Trade Week Analysis for 13/05/13

Last week: Last week was certainly the week of the USD. Some positive employment data on Thursday saw the USD rally on thoughts of reduced US monetary easing. Most other currencies suffered in its wake.

We are into our 4thmonth now of Cloud divergence, choppy markets, few 4hr TS signals yet some good 30 min chart trades during the US session.  Two 4hr TS signals from the previous week closed for losses: U/J= -40 and A/J= -100. The USD rally saw some new signals kick in later in the week that performed better. These signals are still open and currently have given a maximum pip haul of: E/U= 90, E/J= 50, A/U= 100, G/U =120, U/J=140, Swissie=150 and Kiwi=100.

Last week was certainly a week where the US session delivered highly profitable, low risk, 30 minute TS trend trades. This is typical during these periods of Ichimoku divergence though.

This week: The Ichimoku Charts continue to be divergent but I’m still on the lookout for the next wave of alignment.
The EURX has still 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 ‘and further ‘risk on’ potential. I’m watching the EURX to see which way it heads from this point. I am surprised it has held up this well given the current rally with the USD. I have been reading this w/e that many traders are jumping on the ‘LONG USD’ fast train. I’m a little cautious here though until I see the 84 level on the USD index break and the Euro roll over.

I have also read that traders will be keenly watching for Monday’s US Retail Sales data. A positive result here might continue to fuel the USD rally thereby putting further pressure on the Euro, AUD and NZD. Conversely, a poor release here might see the USD pull back.

Overall, the USD seems to be ‘holding the reins’ at the moment and in control of momentum. I am conscious though that this is not your usual ‘fear driven’ USD rally so the rules, if anyone knows them, might be a bit different. I will be watching for any increased momentum with the USD in this bullish direction.

Stocks and broader market sentiment:
I am still on the lookout for charting signals to warn me of any possible correction and/or new market direction and trading sentiment with stocks. I don’t have any signals of this AS YET. The signals I am watching for include:
  • 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(see chart below).

  • 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 below). A break of this support level would suggest to me of a more severe pull back or correction. The look of this ‘market top’ appears quite different to that of the previous two market tops from back in 200 and 2007. Elliott Wave suggests a substantial correction here though.

S&P500 Daily Ichimoku chart:


S&P500 weekly chart: 

S&P500 monthly chart: 

BTW: I still have the same stocks on my watch list that I have been posting about through May on my May:Stocks page and on my Stocks:Triangles page. I am also on the lookout for a close above the 5,200 support/resistance level on the Aussie market. This market is well off its highs and, as such, could be considered undervalued by global standards:

XAO monthly: Aussie All Ordinaries

XAO daily: I do note the bearish ‘shooting star’ reversal candle here from Friday though. I will be watching to see if this translates into any pause or even pull back:


Some key events to watch out for include:

  • Mon 13th: USD Retail sales.
  • Tue 14th: NZD Retail sales. EUR Economic sentiment. AUD Budget.
  • Wed 15th: GBP data, USD PPI.
  • Thurs 16th: NZD Budget. USD CPI/Building Permits/Employment data/Philly Manufact Index.
  • Fri 17th: USD Consumer sentiment.

Currencies:

E/U: Price was looking bullish until the USD rally took hold on Thursday following the positive US employment data. Price has now closed below the 1.30 level. Price is trading in the Cloud on the daily but below on the 4hr Ichimoku chart which suggests some further choppiness. The weekly candle closed as a bearish engulfing candle. The weekly chart also has a bit of a bearish H&S pattern look to it. The major weekly support trend line would be broken here though before any neckline would be hit. 
  • I’m watching the 1.3 level, the weekly support trend line and the H&S pattern. There is a current TS  SHORT signal.

E/J: Price chopped around again within the daily chart symmetrical triangle to start the week. It broke out and up from this triangle, and above the 130 level, on Thursday after the positive US jobs data. Price is trading above the Cloud on the daily and on the 4hr time frame which is bullish. The weekly candle closed as a bullish candle.
  • There is a current TS signal to LONG. 

A/U: Price fell this week after the RBA rate cut and the USD rally. The Aussie managed to close the week above the support of the key 1.00 parity level though.  Price is trading below the Cloud on the daily and on the 4hr chart which is bearish. The weekly candle closed as a large bearish candle.
  • There is a current signal to SHORT the A/U. I will be watching to see if the 1.00 level holds.

A/U: an alternative weekly chart trend line:


A/J: Price has chopped around this week above the key 100 level and within a descending wedge pattern. Price is trading just above the Cloud on the daily and 4hr time frame which is bullish. The weekly candle closed as a bearish candle with a long lower shadow.
  • I’m watching the 100 level and the upper trend line.

G/U: Price chopped downwards this week and fell heavily with the USD rally. It is still trading within an upwards trend channel on the daily and weekly chart but has broken this on the smaller 4hr time frame.  It is trading above the Cloud on the daily but below the Cloud on the 4hr chart which suggests choppiness. The weekly candle closed as a large bearish 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 until the USD rallied. 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.
  • I’m watching for a daily close below the trend channel. There is a current TS signal to SHORT the G/U.

Kiwi: NZD/USD: Price fell below the H&S neckline early in the week and then again after the USD rally. Price is now trading below the Cloud on the daily chart and on the 4hr charts which is bearish. The weekly candle closed as a large bearish candle.
  • There is a current TS signal to SHORT the Kiwi.

EUR/AUD: Price chopped upwards this week to close near the upper trend line of the trading channel and near the key 1.30 level. It is trading above the Cloud on the daily and on the 4hr time frame which is bullish. The weekly candle closed as a large bullish candle.
  • I’m watching the 1.30 level.

The Yen: U/J: Price chopped sideways within the ascending triangle to start the week. It rallied after the positive US jobs data to break up out of the triangle and above the key 100 level. Price is trading above the Cloud on the daily and on the 4hr time frame which is bullish. The weekly candle closed as a large bullish candle.
  • There is a current TS signal to LONG this pair.

Metals: Both Gold and Silver are looking bearish. I do consider that any continued optimism-based rally, whether the USD tags along too or not, might add to the bearish mantle around Gold and Silver. Investors might look to move out of these instruments and chase yields elsewhere.

Silver: Silver has broken below the long term monthly support triangle trend line. Price simply chopped sideways for most of the week. The weekly candle closed as a small bearish candle. The next major support seems to be down at $15 in the monthly 200 EMA. A close below the Ichimoku Cloud on the monthly chart would be a very bearish signal.

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 this week. The weekly candle closed as a bearish engulfing candle. 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. Price is still trading above the monthly Ichimoku Cloud BUT has given a bearish Tenkan/Kijun cross signal.

Oil: The constant drip (no pun intended!) of positive USD data might add support for further demand for Oil and, thus, flow on to support price. There are many other factors that impact Oil though so one would not trade it on this bias alone; not least of these is a higher USD. The weekly candle closed as a spinning top candle but price is trading under a triangle trend line and looks poised for a possible breakout.