FX Indices Review for 18/08/14

USDX

Monthly: Trend ranging. The August candle is still printing a bearish coloured ‘Spinning Top’.

USDXmonthly

Monthly Ichimoku: The Aug candle is trading above the monthly Cloud. The Cloud band continues as rather narrow, bearish in nature and spanning horizontally. The monthly Cloud chart shows that, whilst the index had spent much of the last 6 months within the monthly Ichimoku Cloud, it has now broken back above the Cloud. Decent tending markets might return if this index can remain free of the monthly Cloud.

USDXmonthlyCloud

Weekly: Trend chopping/sideways. The weekly candle closed as a bullish coloured Doji BUT back below the key resistance of 81.50. The failure to print a weekly close above this resistance level is rather bearish.

USDXweekly

Weekly Ichimoku: Price is still trading within the weekly Cloud.

USDXweeklyCloud

Daily: Trend choppy/sideways. Price chopped around just under the 81.50 level last week until Wednesday when it eventually managed to print a daily close above this resistance. It managed to hold above this level for Thursday but couldn’t print a weekly close above the 81.50. Renewed conflict in the Ukraine and some weaker than expected USD data on Friday resulted in the USD index pulling back below this key level. Price also closed below a daily support trend line which adds to the bearish sentiment.  Traders need to be cautious here though as this is a major resistance level and the index could continue to battle it out here for a bit longer. If so, price action could then form up into a ‘Bull Flag’. The condensed daily chart continues to show how price had essentially chopped sideways since last September in a range bound by the 79 and 81.50 levels.

USDXdaily

Daily Ichimoku Cloud chart: In much the same way as last week, the index chopped only slightly higher but well above the Cloud all week. The daily Ichimoku chart shows how price has chopped within, or near, the Cloud since last November but this may be about to change! I remain on the lookout to see if the USDX can manage to hold out and up following this period of being ‘Cloud bound’. A bullish hold above the Cloud might signal continued upwards momentum but any further failure would be a rather bearish signal.

USDXdailyCloud

4hr: Trend choppy. Price chopped marginally higher last week but was capped by the 81.50 resistance level until Wednesday. The index closed the week out sitting back just below the 81.50 level. I have drawn in potential ‘Bull Flag’ trend lines on the 4hr chart. Watch these levels next week for possible clues about the next directional move for the USDX:

USDX4

4hr Ichimoku Cloud chart: Price chopped along either in or above the top edge of the Cloud until Friday but ended up closing the week below the Cloud. There was another bearish Tenkan/Kijun cross on Friday but this was deemed a weak signal as it formed above the Cloud. This chart is still aligned with the daily chart and supports long USD trades.

USDX4hrCloud

EURX

Monthly: Trend down overall. The August candle is printing a bullish coloured ‘Spinning Top’. I have relaxed the bottom triangle trend line here to capture the most recent price action: 

EURXmonthly

Monthly Ichimoku: The August candle is within the monthly Cloud. This index has spent much of the last 8 months within the monthly Cloud. There may need to be a clear breakout here before decent trending markets return.

EURXmonthlyCloud

Weekly: Trend up, overall. The weekly candle closed again as a bullish coloured Doji candle with a long lower shadow. In much the same way as last week, the EURX is still below the previously broken weekly support trend line but above the weekly 200 EMA.

EURXweekly

Weekly Ichimoku: Price is still trading just below the weekly Cloud.

EURXweeklyCloud

Daily: Trend choppy. Price action was very choppy as it moved slightly higher last week.

EURXdaily

Daily Ichimoku Cloud chart: Price traded below the Cloud all week.

EURXdailyCloud

4 hr: Trend choppy:  Price chopped lower to start the week but recovered mid-week to end up closing slightly higher.

EURX4

4 hr Ichimoku Cloud chart: The EURX slipped below the Cloud early in the week but recovered by mid-week to trade back above the Cloud where it remained to see out the week. This chart is divergent from the daily chart and suggests choppiness.

EURX4hrCloud

Comments:

General:  There have been small, indecision-style weekly candles printed on the EURX and USDX charts for the last two weeks. There is quite a bit of high impact news scheduled for the week ahead that could trigger some movement here though. Most notably on Thursday with FOMC and then on Friday with the Jackson Hole Symposium where both Fed Chair Yellen and ECB  Draghi will be speaking.

I have been watching two key levels on both indices over recent weeks:

  • USDX: the 81.5 resistance level. The index failed to make a weekly close above this resistance level. Renewed Ukraine concern and some weaker than expected US data on Friday resulted in the USD weakening to close back below this key S/R level.
  • EURX: the 108.5 support area: this is the region of the weekly support trend line, the bottom of the weekly Cloud and the weekly 200 EMA. The index is still below the weekly support trend line and the weekly Cloud BUT has managed, again, to scrape back above the weekly 200 EMA and the 108.5.

USDX: the USDX closed slightly higher for the week but failed to break out from the 81.50 – 79 trading channel. The index had essentially been trapped in this range for the last 11 months! Whilst the failure to close up and out of this channel seems bearish traders need to be wary of possible consolidation at this major resistance level and the formation of any ‘Bull Flag’.

EURX: the EURX also closed slightly higher for the week. The index has held below the weekly Cloud and the weekly support trend line BUT scraped a close back above the weekly 200 EMA.

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, Euro zone or Middle East events and/or news announcements, continue to be unpredictable triggers for price movement on the indices.  These events will always have the potential to undermine any technical analysis.

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