FX shift? EURX breaks out & USD fizzles by Mary McNamara


Monthly: The November candle is printing a bullish candle and is still sitting above the ‘resistance-now- turned support’ of the monthly chart’s bear triangle tend line. It has not managed to move above the resistance of the 2010 highs though.


Monthly Ichimoku: The November candle is still well above the monthly Cloud.


Weekly: Last week’s candle closed as what would be best described as bearish-reversal ‘Shooting Star’. This reversal candle, forming under major resistance, doesn’t bode well for the index.  


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


Daily: Price spent much of the week consolidating under the 88.50 level which was the region of the 2010 highs. The most interesting daily candle to note was the one printed on Friday. This was a bearish candle despite further upbeat USD data being released. It seems that this lengthy USD rally might be getting a bit tired!


Daily Ichimoku Cloud chart: Price traded above the Cloud all week. Price is still above the daily Cloud and there is still an open bullish Tenkan/Kijun cross in play.


4hr: Price chopped sideways under resistance for much of last week.


4hr Ichimoku Cloud chart: Price traded above the Cloud last week but dipped into the top of the Cloud by Friday. This chart is now divergent from the daily chart and suggests choppiness.



Monthly: The November candle is now printing a large bullish candle and I am still seeing a larger-scale bullish ‘inverse H&S’ pattern developing as well. This may actually be the start of it!


Monthly Ichimoku: The November candle is trading within the monthly Cloud.


Weekly: The weekly candle closed as a large bullish candle as well and up and out from the descending trading channel that had held price for over seven months! This represents a significant bullish shift here:


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


Daily: Price chopped higher last week and made a bullish breakout from the descending trading channel.


Daily Ichimoku Cloud chart: Price chopped up through the Cloud last week and closed above the Cloud. This is the first bullish candle close above the daily Cloud since May 5th, a period of over 6 months! Watch out as there appears to be a new bullish Tenkan/Kijun cross here as well!


4 hr: Price rallied last week.


4 hr Ichimoku Cloud chart: The EURX chopped up through the Cloud early in the week and closed well above the Cloud.  This chart is aligned with the daily chart and suggests long EUR.



USDX: the USDX had a bearish week, one of only three since this most recent bull run, BUT the bearish–reversal “Shooting Star’ style candle may be pointing to more bearish activity in sessions to come. The new monthly candle is still holding above the major triangle bear trend line but continues to struggle at resistance from the previous 2010 highs near 88.50.

Interestingly, the index pulled back on Friday despite further upbeat US data and this is probably a case of ‘what goes up must eventually come down’ I suspect.  This USD rally might be a bit overdone for now and I’ll be watching out for any further weakness. The index has been on a lengthy bullish run and some pull back, even if only temporary, would not be out of order. Obvious pull back targets include the previously broken monthly trend line and then the 83 region which is near the daily 200 EMA and the 61.8% fib of the recent bull run.

EURX: the EURX had a pivotal week breaking up and out from a seven month trading channel. It is noteworthy that the EURX is back above the Cloud on the 4hr and daily time frame which is a significant bullish development. Whilst divergence between the Eurozone and US economies continues it appears there is a bit of fatigue with the ‘long USD and short EUR’ theme that has dominated the markets of late. I still have my eye on the bullish ‘inverse H&S’ building on the monthly chart.

I have been saying for ages that I consider a big move is building. I am now back wondering whether this might be the start of it? A classic ‘risk on’ style rally with short USD, Long EUR, AUD, NZD, Gold, Silver and stocks. I’m not predicting here at all….just watching to see what happens and especially watching the NASDAQ!

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, Ebola, 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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