Trade Week Analysis 29/04/13

I’m sick of saying it…let alone seeing it……but……..Choppy again!

Last week: We are into our 3rd month now of mostly Cloud divergence, choppy markets, few TS signals yet some good 30 min chart trades during the US session.  Again, there were only a few TS signals but they were choppy U/J=70, E/J=80, E/U=-50, G/U=50 And Silver = 70.
This week: There is a lot of ‘red flag’ data out this week so watch your trading calendar. The most closely watched of these will possibly be the USD NFP data on Friday.
The Ichimoku Charts are still divergent but I’m on the lookout for the next wave of alignment.
The EURX has held out from the Bull Flag pattern but looks to be struggling to hold up above the daily Ichimoku Cloud. It has also, thus far, failed to break, close and hold above the resistance of the 108.5 level. The failure to do this may prove to be a game changer for any further ‘risk on’ potential. I’m watching the EURX to see which way it heads from this point.
Stocks and broader market sentiment: I had mentioned last week about the signals that I am looking out for to warn of any possible new market direction and trading sentiment. These included:
  • Ichimoku S&P500 chart: a clear cross of the blue Tenkan-sen line below the pink Kijun-sen line AND 

  • Ichimoku S&P500 chart: price to dip below the Ichimoku Cloud.
  • EURX monthly chart : a break of the monthly support trend line (see monthly chart):
  • S&P500 chart: a break of the monthly support trend line (see monthly chart). A break of this support level would suggest to me of a more severe pull back or correction. The April monthly candle has not closed off yet but, at the moment, the chart is printing a ‘spinning top’ candle. This type of candle suggests ‘indecision’ and reflects the current market sentiment.

One of these signals seems to have evolved during the last week. That is, the first mentioned signal above: a clear cross of the blue Tenkan-sen line below the pink Kijun-sen line on the Ichimoku S&P500 chart:

Such a bearish chart cross has only occurred two times in the last 12 months; last April and October. Both instances were followed by pullbacks, or ‘risk off’ momentum, across stocks and currencies. This can be seen on the S&P500 weekly chart below:

BTW: I have noted some other such Tenkan/Kijun crosses on individual stocks and these are posted in my new page Stocks: May.

I am not predicting any market direction here. I am simply on the lookout for charting clues as to any new momentum direction and move. The mantra of ‘Sell in May and go away’ may just come back to haunt traders though! Thus, I will be on the lookout for any further clues of movement towards ‘risk off’ sentiment. The Euro and USD index charts are close to aligning towards “risk off’ BUT there are other minor signals on the USD index chart that are pointing to possible ‘risk on’ movement! These notes were posted yesterday in FX Indices Review

Some key events to watch out for include: NB: Lots of data this week!

  • Mon 29th: Bank holiday in China and Japan, USD home sales data.
  • Tue 30th: NZD and USD business confidence, Bank holiday in China.
  • Wed 1st: Bank holiday in China and much of Europe, Chinese PMI, GBP PMI, USD PMI and employment change.
  • Thurs 2nd: USD FOMC, AUD building data, GBP PMI, ECB Press conference, USD unemployment claims  and Trade Balance.
  • Fri 3rd: Bank holiday in Japan, AUD PPI, GBP PMI, USD NFP, USD PMI.

E/U: Price chopped sideways this week and still appears to be trading in a bullish ‘descending wedge’ pattern. This is at odds though with some ‘risk off’ signals that I’m seeing across other risk appetite instruments such as stocks though so, I’m keeping an open mind here.  Price is trading in the bottom edge of the Cloud on the daily and below the Cloud on the 4hr Ichimoku chart which suggests some further choppiness. The weekly candle closed as a small bearish candle.
  • I’m watching the 1.3 level and for a new TS signal.

E/J: Price chopped around this week within a symmetrical triangle pattern but broke out and down from this on Friday. Price gave a new TS signal on Friday as well. Price is trading above the Cloud on the daily but below on the 4hr time frame which is divergent and suggests choppiness. The weekly candle closed as a bearish engulfing candle.
  • The E/J gave a SHORT signal on Friday.

A/U: Price chopped up and down this week, just above the major support level of the trend line from the monthly triangle pattern. As with the E/U, price also looks to be trading within a bullish descending wedge pattern. Price is trading below the Cloud on the daily and on the 4hr chart which is bearish. The weekly candle closed as a ‘spinning top’ indecision style candle.
  • I’m watching for a new TS signal and for any trend line break.

A/J: Price chopped around this week within an ascending triangle pattern but broke down from this on Friday and gave a new TS signal to SHORT. Price is trading above the Cloud on the daily but below the Cloud on the 4hr time frame which is divergent so price might be choppy. The weekly candle closed as a large bearish candle.
  • There is a TS signal to SHORT from Friday and I’m watching the 100 level.

G/U: Price chopped sideways until midweek when it rallied hard and gave a new TS signal to LONG. It is still trading within an upwards trend channel.  It is trading above the Cloud on the daily and on the 4hr chart which is bullish. The weekly candle closed as a bullish engulfing candle. I was wary with shorting this pair though given that the March candle closed as a pin bar reversal or ‘hammer’ style candle. This suggested a reversal to the upside which seems to have evolved for the time being! The daily chart still has a bit of a ‘Bear Flag’ look to it though!
NB: Go Market charts have an error for my weekly 200 EMA with the G/U. I have advised them about this.
  • There is a TS signal to LONG this pair. I’m just watching at the moment, especially the Flag pattern.

Kiwi: NZD/USD: Price chopped sideways within a triangle to start the week but broke out and up from this pattern. Price is now trading above the Cloud on the daily but in the Cloud on the 4hr charts which is divergent so price might be choppy. The weekly candle closed as a small bullish candle.
  • I’m just watching for a new TS signal and the triangle trend lines.

EUR/AUD: Price simply chopped sideways this week. It is trading in the Cloud on the daily and on the 4hr time frame so might be choppy. The weekly candle closed as small bearish candle .
  • I’m just watching this pair at the moment.

The Yen: U/J: Price chopped around within an ascending triangle this week but broke down and out from this on Friday. Price is trading above the Cloud on the daily but in the Cloud on the 4hr time frame which is divergent and so might be choppy. The weekly candle closed as a bearish engulfing candle.
  • I’m watching the 98 level.

Silver: Silver has broken below the long term monthly support triangle trend line. Price chopped sideways for most of the week but gave a new TS signal to LONG on Friday. The weekly candle closed as a small bullish candle; the first one in seven weeks! The next major support seems to be down at $15 in the monthly 200 EMA.

The warning signal about Silver actually came through last September when there was a bearish Tenkan/Kijun cross! There are no real bullish signals yet either!
Gold: Gold has also broken down through major monthly triangle support that dates back to early 2008. That was a major break down for the metal. Price chopped sideways and up this week as it clawed its way back above the $1,440 level. The weekly candle closed as a bullish ‘inside’ candle and suggests indecision. The next major support seems to be down at the whole number, $1,000 level and, after that, at $850 in the monthly 200 EMA.

The warning signal about Gold actually came through last October when there was a bearish Tenkan/Kijun cross! There are no real bullish signals yet either!