Last week: It has been a bit quiet on the TC front given the lead up to Christmas but there have still been some great trend line breakout trades and TC signals. More technical patterns are setting for the sessions ahead but expect some quiet to continue until after Christmas and the New Year. Wishing everyone a Merry Christmas! There won’t be any updates next weekend as I am away over New Year.
- EUR/JPY: 130 pips.
- AUD/JPY: 100 pips.
- GBP/NZD: 120 pips.
- GBP/JPY: 140 pips.
- EUR/AUD: 110 pips and, later, an Optimal style TC signal for 140 pips and 7 R.
- EUR/NZD: 120 pips and another Optimal style TC signal for 80 pips.
- Gold: 150 pips.
- AUD/USD: 45 pips.
- GBP/AUD: 90 pips with an Optimal TC signal for over 2 R.
- NB: this is just a brief update and there won’t be any weekend updates over the New Year period as I will be away. I have detailed a little extra in my analysis of the AUD/USD though.
- FX Indices: The US$ index closed lower for the week despite the recent US rate hike. The FX Indices have slipped into alignment for ‘risk on’ so I’ll be watching for any follow-through here. An update on both FX indices can be found through this link.
- US Tax Reform: President Trump has signed his Tax Reform bill into Law so watch for any impact on stock markets.
- Triangles: these FX pairs remain consolidating in weekly triangle patterns so keep an eye on the bigger picture patterns here: AUD/JPY, AUD/USD, GBP/USD, NZD/USD and USD/JPY. The EUR/USD is in a monthly triangle.
- Brexit: this remains in the news so caution is required with GBP pairs.
- Bitcoin: I noted on Twitter and in my regular updates earlier last week how Bitcoin was setting up with some bearish-reversal patterns and how caution, or at least some healthy respect, was needed. The daily chart from that time is below and shows the Double Top and Bearish Divergence (Volume vs Price Action). Note how these technical patterns turned out to be great clues as price plunged down to near $10,000 shortly after that time. Price action today shows a recovery attempt but traders need to be careful this isn’t a dead cat bounce!:
Bitcoin daily: from the warning re Divergence and Double Top:
Bitcoin daily: bearish follow through after these clues:
- XJO: ASX-200: I’m keenly watching to see where this index closes for the month and the year. Any close, and then hold, above 6,000 would be very bullish and would, I believe, set up for an exciting 2018. I reviewed the ASX-200 on Friday and a copy of this review can be found through the following link. In this article I noted some stocks on my radar but, remember, a rising tide generally floats all boats! Someone on Twitter asked me whether our Aussie indices could churn higher with US stocks at such highs and having the potential to pullback. They quoted the common concern….’when the US markets sneeze we catch the cold’. I am open to the idea of some potential divergence here though and even if the US markets enter a period of choppiness could see our markets try to churn higher as we have some catching up to do!
ASX-200 monthly: 6,000, 6,800 & 10,400 are the key levels here:
- Nikkei: JP225 daily: this is one to keep in mind as well as it consolidates under the key 23,000 level. It certainly looks like a Bull Flag brewing!
Calendar: it is a quiet week for data next week due to Christmas:
EUR/USD: This is trading above 1.18 and if this level holds then the next major zone to monitor is 1.20. Watch the 4hr chart trend lines for any new momentum-based trend line breakout:
EUR/JPY: The EUR/JPY is consolidating under the major 135 level. This is hugely importnat S/R zone as the monthly chart reveals. Watch this 135 and the 4hr chart trend lines for any new momentum-based trend line breakout:
AUD/USD: The 0.77 level is a significant S/R zone for the Aussie and this can be seen on the monthly chart. It isn’t the only major zone in this region, 0.80 feature strongly here too, but the 0.77 is the one in focus as the markets grind towards the end of month and end of year. A yearly close above 0.77 would be quite a statement and, IMHO, would underpin the Aussie for a continued grind higher. Traders need to keep an eye on the US$ index here though; the US$ is currently struggling to make gains following the recent US rate hike and any continued weakness would help support the Aussie. However, if the US$ gets its mojo back then the Aussie would struggle.
Monthly chart: The Aussie has been chopping higher since mid-2015 and price action is currently trading within a triangle on the weekly chart that is set within a larger triangle on the monthly chart. Note the momentum on the monthly chart though; the ADX is declining and below the 20 level so watch this for any uptick to garner clues about a shift here.
Weekly chart: The weekly chart shows price action coiling towards the apex of the weekly triangle with the breakout trend line near the 0.80 level. Note how bearish momentum is declining and bullish momentum is gaining; keep and eye on this! Any bullish breakout would bring the 0.90 level into focus as this is the 50% fib of the swing low move and is near the upper trend line of the monthly chart’s triangle. The 61.8% fib here is near 0.95.
Daily chart: the daily chart shows bullish momentum and that the Aussie has closed above 0.77 and the daily 200 EMA. The 61.8% fib of the recent swing low is up near 0.79 so this would be the next hurdle to keep in focus for this pair. The weekly chart’s bear trend line is up near the 0.80 level.
4hr: The Aussie is above the 0.77 level and displaying bullish momentum. Do not be surprised to see this level tested again though even if there is to be bullish continuation. Any bearish retreat would bring the 0.76 level into focus as this is down near the 61.8% of the recent swing high move.
Summary: Watch the 0.77 level over coming sessions, and at the end of month/year, for any decisive make or break:
- Bullish targets: 0.79, 0.80, 0.90 and 0.95.
- Bearish targets: 0.76.
AUD/JPY: Watch the 87 level and 4hr chart trend lines for any new momentum-based trend line breakout:
NZD/USD: Watch the monthly 200 EMA and 4hr chart trend lines for any new momentum-based trend line breakout:
GBP/USD: The Cable continues to negotiate the recently broken three-year bear trend line region. Watch the 4hr chart trend lines, and 1.35 level, for any new momentum-based trend line breakout:
USD/JPY: Watch the 4hr chart trend lines for any new momentum-based trend line breakout:
GBP/JPY: Watch the 4hr chart trend lines, and the key 150 level, for any new momentum-based trend line breakout:
GBP/AUD: Watch the 4hr chart descending wedge trend lines for any new momentum-based trend line breakout:
GBP/NZD: Watch the 4hr chart trend lines for any new momentum-based trend line breakout:
EUR/AUD: The 1.55 level is an important S/R zone for this pair so keep this in focus as the year draws to a close. Watch the 4hr chart trend lines and 1.55 level for any new momentum-based trend line breakout:
EUR/NZD: Watch the 4hr chart trend lines, and 1.675 level, for any new momentum-based trend line breakout:
Gold: This precious metal is starting to look bullish again so watch this descending wedge for any breakout. Any continued US$ weakness would add support here.
Watch the 4hr chart wedge trend lines, and key $1,280 level, for any new momentum-based trend line breakout:
Oil: Watch the 4hr chart wedge trend lines, and key weekly 200 EMA, for any new momentum-based trend line breakout: