the pull back from the monthly chart’s 61.8% fib gave 400 pips down to the 1.30 level. Price is now below this key S/R level and the daily chart reveals that there could be more bearish potential to come. This would all still tie in with the monthly chart Cup ‘n’ Shoulder pattern I’m on the lookout for!
Any continued commodity bounce would help to support this pair too.
Monthly Chart Cup ‘n’ Handle? The monthly chart now also 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.
GBP/AUD: There was a triangle breakout here last week that initially wasn’t too convincing as it could also have been developing a Bull Flag. The lower Flag trend line eventually gave way here too though and this breakout trade has given over 440 pips. I’m still thinking this could test lower near the congested zone that is highlighted:
GBP/NZD: This triangle breakout trade came with a TC signal some weeks ago and has now delivered over 1,200 pips. The weekly close below 2.30 is bearish and suggests there could be further follow-through. Watch out for a test of the congested zone that is highlighted on the chart, or, even the 2.10 level further down:
EUR/AUD: this TC signal eventually came with a trend line break and gave 270 pips before closing off. I note the weekly chart though and how price might just pull down even further to test the previous larger weekly-chart triangle trend line before any possible bounce:
Gold: this has closed the week back above the key $1,145 and 61.8% fib level. The weekly chart also suggests the start of a bullish wedge breakout:
Gold weekly: it’s very subtle but there is a break above the 2/1/2 year Bear trend line here suggesting the start of a major bullish-reversal descending wedge breakout. Price could try and test the $1,145, or broken TL level, again before any bullish continuation.
- Bullish targets for Gold? Again Fibonacci levels might be of some help to identify bullish targets for any continuation move on Gold. The 61.8% Fib of the last major swing low move is back up near the whole number level of $1,500 and so seems as good as any! There are other obvious whole number psychological levels before then that might offer the metal some grief though too, $1,200 and $1,250 as just two.
Silver: has broken back above a monthly TL here but is yet to break a more recent weekly bear TL.
Silver 4hr: the monthly TL break gave a 100 pips move:
Silver weekly: the weekly wedge has yet to be broken though:
SLV: the Silver ETF breakout looks quite clear here however:
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