USDX
Monthly: The August candle closed as a bearish coloured ‘Inside’ candle reflecting indecision. No great shake there as the index has been range-bound within a Flag pattern for over 6 months! The new September candle is currently printing a small bullish coloured, essentially ‘Inside’, candle and is also still under the key 100 level.
Monthly Ichimoku: The September candle is trading above the Cloud.
Weekly: Last week’s candle closed as a bullish candle following on from the previous week’s bullish-reversal ‘Hammer’ candle. Any bullish continuation from here will bring the 100 level back into focus with some possible ‘Triple Top’ jitters. However, any bearish breakdown will bring the 61.8% fib level, down near 87, the weekly 200 EMA and the previously broken triangle trend line into focus.
Weekly Ichimoku: The weekly candle closed ABOVE the weekly Cloud. It is still worth noting that the bearish Tenkan/Kijun cross is open and I would want to see a new bullish cross before being too confident of any resumption of bullish momentum.
Daily: Price chopped a bit higher last week. The 100 level remains as overall resistance above current price.
Daily Ichimoku Cloud chart: Price moved back up into the Cloud on Tuesday and finished the week off within the Cloud.
4hr: Price chopped sideways to start the week but then edged higher after Thursday’s ECB.
4hr Ichimoku Cloud chart: Price traded above the Cloud all week. This chart is divergent from the daily chart though for now and suggests choppiness.
EURX
Monthly: The August candle closed as a bullish, almost ‘engulfing’, candle but the new September candle is currently printing a bearish coloured ‘Inside’ candle but, for now at least, it is still above the key 96 ‘Double Bottom’ level.
Monthly Ichimoku: The September candle is trading below the Cloud.
Weekly: The weekly candle closed as a bearish candle following on from the previous week’s bearish-reversal style ‘Shooting Star’ candle BUT it is still above the key 96 level. There have been two conflicting, weekly-based technical patterns competing over recent months; a basing-style bullish ‘Double Bottom’ and a ‘Bear Flag’, but neither pattern has clearly trumped yet.
Weekly Ichimoku: Price is still trading below the weekly Cloud. The bullish Tenkan/Kijun cross remains open and, thus, I want to see a new bearish cross before being confident of any resumption of bearish momentum.
Daily: Price traded higher to start the week but then chopped lower.
Daily Ichimoku Cloud chart: Price traded above the daily Cloud last week.
4 hr: Price chopped higher until ECB last week but then fell back down to close lower for the week.
4 hr Ichimoku Cloud chart: The EURX tried to break up through the 4hr Cloud last week but wasn’t successful and closed the week below the Cloud. This chart is divergent from the daily chart and suggests choppiness.
General:
- Both indices continue consolidating sideways in weekly/monthly-chart Flag patterns that have persisted for over 6 months.
- The USDX and EURX are NOT aligned on the Ichimoku charts.
Each week I keep anticipating which piece of economic data might trigger a breakout on both of these index Flag patterns. I am beginning to think that there won’t be a decisive Flag breakout on either index until the Federal Reserve actually announce a specific date for any US interest rate increase. I’m wondering if the September 17th FOMC meeting might be just that trigger!
USDX: The US$ closed higher the week helped more midweek by dovish ECB comments than by Friday’s NFP. However, the index continues consolidating within a potential Bull Flag pattern.
As mentioned over many weeks, I still consider the US$ is in no-man’s land whilst it trades above 92.50 and below 100. I continue to wait for a decisive breakout from this region to signal the next major directional move on the index as this choppy and range-bound price action has gone on for over five months now. Thus, the levels to keep watching on the USDX are:
- The weekly chart Flag trend lines.
- The psychological 100 level above current price. This is the top of the recent trading range.
- The 92.50 level below current price. This is the bottom of the recent trading range.
EURX: The EURX closed lower for the week but is still holding above key 96 support for the time being and is still trading within a consolidation style Flag pattern. The fact remains, however, that the Eurozone is trading within a monetary easing cycle and the US is trying to emerge from one. Dovish ECB commentary midweek and the suggestion of potential for further easing undermined the recovery effort that the EUR had been embarking on over recent weeks.
The levels to watch on the EURX remain as:
- The weekly chart Flag trend lines.
- The 105.5 level: The weekly chart reveals that a 61.8% fib retracement of the recent lengthy bear move is back up near the 105.50 level and weekly 200 EMA. Any hold back above 96 and continued recovery effort might see the index target this region.
- The 96 level:This is a major support level for the EURX and a possible bullish ‘Double Bottom’ region.
- The 94 level: Any break and hold back below 96 might suggest bearish continuation as it represents a break of the monthly charts ‘Double Bottom’. If so, the recent low printed near 94 will come back into focus.
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, 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.
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