Last week: It was a bit of a tough week for me and my 4hr based TC system. There were four new TC signals with only two still open: The E/U gave just 70 pips before closing off in choppy trade. The E/J was a maximum loss for me of 100 pips. The Cable is open and has chopped up as much as 160 pips and the GBP/JPY is up around 80 pips.
The FX index alignment that helped to give so may pips in the previous week did not offer the same help last week. The weight of the two major events of FOMC and the Greek-debt crisis seemed to combine to cripple many instruments.
NB: This is a brief update as I have been away for the weekend.
The US$ remains range bound between 100 and 92.50 and traders will be watching to see if Wednesday’s FOMC might be able to trigger a breakout. The monthly chart below shows how the 100 level remains as major resistance above current price:
Whilst Wednesday’s FOMC will be a keenly watched event this will be closely followed by Thursday’s Eurogroup meetings. The Greek-debt situation still weighs on the EUR and broader market sentiment. The current aid package runs out on June 30th so this saga could drag on until then although there could be some related news or possible outcome from this week’s Eurogroup meeting. There are reports that the Germans are becoming resigned to a Grexit but, no sooner than this is considered, the ramification of contagion and all the associated acronyms…Spexit, Portugexit etc, are then being mulled over. The risk of a potential Grexit still remains high though at the moment and news of just such an outcome or, conversely, of a last minute deal, has the potential to trigger large and unpredictable swings across all markets and instruments. Think: SNB of recent history and this may help to shape an understanding of the impact of any news! Thus, I will be trading with extra caution, if at all, and trying to avoid EUR pairs.
Next Sunday 21st June marks the winter solstice for the southern hemisphere, and summer solstice for those north of the equator. The solstice is an astronomical event with strong ties to the ancient Greeks. Their understanding of celestial navigation helped to develop contemporary understanding of the ordered movement of planetary bodies within the celestial sphere. It seems rather poignant then this week, as we head towards the June 21 solstice, that much of the world is pondering just how orderly Greece will be moving within the sphere of the EU in coming weeks! One wonders whether the looming Sunday 21st astronomical event might herald any other significant polar shifts!
Data to watch out for next week:
- Mon 15th: ECB Draghi speech.
- Tue 16th: AUD RBA Monetary Policy Minutes. GBP CPI. EUR European Court of Justice Ruling, German ZEW Economic Sentiment. USD Building Permits.
- Wed 17th: NZD GDT Price Index. GBP Employment data and Bank Rate Votes. USD FOMC & Press Conference.
- Thurs 18th: NZD GDP. GBP Retail Sales. EUR Targeted LTRO & Eurogroup meetings. USD CPI, Unemployment Claims and Philly Fed Manufacturing Index.
- Fri 19th: JPY BoJ Interest Rate & Press Conference.
S&P500 daily: The index closed the week with a bullish coloured Doji but the Greek-debt situation continues to weigh across all stocks, not just those of Europe. The question of how US stocks will react to any defined US interest rate hike also remains to be seen but we may get a sense of this in the coming week depending on the outcome of Wednesday’s FOMC. The broader S&P500 is trading just above the Cloud for now but a bearish Tenkan/Kijun cross remains in play. I’m watching for any wedge breakout and or move below the Cloud:
VIX: strangely with all this supposed fear that the ‘fear index’ had a bearish week:
FEDEX: this US market ‘bellwether’ continues on its bullish path:
Russell 2000: this small caps US market ‘bellwether’ also closed higher for the week:
Forex TC Signals: only two open now; The Cable and the GBP/JPY.
E/U 4hr: choppy within a daily wedge/ triangle.
E/U daily: watching for any trend line breakout:
E/U weekly: the E/U closed the week higher which seems surprising given the situation with Greece. The daily chart’s wedge pattern is giving the weekly chart a bit of a Bear Flag appearance though:
E/U monthly: despite the potential bearish weekly Bear Flag pattern price continues to hold above the 1.12 level. This is a major S/R level as it is the 61.8% retracement fib level of the 2000-2008 swing high move. A sustained hold above this level would bring the 1.18 level into focus as this is the bottom of the bearish monthly triangle pattern:
E/J 4hr: watching for any trend line breakout here too:
E/J monthly: I’m still seeing a possible larger bullish ‘inverse H&S’ here on the monthly time frame:
A/U 4hr: still range bound between the 0.755 and 0.995 levels:
A/U weekly: there is still the look of a potential Bear Flag on the weekly A/U chart:
A/J daily: watching for any daily chart based triangle breakout here:
Kiwi 4hr: lower following the RBNZ rate cut and has closed below the weekly 200 EMA:
U/J 4hr: no momentum based triangle breakout on Friday and, hence, the trend lines have been adjusted:
U/J monthly: the 124 level remains an important level to watch as the month of June progresses. A hold above 124 for June will help to support the bullish Cup ‘n’ Handle pattern:
EUR/NZD monthly: this pair looks set to break out above a significant monthly bear trend line. Watch this pair through the Greek debt issues though to see if it pulls back within the trend line before June closes at all. Any June bullish breakout though may mark a major polarity shift here though:
GBP/AUD: this has made a weekly close above the psychological 2.0 level. It also continues to hold above a recent broken bear trend line and it looks like this pair might be in for a polar shift too.
G/A weekly: closed the week above 2.0:
G/A monthly: a major monthly bear trend line remains broken:
Silver and Gold: both metals are trading at major S/R levels as the trading world waits for news about the Greek-debt situation and the timing of US interest rates. Silver is trading near $16 support and Gold near $1,180 support. I would expect that a sooner, rather than later, US interest rate hike would be bearish for these two but that any Greek debt default might be bullish. Thus, these two could head either way from these strong S/R levels:
Silver 4hr: this is rather bearish as it has closed the week below the $16 level:
Gold 4hr: not quite as gloomy here as price has closed above $1,180 support: