FX, stocks & bitcoin.

Last week:  What a week! Stocks have been roiling, Bitcoin is trying to find its feet and the US$ is recovering but slowly. These markets at the moment, IMHO, are better for trading than investing and that is one of the great advantages on my TC system. I stumbled across this old track recently and suggest you download and listen to it whilst mulling over chart set ups for the week ahead.

FX Index Divergence: The FX Indices have been divergent this week and this has meant that better TC signals came off the shorter time frame charts and off the Forex Cross pairs. One of the better examples of this was on the GBP/AUD where two great TC signals triggered during the week. I had warned about the 1.80 level in my analysis last weekend and the first TC signal was from a move up to test this level that gave up to 200 pips. Then, on Friday, there was another TC signal when this level was rejected for a move worth up to 230 pips. That is two TC trades for 3.5 R and 7.5 R respectively and for up to 430 pips!

Trend line breakouts and TC signals: there were a few trend line breakout trades last week and these were updated on my site during the week here, herehere and here:

  • GBP/JPY: 400 pips.
  • GBP/AUD: a TC signal for 3.5 R and another on Friday for 230 pips and 7.5R.
  • EUR/JPY: a TC signal for 3 R.
  • AUD/JPY: a TC signal for 7 R.
  • GBP/USD: 220 pips & a TC signal for 4 R.
  • GBP/NZD: 320, 180 and 200 pips in choppy moves.
  • Oil: 450 pips.
  • S&P500: a TC signal for 5.5 R.
  • Gold: 100 pips.
  • EUR/USD: 180 pips.

Next week:

  • FX Indices: The US$ index closed higher for the week but still below major S/R. An update on the indices can be found through this link.
  • Triangles: these FX pairs remain consolidating in weekly triangle patterns so keep an eye on the bigger picture patterns here: NZD/USD, and USD/JPY. The EUR/USD and EUR/JPY are in monthly triangles.
  • AUD/JPY: this looks to have made a bearish weekly triangle breakout so watch for any follow-through; especially if stocks remains week.
  • Stocks: We had a Prime Minister down here once who, rather famously, was quoted as saying a particular recession was the ‘recession we needed to have’. Well, in a similar vein, I believe this market pullback is the ‘pullback we needed to have’ and….the deeper the better! It’s a technical necessity and nothing more! I wrote an article on Friday showing some US Stock index charts where I was trying to put the recent wild swings into some perspective and it can be found through the following link. I heard one report saying the Dow experienced 22,000 points worth of movement throughout the week but the updated weekly charts below show how, despite this massive turbulence, recent support trend lines are still holding. I’ve place Fibonacci retracement on the most recent and obvious swing high move and this translates roughly to the last two years. As the charts show, the moves to date don’t constitute that much of a pullback just yet! The big question of course being where to from here? (click on charts to enlarge):
  • Bitcoin: has held above the 61.8% fib near $8,000 and, IMHO, any hold above this key level would add credibility to crypto-currencies in general as it would suggest the currency is conforming to technical theory. I wrote a separate article on Bitcoin this weekend that can be found through the following link.

Calendar: Note the high impact data for the week ahead; there is a fair bit to impact the US$:

Forex:

EUR/USD: I’m still wondering if we are just seeing consolidation on this pair as it hovers below the major 1.26 level.

The weekly chart’s 61.8% fib is near 1.26 and this region also intersects with the monthly chart’s 10-year bear trend line so this remains the target for any bullish continuation move.

Thus, the 1.26 remains as the major level to monitor in coming sessions. Note on the monthly chart below how the 61.8% fib of the swing low move is up near previous S/R at 1.40 so this would be the longer-term target on any break and hold above 1.26. This constitutes a move worth 1,400 pips so is well worth motioning.

  • Watch the 4hr chart trend lines and monthly 200 EMA for any new breakout.  Any pullback would have me looking for a test of the key 1.20 level.

EUR/JPY: This, and some of the other Yen pairs, are experiencing wide swings along with the volatility experienced across stock markets. This pair is now back below the key 135 level and I’m struggling to come up with any really decent technical pattern on the 4hr chart time frame. It’s now hovering near 133 whole number S/R so maybe watch this level for any new make or break?

AUD/USD: The Aussie gave a great technical pullback to the 61.8% fib last week but managed to close back above the key 0.78 S/R level. I’d mentioned this level in my analysis last week so was spot on here 🙂 !

  • Watch the revised triangle trend lines and 0.78 level for any new breakout; especially with this week’s AUD Employment data:

AUD/JPY: Like the EUR/JPY, this has been on a wild ride along with stocks. It would appear that the weekly triangle has broken to the downside and so I’ll be watching the 61.8% fib of the weekly chart’s swing high move as a potential target for any deeper pullback move. This fib level is well worth watching as it is some 550 pips away from the current action.

Keep an eye on stocks here as well as this pair is closely correlated with them. Any continued stock weakness could help to develop this bearish breakdown move however, a stock recovery would help to lift this pair.

  • Watch for any new make or break at the 85 level and for any weekly triangle bearish follow-through as this could target the 61.8% fib down near 79.

NZD/USD:  Price action continues to consolidate below a 3-year bear trend line and under the key 0.74 level. 

  • Watch the triangle trend lines for any new breakout, especially with this week’s NZD Inflation Expectation data:

GBP/USD: Price action continues to consolidate near the 1.40 level and weekly 200 EMA.

  • Watch the wedge trend lines and 1.40 level for any new breakout, especially with this week’s GBP CPI and Retail Sales data:

USD/JPY: This Yen pair did not suffer the wild swings that many of the others experienced. Price action now seems to be in a descending wedge on the 4hr chart.

  • Watch the 4hr chart’s wedge trend lines for any new breakout:

GBP/JPY: Hooley dooley! What a wild ride here last week! As with some of the other Yen pairs, I’m struggling to chart this but 150 S/R is back in the frame so maybe watch this for any new make or break.

  • Watch the 4hr chart’s descending channel trend lines and the 150 level for any new breakout:

GBP/AUD: It’s much like last week here again with 1.80 back in the frame!

  • Watch the 4hr chart’s triangle trend lines and 1.80 for any new breakout:

GBP/NZD: I’m on struggle-street trying to chart this one as well so it might be better left, although, the 1.90 S/R level is back in the frame.

  • Watch the 1.90 level for any new breakout:

EUR/AUD: Looking a bit Bull Flag like here as price consolidates back above the 1.55 level.

  • Watch the 4hr chart’s Flag trend lines for any new breakout:

EUR/NZD:  This seems to keep consolidating above the key 1.675 level.

  • Watch the 4hr chart’s triangle trend lines for any new breakout:

Gold: This is still looking a bit Bull Flag like here on the 4hr chart as price consolidates above the $1,300 level.

Any bullish breakout here and move above $1,400 would support the Bull Flag seen on the monthly chart.

Any bearish retreat would have me looking for a test of $1,300 as this is near the 4hr chart’s 50% fib and, after that, the 4hr chart’s 61.8% fib which is also near the daily 200 EMA.

  • Watch the 4hr chart’s triangle trend lines for any new breakout:

Oil: What a huge trend line breakout move here last week….for 450 pips down to the 78.6% fib and weekly 200 EMA.

  • Watch the revised 4hr chart trend lines for any new breakout:

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