An exciting end to the month?

Last week: The rout with global stocks eased towards the end of last week with many indices printing their first bullish weekly close for the year. This reversal was triggered by dovish ECB comments suggesting more stimulus may be on the way and also by the recovery with Oil price. Thus, a stock recovery fueled primarily by the prospect of more easy money rather than fundamentals has to be a bit suspect and so I will be keen to see on Friday just how these indices end up closing out for the month. This reversal of risk appetite on stocks has kept some FX pairs rather choppy but the USD/CAD was one exception bouncing back down on the back of the Oil recovery and the hold with CAD interest rates. The commodity currencies, AUD$, CAD$ and NZD$, have recovered somewhat though following this ECB news with thoughts that further monetary stimulus may improve the global demand for goods.

TC Signals: I have been in holiday mode down here but noted one new TC signal on the Cable earlier in the week. This closed off for no gain BUT the move did continue on for over 100 pips. I received one new TC signal on Friday on the USD/JPY (discussed below), however, the recent choppy price action hasn’t been conducive for my trending-based algorithm off the 4hr time frame.

NB: this is only a brief update as I am away for the weekend.

Next week:

  • Friday is the last day of the trading month so watch for monthly candle close formations.
  • Three Central Banks report interest rate decisions next week:  USD Federal Reserve with FOMC, NZD: RBNZ and JPY: BoJ.
  • Oil: Oil carved out a decent recovery last week and the monthly candle close, to form up at the end of the week, will be keenly watched to see if it can scrape back above the key $33.50 level. Success here would then support a potential bullish ‘Double Bottom’ but failure would suggest a test of the $20, and possibly $10, S/R levels.
  • Stock indices: many global stock indices closed the week with bullish-reversal style ‘Hammer‘ candles to carve out their first bullish weekly close of the year. These included the S&P500, DJIA, NASDAQ, FTSE, TSX, Russell 2000 and the XJO / XAO.

Data for next week:

  • Mon 25th: EUR German Ifo Business Climate. ECB President Draghi speaks.
  • Tue 26th: AUD: Public Holiday. GBP BoE Gov Carney speaks. USD CB Consumer Confidence.
  • Wed 27th: AUD CPI. USD Crude Inventories and FOMC.
  • Thurs 28th: NZD Interest Rate and Trade Balance. GBP Prelim GDP. USD Core Durable Goods and Weekly Unemployment Claims.
  • Fri 29th: JPY Interest Rates, BoJ Outlook Repost and Press Conference. EUR CPI Flash Estimates. USD GDP and CAD GDP.

FX Indices:

USDX: the USDX has made a daily and weekly chart bullish triangle breakout. The daily chart move evolved with little to no supporting momentum and so I’d be wanting to see a bullish break and hold above the key 100 level and Flag pattern before getting too excited about bullish continuation:

DXYmonthly

USDXweekly USDXdaily

EURX: this is weaker but still within the daily chart’s triangle and weekly Flag pattern:

EURXweekly EURXdaily

Gold: this is holding up near the $1,100 level despite the stronger US$. Keep an eye on the wedge trend lines for any breakout, bullish or bearish:

GoldWeekly

S&P500: continues to hold above the monthly support trend line and closed the week with a bullish-reversal ‘Hammer’ candle and just above 1,900 support. The monthly support trend line is the level to watch in the coming week as January draws to a close:

S&Pmonthly S&Pweekly S&Pdaily

Oil: a pullback to close the month above $33.50, the Feb ’09 low, would be a rather bullish signal and set up a potential bullish ‘Double Bottom’. Conversely, a close below this level would support a move down to test the $20 and $10 S/R levels. This week could be a rather exciting one for Oil!

CLmonthly

Copper: watch for any monthly close and hold above the ‘2’ handle:

HGmonthly

Russell 2000: watch for any monthly candle close back above the monthly support trend line. The weekly candle closed as a bullish-reversal ‘Hammer candle:

RUTmonthly

RUTweekly

VIX weekly: this has closed with a bearish weekly candle and still below the 30 threshold:

VIXweekly

New TC Signal:

USD/JPY: this triggered a new TC LONG signal during Friday’s trade. Note the continued hold above the 117 S/R level :

UJ4 UJdaily

UJweekly

UJmonthly

Forex:

EUR/USD: price action made a breakdown from the recent daily chart triangle BUT daily momentum is still low making me a bit suspect of this move. To add to this, I don’t have any new TC ‘SHORT” signal on the 4hr time frame. There is a 300 pip gap down to the 1.045 S/R potential ‘Double Bottom’ level and we may get choppy action down to test that region.

EUmonthly

EUweekly EUdaily EU4

EUR/JPY: price action continues to hold above the recent ‘Double Bottom’ level of 126.50. Momentum remains low on the 4hr and daily time frame however as price chops sideways above this S/R region. Note the weekly candle though and how it has a bullish-reversal ‘hammer’ look to it:

EJweekly EJdaily EJ4

AUD/USD: this has closed the week back above the key 0.69 S/R level and has printed a bullish-engulfing weekly candle. I’m on the lookout for any new TC signal here:

AUmonthly

AUweekly AUdaily AU4

AUD/JPY: price has bounced up off a monthly support trend line but without triggering any new TC signal. The triangle breakdown that was in progress gave only 600 pips of a potential 1,000 pip move but this was still a huge haul. The A/J has also printed a bullish-engulfing weekly candle:

AJmonthly

AJweekly AJdaily AJ4

GBP/USD: the triangle breakdown has stalled a bit but has given over 800 pips of a possible 1,600 pip move. The weekly candle was a bullish coloured ‘Spinning Top’ reflecting some indecision.

GUmonthly

GUweekly GUdaily GU4

NZD/USD: this remains in a bit of ‘no man’s land’ for me. Half way between forming either a ‘Bear Flag’ or a bullish-reversal ‘Double Bottom’. Price is currently trading within the 4hr Cloud so I’ll keep an eye on its progress here:

KiwiMonthly

KiwiWeekly KiwiDaily Kiwi4

Kiwi4hrCloud

GBP/JPY: this has closed the week back above the 167 S/R level. Note how the 1,600 pip triangle gave the full quota of pips! Price is currently stuck in the 4hr Cloud and so I’ll be keeping an eye on progress here too and for any new TC signals:

GJmonthly

GJweekly GJdaily GJ4hr

GJ4hrCloud

USD/CAD: this has pulled back but without triggering any 4hr chart based TC signal. The recovery with Oil price and failure of the BoC to cut interest rates has helped to support the CAD and, hence, this reversal. I’ll be watching for any reaction around 1.40 as this is a major S/R level, best seen on the monthly chart. A close and hold below 1.40 could support a choppy move back down to test the 1.30 level and so this is worth watching. Conversely, price could find support at 1.40 before any move higher. The weekly candle closed as a bearish engulfing candle:

LoonieMonthly LoonieWeekly LoonieDaily Loonie4hr

GBP/AUD: the daily, weekly and monthly charts suggest some orderly progress here but price action on the 4hr time frame is choppy. This continues conforming to the descending trading channel for the time being and printed a large bearish weekly candle. Keep an eye on the channel trend lines:

GAmonthly GAweekly GAdaily GA4

EUR/AUD: this has closed the week back below the 1.55 S/R level but has not triggered any new 4hr chart based TC SHORT signal.

EAmonthly

EAweekly EAdaily EA4

EUR/GBP: this has pulled back to the 0.75 S/R level which also happens to be the neck line of the inverse H&S pattern. The dovish ECB commentary may undermine this pattern but, for now, it is still going pretty much to plan. A test of this major 0.75 S/R level was to be expected as part of any potential bullish continuation:

EGmonthly

EGweekly EGdaily EG4hr

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