The defining ‘end of year’ trading event seems to be that the USD index, after posting a 12% gain for 2014, has closed the month and year above the key 90 resistance level. This is more than likely going to have implications for a number of FX pairs.
USDX weekly: price action may become a bit choppy around this 90 level as it tests the relative strength of this region as potential new support:
My USD index MT4 charts:
USDX monthly: a pause, by way of some choppiness whilst testing out this new 90 level, would not be out of order given the recent meteoric rise of the USD:
USDX weekly: a pull back would be nice but it doesn’t seem too likely at the moment. Fib levels will help identify targets for any potential pull back though:
E/U: The E/U chopped lower since I last reported and this has come on the back of increasing USD strength. This latest bear move triggered a new TC signal off my second last 4hr candle for 2014, a trend line break below a 3 month support trend line and a break below the 50% fib of the 2000-2008 bull run. The following chart shows the monthly candle close below this key 50% fib level:
E/U chart showing the monthly candle close below 50% fib support:
The E/U is now only about 25 pips above a monthly chart symmetrical triangle support trend line and just over 290 pips or so above the monthly chart’s descending triangle trend line. It is also less than 100 pips above the major psychological 1.20 level. Thus, it is getting close to make or break time for the E/U.
Descending triangle 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 4,000 pips. Technical theory would suggest that any bearish breakdown of this triangle below 1.18 might see a similar magnitude 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 Ichimoku Cloud on the 4hr, daily, weekly and monthly charts which is bearish.
There isn’t a lot of positive EUR news about BUT I am a bit cautious with the E/U given the USD could chop around a bit whilst it tests out the ‘atmosphere’ above the 90 level.
- There is a new TC signal on this pair BUT I am wary given the USD index level and because of the major trend line & psychological support just below current price.
USD/CHF: The Swissie has chopped higher since I last reported and has continued up from the ‘Handle’ of the weekly chart’s bullish Cup ‘n’ Handle pattern. This price action would seem to suggest that this bullish pattern is getting underway. The 0.975 is a major S/R level here though and I would not be surprised to see this level tested again, even if there is to be bullish continuation.
The other technical feature to remember here is the inflection-point shift seen on the monthly chart. A 14 year bear trend line was broken back in July 2014 and this major shift was associated with strong momentum, as reflected by the ADX. This polarity shift alone supports a ‘long’ trade focus but I continue to wait for any confirmed ‘Handle’ breakout of the Cup ‘n’ Handle pattern!
The Swissie is still trading above the Cloud on the 4hr daily, weekly and monthly charts which is bullish. The more interesting chart is the monthly Ichimoku chart with the Swissie printing a bullish monthly candle close above the Cloud for the first time in four years and holding above the Cloud for the longest time since 2002!
- I’m watching for any new TC signal on this pair but I’m also watching the developing Cup ‘n’ Handle pattern and 0.975 level.
A/U: The A/U hasn’t been able to break back above the 4hr Cloud.
I am beginning to think that we might be watching the start of yet another Bear Flag! The Flagpole of the previous Bear Flag pattern is forming up the new Flagpole of the next potential Bear Flag pattern! Note how price is only about 170 pips away from the major support 0.80 level though:
The monthly chart shows that the Aussie is getting closer to a potential support zone near the 0.80 level:
- I’m watching for any new TC signal and for any move above the 4hr Cloud or below the recent support trend line.
Other TC Signals Update:
Kiwi: this signal closed off after giving up to 90 pips:
E/J: this signal has given up to 160 pips and is still open: