Indecision candles, range-bound items but Yen strength

Last week:  Despite a number of trading instruments printing indecision-style weekly candles and others remaining range-bound there were three TC signals to track last week and two of these were hugely profitable: GBP/JPY = 750 pips, AUD/JPY = 400 pips and a loss on the GBP/AUD = -100 (although it did give 80 pips before reversing).

Much was made of the bearish week for stocks but all four of the major US indices, S&P500, NADAQ, DJIA and Russell 2000 closed the week with indecision-style ‘Inside’ candles, albeit they were bearish coloured. In fact, there were a few indecision-style weekly candles printed in Forex as well: EUR/USD, AUD/USD, GBP/USD and the NZD/USD. This is all fine for those who happily trade bounces off these ranges but it doesn’t really suit my style of 4hr chart-based trend trading. 

Indecision

Yen¥: Yen strength was a feature of last week but many wonder just how much longer the BoJ will wait before potentially intervening to correct this. Whilst some are seeing this Yen strength as a very worrying signal I wrote back in February suggesting this might be just a simple technical and normal corrective move. Until there is a break and hold beyond the 61.8% fib on each Yen pair then I’m still thinking along these lines. I note the bullish-reversal pattern on the EUR/JPY chart though and do wonder if this might be flagging a bit of a warning!

This week:

US$: The US$ had another bearish week so watch for any follow-through activity and movement down to major 92.50 support. A review of the FX Indices can be found through the following link.

China: there is a lot of Chinese data to monitor this week and these items can ofen give risk sentiment a decent shove: CPI, PPI, Trade Balance, GDP and Industrial Production.

GBP£: the Cable has been ranging between 1.46 and 1.40 for most of this year so watch to see if any breakout move might be triggered by this week’s BoE Interest Rate announcement or ongoing Brexit news.

US Earnings: US earnings season starts this week and this link will take you to an earnings calendar. Watch for earnings results and to see how this impacts broader market sentiment.

My TC Updates: I will be updating much as usual for the next week or so but for the w/e of April 23rd-24th they might be brief. Also, I am away on a one month holiday to Europe from April 27th and trading blog updates during that time will be very brief and few as I switch to travel blog mode :-)  

Stocks and broader market sentiment:

All of the major stock indices closed lower for the week except the FTSE. However, the S&P500, DJIA, NASDAQ and Russell 2000 closed with indecision-style ‘Inside’ bearish coloured candles. Canada’s TSX, the German DAX and the Aussie XJO closed with bearish weekly candles too.

The S&P500, DJIA, Russell 2000 and NASDAQ are all pushing at the upper edges of Flag patterns though and so this choppiness is not surprising. Whether they all make or break from these levels remains to be seen and continues to be a point of interest for me to monitor.

I continue to watch out for further clues as to any new momentum move, long or short though! In particular I’m looking out for:

S&P500 daily chart: The index closed just below the Flag’s upper trend line and is at a critical make or break level here.

S&Pdaily

S&P500 weekly: The index closed with a bearish coloured ‘Inside’ candle suggesting ‘indecision’ which isn’t surprising given the level at which it is trading. It still has a bit of a Bull Flag appearance and traders need to keep note of the Flag trend line just above current price. As well, the 2,100 and the 2,135 are other bullish levels above current price worth watching in coming sessions.

S&Pweekly

S&P500 weekly Cloud: the index is above the weekly Cloud but keep watching for any new bullish Tenkan/Kijun cross. Well worth watching!

S&P500weeklyCloud

S&P500 monthly chart: The new April candle is printing a bearish coloured ‘Spinning Top’ but the monthly trend line remains intact. Any break of this support level though would suggest to me of a more severe pull back.

S&Pmonthly

Russell 2000 Index: this small caps index is considered a US market ‘bellwether’ and the Bull Flag may trump the potential bearish H&S.  The weekly candle was a bearish coloured ‘Inside’ candle suggesting indecision.

RUTweekly

VIX Index: The ‘Fear’ index has printed a bullish coloured ‘Inside’ candle suggesting indecision but is back above the 14 threshold level.

VIXweekly

Copper: closed with a bearish weekly candle but still above the key 2.0 level and within a long-term triangle.

HGweekly

Oil: Continues holding above the 2009 low of $33.50, printed a bullish engulfing weekly candle and has held up and out from a 21 month bear trend line.

CLweekly

Trading Calendar Items to watch out for:

  • Mon 11th: CNY CPI & PPI. USD Fed Announcement.
  • Tue 12th: GBP CPI.
  • Wed 13th: CNY Trade Balance. USD Retail Sales & PPI. CAD BoC Monetary Policy Report & Press Conference. USD Crude Oil Inventories.
  • Thurs 14th: AUD Employment data. GBP Bank Rate. USD CPI & Weekly Unemployment Claims.
  • Fri 15th: CNY GDP & Industrial Production. CAD Manufacturing Sales. USD Prelim UoM Consumer Sentiment.
  • Sat 16th: IMF Meetings.

Forex:

EUR/USD: The E/U continued chopping along above the upper edge of a fairly lengthy daily chart triangle and just below a recent ‘Double Top’ level of 1.15.

Any bullish continuation from the triangle breakout would have me looking at the 1.18 S/R level in the first instance as this is just above the most recent HIGH and a 38.2% fib level. After that I’d be looking at the 1.22 level as this is a congested zone holding the weekly 200 EMA, a previous monthly triangle trend line and the 50% of the weekly chart’s 2014-2015 swing low move.

The key levels to keep monitoring on the EUR/USD include:

  • 1.12:    this is a major S/R level from the monthly chart as it is the 61.8% fib of the 2000-2007 swing high move.
  • 1.18:   this is major long term S/R level (seen on the monthly chart).
  • 1.22:    weekly 200 EMA, a previous monthly triangle trend line and the 50% of the weekly chart’s 2014-2015 swing low move.
  • 1.045 /1.040: the recent & longer term support levels marking the lower boundary of a potential Bear Flag.

Price is trading above the 4hr and daily Cloud which supports LONG EUR$.

The weekly candle closed as a bearish coloured Doji candle suggesting indecision.

  • I’m watching for any new TC signal on this pair, the daily chart triangle and the 1.15 level.

EUmonthly

EUweekly EUdaily EU4

EUR/JPY: The E/J fell almost 450 pips last week and finished well below 126 support and the 17+ month bear trend line.

The weekly chart now shows a bit of a potential bullish-reversal descending wedge pattern and so we shall see how this goes. Whilst price closed above the 123 region I consider the 122 region as the one to watch. This is long term S/R and the 50% fib of the recent swing high move so it may be the place to watch for any potential bounce.

A failure of 122 to offer any support though would have me watching the 115 / 115.50 region as this is also long-term S/R and the 61.8% fib of the recent swing high move (see weekly & monthly charts).

Price is trading below the Cloud on the 4hr and daily chart which suggests SHORT EUR/JPY still for now.

The weekly candle closed as a bearish engulfing candle.

  • I’m watching for any new TC signal, the 122 level near the 50% fib and the descending wedge trend lines.

EJmonthly EJweekly EJdaily EJ4

AUD/USD: The A/U pulled back last week and this has price action forming up within a 4hr chart triangle pattern.

Any bullish breakout will have me focussed on the 0.80 cent region. This is a psychological whole number level, previous S/R and the rough location for the junction of the bear trend line that has been in force since the decline started back in late 2012.

Price is trading below the Cloud on the 4hr chart but above the Cloud on the daily chart which suggests choppiness.

The weekly candle closed as a bearish coloured ‘inside’ candle.

  • I’m watching for any new TC signal on this pair and the 4hr chart’s triangle trend lines.

AUmonthly AUweekly AUdaily AU4

AUD/JPY: The A/J respected an 18+ month bear trend line and the daily 200 EMA last week and pulled back almost 500 pips with the recent bout of Yen strength. A new TC signal has delivered up to 400 pips.

Price action is back down at a critical S/R level though now being near the 61.8% fib of the recent (Feb-March 2016) swing high move at 81 and just above the 50% fib of the longer term (2008-2013) swing high move near 80. These are the levels to watch next week for any make or break activity.

Price is now trading below the Cloud on the 4hr and daily chart which supports SHORT AUD/JPY.

The weekly candle closed as a large bearish candle.

  • There is an open SHORT signal on this pair BUT I’m watching for any support from the 81 / 80 levels.

AJmonthly AJweekly AJdaily AJ4

GBP/USD: I’m still watching a potential ‘Inverse H&S’ play out on the daily chart here but it is getting a bit stretched. The neck line is at the 1.46 level and this is previous S/R for added confluence.

One look at the condensed 4hr chart below shows how price has been range-bound between the 1.46 and 1.40 level for over three months:

GU4

The monthly chart reveals another slant here though. Price has broken a long-term support trend line, pulled back to test this, failed and now continued lower. So if 1.40 is broken and price holds below then I would be thinking that this has much lower to go. The long term 61.8% fib is already broken so then I’d be looking for a test of the S/R level of 1.35 which is 500 pips lower.Then I’d look for the 78.6% fib that is down near 1.30. Yep…1,000 pips lower! So what could possibly bring about such a collapse? Well maybe w/e Brexit news like this! The waters are muddied here though by potential US$ weakness but 1.40 seems the level to watch for any make or break activity in the coming sessions.

GUmonthly

Price is trading below the Cloud on the 4hr and daily chart suggesting bearish GBPUSD.

The weekly candle closed as a bearish coloured ‘Spinning Top’ candle.

  • I’m watching for any new TC signal on this pair, the inverse H&S and the 1.40 and 1.46 levels.

GUmonthly GUweekly GUdaily GU4

GBP/JPY:  The GBP/JPY weakened by 780 pips following last Friday’s TC SHORT signal and trend line break. Price broke down through two potential layers of support of the weekly chart’s 50% fib, from the 2011-2015 swing high move near 156.50, and then the ‘Double Bottom’ region near 154.50.

The move below 154.50 has me looking for an possible test of the 61.8% fib down near 147 and this, too, is previous S/R giving it added significance. (see the monthly chart)

Price remains trading below the Cloud on the 4hr and daily chart which is bearish.

The weekly candle closed as a large bearish candle.

  • There is an open TC SHORT signal on this pair.

GJmonthly GJweekly GJdaily GJ4hr

NZD/USD: The NZD/USD pulled back last week and I have adjusted the recent wedge trend line to reflect this latest resistance zone.

The 4hr chart shows a recent support trend line still intact and price being helped also by the 4hr and daily 200 EMAs.

I note that any bullish continuation might target the 50% of the 2014-2015 swing low move as this is also near a strong level of previous S/R at 0.75 and the weekly 200 EMA (see weekly chart).

Price is trading below the Cloud on the 4hr chart but above the Cloud on the daily chart suggesting choppiness.

The weekly candle closed as a bearish coloured ‘inside’ candle.

  • I’m watching for any new TC signal on this pair, the revised wedge trend lines, recent support TL and the 0.75 level.

KiwiMonthly KiwiWeekly KiwiDaily Kiwi4

The Yen: USD/JPY: The U/J weakened by almost 400 pips last week and it finally broke below the 115 – 111 trading channel. I’d Tweeted on Friday that it might find support from the weekly 200 EMA and price closed right on this level to see out the week.

Price has not traded below the weekly 200 EMA for over three years but, despite this support, price action has still really only pulled back to the 38.2% fib of the 2012-2015 swing high move. Thus, I see potential for a deeper technical-based pull back even as part of overall bullish continuation. A pull back to the 61.8% fib of any move is considered reasonable and this would bring price down to the 95 region. Now, the ‘elephant in the room’ here of course is the BoJ and whether they intervene or not remains to be seen and there is plenty of conjecture about regarding at what level they would act. Many report the 100 level which I kind of gravitate to as this has been a level on my radar for many months. This is near the 50% fib of the swing high move, it is long term S/R and it would also help shape up the bullish-reversal ‘Inverse H&S’ pattern I’ve got going. I do note that the 106.5 level is recent S/R too, as well as being the 38.2% fib, so watch for any reaction there too.

Monthly Chart Bullish Cup’ n’ Handle pattern: There still looks to be a longer-term bullish Cup ‘n’ Handle forming up on the monthly chart. The theory behind these patterns is that the height of the ‘Cup’ pattern is equivalent to the expected bullish move from the ‘handle’ breakout. The height of the Cup for the U/J weekly chart is around 4,800 ~ 4,900 pips. This may seem like a massive move but the longer term chart below shows this move to be reasonable as it would take the U/J up near the 50% fib of the 1985-2012 swing low move. Note the 101.5 level on the other monthly MT4 chart though. Any pullback down to this level, apart from helping to form up the huge Handle for the Cup ‘n’ Handle, would also help to develop a bullish ‘Inverse H&S’ pattern.

UJmonthlyCloud

Price is trading below the Cloud on the 4hr chart and daily chart which is bearish for the U/J.

The weekly candle closed as a large bearish candle.

  • I’m watching for any new TC signal on this pair and the 106.5 and 100 levels.

UJmonthly UJweekly UJdaily UJ4

USD/CAD: The USD/CAD chopped along just above the 1.30 major S/R level until Friday when decent CAD Employment data, Oil strength and US$ weakness took their toll resulting in a weekly close below 1.30 and triggering a new TC SHORT signal.

Any weekly close and hold below 1.30 support would have me looking at the 61.8% fib retrace level down near 1.155 as this is also near the weekly 200 EMA for added confluence.

Monthly Chart Cup ‘n’ Handle? The monthly chart shows a developing bullish Cup ‘n’ Handle pattern with a neck line at 1.30. This is worth keeping an eye on as the pattern would be worth up to 3,500 pips as this is the height of the ‘Cup’. The interesting point is that the target for this pattern would put price up at the highs reached back in 2002 and this is equal to a 100% Fib retracement of the 2002-2007 bear move.

Price is now trading below the Cloud on the 4hr and daily chart which is bearish.

The weekly candle closed as a bearish candle.

  • There is a very new TC SHORT signal on this pair.

LoonieMonthly LoonieWeekly LoonieDaily Loonie4hr

GBP/AUD: This pair gave a failed TC signal late last week but I had stressed that the weekly chart’s 50%, at 184, was just below and might help to provide support and, that it did.

The weekly candle closed as a potential bullish-reversal candle and so I’d want to see a close and hold below this 50% fib at 184 before being confident to take any new SHORT trade.

Price is trading below the Cloud on the 4hr and daily charts which is bearish.

The weekly candle closed as a bullish-reversal ‘Inverted Hammer’ candle.

  • I’m watching for any new TC signal on this pair and the 1.84 level.

GAmonthly GAweekly GAdaily GA4

EUR/AUD: This pair chopped higher last week but without a clean wedge trend line breakout and so I have adjusted the wedge trend lines here.

To me, this still looks like a Bear Flag and I’m also keeping an eye on any resistance from the key 1.55 level.

The 1.55 – 1.75 remains a congested trading zone over the longer term and monthly time frame keeping me focused on the impact of price action at the boundaries. However, the hold below 1.55 looks rather bearish for the longer term now!

Price is trading above the Cloud on the 4hr chart but below the Cloud on the daily chart suggesting further choppiness.

The weekly candle closed as a bullish candle.

  • I’m watching for any new TC signal on this pair and the 1.55 level.

EAmonthly EAweekly EAdaily EA4

GBP/NZD: The GBP/NZD bounced back up from the 2.065 S/R level last week and tested the key 2.10 just as I suggested it might :-)

Price closed the week below 2.10 but above 2.065 yet note how the Bollinger bands are clamping down here on the 4hr chart suggesting reduced activity. The ADX, +DMI and –DMI are all below 20 too suggesting indecision here.

The previous triangle trend line breakout was a good guide but there has not been continued follow through and so I’ve adjusted the trend lines to reflect this recent S/R activity. This has resulted in another triangle forming up on the 4hr chart and so there are new trend lines to watch here in the coming sessions.

The GBP/NZD is trading below the Cloud on the 4hr chart and the daily suggesting a bearish bias.

The weekly candle closed as a bullish-reversal ‘Inverted Hammer’ candle.

  • I’m watching for any new TC signal on this pair and the triangle trend lines.

GNmonthly GNweekly GNdaily GN4hr

EUR/GBP: The 500 pip bullish ‘inverse H&S’ move has completed but I’m watching any test of the weekly chart’s triangle bear trend line and this remains the region to watch in coming sessions.

The EUR/GBP is trading above the Cloud on the 4hr and daily charts which is bullish.

The weekly candle closed as a bullish candle.

  • I’m watching for any new TC signal here and the weekly chart’s triangle trend line.

EGmonthly EGweekly EGdaily EG4hr

Silver:  Silver has chopped around either side of the key $15 support for many weeks now but broke up from this region and out of a recent triangle pattern late last week.

Silver is trading in the Cloud on the 4hr chart but above the Cloud on the daily chart and so choppy price action may continue for a bit longer.

The weekly candle closed as a bullish, almost ‘engulfing’ candle.

  • I’m watching for any new TC signal and the $15 level.

SilverMonthly SilverWeekly SilverDaily Silver4hr

Gold:  Gold finally broke up and out from its 4+ week Flag pattern but didn’t really kick on at all from there. I note on the 4hr chart that the ADX, +DMI and –DMI are still all below 20 so that’s proof little is happening here just at the moment.

I’m keeping an open mind with Gold and can reasons for both weakness and strength with the precious metal.

Bullish targets include:

  • The weekly chart’s swing low 50% fib near $1,415. This is also near the monthly chart’s bear trend line.
  • The weekly chart’s swing low 61.8% fib near $1,500.

Bearish targets include:

  • The daily chart’s 50% fib near $1,165 and the daily 200 EMA.
  • The monthly chart’s 61.8% fib level near $1,150.
  • The daily chart’s 61.8% fib which is just under the long term S/R level of $1,145.

Gold is now trading above the Cloud on the 4hr and daily charts which is bullish.

The weekly candle closed as a bullish candle.

  • I’m watching for any new TC signal here and the weekly 200 EMA.

GoldMonthly GoldWeekly GoldDaily Gold4hr

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