Monthly: What a difference a week makes. Last week the October was printing a bearish-reversal style ‘Hanging Man’ candle and sitting below the resistance of the monthly chart’s bear triangle tend line. This week though, helped by news from FOMC and the BoJ, the index has moved well on and closed as a bullish candle and above the major triangle trend line.
Monthly Ichimoku: The October candle closed well above the monthly Cloud.
Weekly: Last week’s candle closed as a large bullish candle and above the major trend line. It also closed above the potential ‘Double Top’ level.
Weekly Ichimoku: Price is still trading ABOVE the weekly Cloud.
Daily: Price rallied to close above the major trend line and the potential ‘Double Top’ level. Wednesday’s candle with FOMC and Friday’s with BoJ were large bullish candles.
Daily Ichimoku Cloud chart: Price traded above the Cloud all week. Price is still above the daily Cloud and there is an open bullish Tenkan/Kijun cross.
4hr: Price chopped lower to start the week but then rallied after Wednesday’s FOMC and Friday’s BoJ news.
4hr Ichimoku Cloud chart: Price traded above the Cloud for most of last week. This chart is aligned with the daily chart and suggests long USD.
Monthly: Given the bullish moves on the USDX it was surprising to see such little capitulation-style reaction with the EURX. The October candle closed as a bullish-reversal ‘Inverted Hammer’ candle and this is what it had printed last week. This is the first bullish monthly candle for five months and, as such, is some achievement. I am still seeing a larger scale bullish ‘inverse H&S’ pattern here as well.
Monthly Ichimoku: The October candle closed still within the monthly Cloud.
Weekly: The weekly candle closed as a bearish coloured Doji; still reflecting some uncertainty here.
Weekly Ichimoku: Price is still trading below the weekly Cloud.
Daily: Price chopped higher to start the week but then pulled back as the USD rallied post FOMC. It is still within the descending trading channel.
Daily Ichimoku Cloud chart: Price is still below the Cloud, but only just.
4 hr: Price chopped up and then down last week.
4 hr Ichimoku Cloud chart: The EURX chopped up through the Cloud during the week, then fell back below to chop within this resistance but ended up closing just below the Cloud. This chart is aligned with the daily chart and suggests short EUR.
USDX: the USDX had another bullish week helped by news from the FOMC and BoJ. The monthly candle has now closed above the major triangle bear trend line and the previous high, thus avoiding a possible ‘Double Top’.
This triangle break represents a major technical breakout and technical theory would suggest bullish continuation form here. The two most obvious future targets would be previous highs at the 88.50 region, from the Jan 2011 period, and then the 89.50 region, from April 2009.
EURX: the EURX closed only slightly lower for the week which is pretty amazing given the relative gains for the USDX. The issue for the EUR remains that divergence between the Eurozone and US economies continues to widen. I am on the lookout for a possible continued pull back with the EURX down to the 103 region as this is a 61.8% fib pull back of the latest bull move (2012-2013) but the fairly bullish hold though last week suggest that this may not evolve. I’m watching the daily chart’s trading channel with an eye also on the possible ‘inverse H&S’ developing on the monthly chart.
Note: The analysis provided above is based purely on technical analysis of the current chart set ups. As always, Fundamental-style events, by way of any Ukraine, Ebola, Eurozone or Middle East events and/or news announcements, continue to be unpredictable triggers for price movement on the indices. These events always have the potential to undermine any technical analysis.