TC returns with a blast.

Last week: This is my first detailed weekend update since returning from my month in the USA and what a week to be getting back into a groove. There were many great trend-line breakout trades and plenty of great TC signals as well which, following on from a rather quiet and choppy period, was greatly appreciated. Price action pressure on the FX index Flag patterns coincided with the return of these great FX trends and so I’ll be watching to see if these Flags do breakout and help to deliver a return to trending FX markets.

I had warned back on Thursday 9th, a week and a half ago, to watch for potential movement on the NZD cross pairs. That proved to be most prudent advice as the best trend line breakout trades last week came on the EUR/NZD for 600 pips and the GBP/NZD for 500 pips. These moves also gave great TC signals with examples on Friday being a 200 pip move worth 10 R on the EUR/NZD and a 250 pip move worth 5 R on the GBP/NZD.

Trend line breakout trades & TC signals: the pip / point tallies for the various trend line breakout trades and TC signals can be found documented  here, here, here and here.

  • ASX-200: 35, 50 & 45
  • DJIA: 80
  • EUR/NZD: 600 (peaked on Friday)
  • EUR/AUD: 290
  • EUR/JPY: 130
  • NZD/USD: 70
  • Oil: 140:
  • EUR/USD: 250 (continued from last week)
  • USD/MXN: 1,600
  • USD/JPY: 55
  • AUD/JPY: 70
  • S&P500: 210
  • DJIA: 130
  • DAX: 125
  • Gold: 200 ( a great TC signal on Friday)
  • GBP/NZD: 500 (peaked on Friday)
  • Oil: 120 ( a great TC trade here on Friday)

Next week:

  • The US$ is under a bit of pressure. Watch out for any new make or break from its current level.
  • Thanksgiving: it is Thanksgiving in the USA this week so watch for lower trading volumes towards the end of the week.

  • Recall the warning from last week concerning the FX Index Flag patterns as this remains valid this week: The consequence of Flag action on the FX indices is that there are similar consolidation-style patterns on a number of the USD-based FX majors. There are weekly chart triangle patterns in play on the USD/JPY, AUD/USD, GBP/USD and EUR/USD with the latter also displaying a Bull Flag within the triangle. These weekly chart triangles have been developing over many weeks and, in the case of the Cable and USD/JPY, over many months. Technical theory suggests that the longer the consolidation period then the greater the breakout so these patterns are well worth monitoring for any breakout, should they eventually trigger!
  • Cross Pairs: a number of these gave huge moves last week so watch for any pause with them this week as they consolidate gains near major S/R levels.
  • Gold & Commodity Currencies: Gold has not moved much over the last couple of months but it broke up through a 10-week bear trend line on Friday. Thus, watch for any continued momentum here and, if this develops, watch for this to potentially drag some of the commodity currencies along for the ride.
  • Stocks: these are the stocks I’m stalking this week.

Calendar: watch out for impact on the various FX pairs from the following calendar items.

Forex:

Gold: Price action broke up and out of a multi-month triangle on Friday so watch for any follow-through. The $1,300 level is the one to watch for any new make or break in coming sessions.

FYI: There was a great TC signal here on Friday with this breakout that gave 160 pips for an 8 R trade outcome. This triggered near a major trend line and was a very low-risk set up making this a most enticing trade:

EUR/USD:  Price finally broke up and out from the descending channel on the 4hr chart but this ‘channel’ represented the ‘Flag’ on the weekly chart so watch for any potential follow-through. The 1.18 is S/R to monitor for any new make or break though and there are revised 4hr chart trend lines as well:

EUR/JPY: The 135 remains as major weekly resistance for this pair but price is currently still consolidating under 134 S/R. Note the monthly chart though and how there has been a recent Tenkan/Kijun cross. These are rare events and usually good for 2,500+ pip moves.

AUD/USD: On a downtrend but the 0.755 level has held for now. Watch for any recovery here though, especially if Gold continues higher.

AUD/JPY: this has fallen below a major support trend line and it also gave a great TC SHORT signal on Friday for 100 pips and a 5 R trade. Price closed just below the 85 level but watch this next week for any new make or break, especially if stocks head lower. NB: I’ve revised the weekly chart.

GBP/USD:  This had looked like it might be breaking out on Friday but the move stalled. Consequently, it is still in a weekly triangle with little momentum. Watch trend lines for any new make or break:

NZD/USD: The 0.68 S/R level has held but recent weakness helped to deliver a great TC signal on Friday for a 6 R result. Watch the 4hr chart’s trend lines and 0.68 level for any new make or break:

USD/JPY: this continued lower last week but 112 support held and this will be the level to watch in coming sessions for any new make or break:

GBP/JPY: watching the trend lines and waiting for a breakout:

GBP/AUD: this pair gave a great trend line breakout last week for 280 pips but price is now up at the major S/R level of 1.75 so watch this for any new make or break. 

Remember that a major bear trend line was broken recently so there may be more upside to come. However, any weakness would have me looking to the 61.8% fib of this whole swing-high move and I note this is down near previous S/R of 1.70:

GBP/NZD: this pair gave a great trend line breakout last week for 500 pips but price is now at the major S/R level of the weekly 200 EMA so watch this for any new make or break.

A major bear trend line was recently broken here too so there could be a continued push higher. However, any weakness at this weekly 200 EMA level would have me looking at the support trend line and, then, 4hr chart fib levels for pullback targets:

EUR/AUD: this pair gave a great trend line breakout last week for 290 pips but price is now back above the major S/R level of 1.55 (see monthly chart for significance of this key level) so watch for any new make or break from here. Recall this pair recently broke above a 9-year bear trend line so it could be on for some more recovery activity.

However, despite this breakout, the monthly chart shows a trading band between 1.55 and 1.75 and these levels constrained a lot of price action between 1992-2008; a period of around 16 years. The bottom of this band if formed up by 1.55 and this has continued to be formidable resistance since 2008. In fact, since 2010 there have only been two monthly candles to close above this key S/R level. Price is poking its head above this region for now but I would not be surprised to see some choppiness set in as it works out whether it will make or break from this region. Any retreat from here, might only be temporary, but would have me looking at the previously broken 9-year bear trend line for a test followed by 4hr chart fib levels.

EUR/NZD: this pair gave a great trend line breakout last week for 600 pips after price cleared the major S/R level of 1.675 (see monthly chart for significance of this key level). This is a major S/R level and I have been warning about this for many weeks. Recall, also, that a 9-year bear trend line was broken recently too so this pair could be on for some recovery activity.

The EUR/NZD has been on the march higher since January though so there is always the chance of a pause or pullback as trends do not travel in straight lines for ever. Thus, if there is any move back below the major 1.675 then I would be looking to support from the previously broken 9-year bear trend line followed by key fib levels and I note the 50% fib is near previous S/R of 1.60.

Any continued hold above 1.675 though would have me looking up to the 1.80 level as the next S/R region to monitor and this is 700 pips away so well worth watching:

Oil: Oil has been consolidating under the weekly 200 EMA for the last couple of weeks and this remains the major level to watch for any new make or break:

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