Trade Week Analysis for 18/03/13

Yet another choppy week.

Last week: It’s still more of the same for this new month: Cloud divergence, choppy markets, few TS signals and some good 30 min chart trades during the US session.  There were only a few 4 hr TS signals but the reliability improved this week: A/U=130 pips, E/G=70 pips and G/U = 85 pips.
This week: I’m watching to see if the USD continues to fall and, also, to see if it gets back to trading inversely to ‘risk appetite’ (stocks, Euro, AUD etc). The USD has been rallying along with stocks lately, in a break from the usual inverse correlation. I’m still on the lookout for any new USD trading paradigm though, as per the notes last week. Thus, I’m keeping an open mind and still only quoting levels of interest for the time being. The FOMC meeting this week might trigger the next momentum move with the USD.

I’m also curious to see how the latest Cyprus (sorry…not Greek!) bank development will impact the Euro when trading starts. Cypriats reacted angrily to this latest move and banks were closed after there was a run on withdrawls (http://www.bbc.co.uk/news/world-europe-21814325). The continued uncertainty surrounding the Italian Parliament could weigh on the Euro too.

Some key events to watch out for include (http://www.forexfactory.com/calendar.php?week=mar17.2013):

  • Italian Parliament matters: could be a real trigger for the Euro.
  • Wednesday March 20th : JPY Bank Holiday. USD FOMC
  • Thusrday March 21st : NZD GDP, Chinese PMI
Pairs I’m leaving for the time being: I am leaving out the USD/SGD as there has been a lot of noted and documented anomalies with this pair. I’m also leaving the USD/CHF too whilst there is pegging of the CHF to the Euro. I’m leaving the Loonie out too. I’m realising it is better to watch fewer pairs, the ones that are delivering trends, and to watch them well.

Stocks:
The S&P500 is very close to printing the high it produced back in 2007. There is much chatter about this being a triple top and, thus, a point from which now to fall. I’m still seeing this ‘high’ as technically different from the previous two highs though. Does this allow me to make any predictions? No, I’m simply stating what I’m seeing and waiting for the next new momentum move to evolve with both stocks and FX, long or short.

BTW: I have updated my Stocks:March page. I posted notes on both Saturday and Sunday.

E/U: Price has broken down from trading within a symmetrical triangle on the monthly chart. Price has been choppy all week and trading around the key 1.3 but rallied on Friday to close the week above this S/R level. Towards the end of the week this pair looked to be trading within a descending wedge pattern. These are bullish patterns. Price actually broke up and out from this wedge pattern on Friday, and also above the 1.3 level. Price tested this broken trend line but has since moved a bit higher which, at this stage, seems quite bullish. Price is trading below the Cloud on the daily but above the Cloud on the 4hr Ichimoku chart which is divergent so might be choppy. The weekly candle closed as a bullish engulfing candle.
  • I’m watching the 1.30 level and for price to hold up and out of the bullish descending wedge pattern. This pair gave a brief TS signal to LONG after my midnight candle on Friday. This signal faded a bit though.

E/J: Price traded sideways for most of the week around the key 125 level. Price is trading just above the Cloud on the 4hr and on the daily time frame which is bullish. The weekly candle closed as almost a ‘shooting star’ candle or even a ‘spinning top’. Both of these reflect indecision. I’ve drawn a new support trend line in on the 4hr chart.
  • I‘m watching the E/J 125 level.

A/U: Price rallied from the key 1.02 level to start the week and never really looked back. Price broke out and up mid week above a daily bear trend line and also gave a TS signal to LONG that is now up 130 pips. Positive employment data helped this pair. It is trading in the top edge of the Cloud on the daily but above the Cloud on the 4hr chart and is starting to look quite bullish. The weekly candle closed above the whole number, psychological 1.04 level and as a large bullish candle.
  • I’m watching for a hold above the 1.04 level.

A/J: Price drifted up on this pair throughout the week but failed to close up above the key 100 S/R and psychological level. Price is trading above the Cloud on the daily and on the 4hr chart which is bullish. The weekly candle closed as a bullish candle. 
  • I’m watching the 100 level.

G/U: Price seems to have bottomed on this pair for the time being. Positive comments from the BOE saw price rally mid week to give a new TS signal that gave up to 85 pips. Price is back to trading above the key 1.5 level too.  It is trading below the Cloud on the daily chart but is now back above the Cloud on the 4hr chart so might be choppy. The weekly candle closed as a large bullish engulfing candle. NB: Go Market charts have an error for my weekly 200 EMA with the G/U. I have advised them about this.
  • I’m still watching the 1.5 level.

Kiwi: NZD/USD: Last week’s ‘inverted hammer’ candle suggested a possible reversal and this is what we got! Towards the end of the week this pair also looked to be trading within a bullish descending wedge pattern. As with the E/U, price actually broke up and out from this wedge pattern on Friday, and also above the daily 200 EMA. This bullish move also produced a TS signal to LONG.  It is still trading below the Cloud on the daily but is above the Cloud on the 4hr chart which is divergent so price action might be choppy. The weekly candle closed as bullish engulfing candle.
  • The Kiwi has given a new TS signal to LONG.

EUR/AUD: Price has chopped down for most of this week within the descending trading channel that it has been in for the last 6 weeks. It is trading below the Cloud on the daily and 4hr chart which is bearish. The weekly candle closed as a large bearish candle.
  • I’m still waiting for a clear break out of the trading channel.

The Yen: U/J: Price chopped sideways for most of the week but headed back down towards the 95 level on Friday. Price is still trading above the Cloud on the daily but is now in the top edge of the Cloud on the 4hr chart which is divergent so price action might be choppy. The weekly candle closed as small bearish ‘inside candle’, reflecting some indecision.
  • I’m looking to LONG this from the 95 level. Target: the monthly 200 EMA near 103!

EUR/GBP: This pair is trading up near the upper edge of a trading channel on the monthly chart that dates back to 2009. Price has broken down from trading within a smaller ascending channel pattern on the 4hr chart and given a TS signal to short that gave up to 70 pips. Price is now trading above the Cloud on the daily but below the Cloud on the 4hr chart which is divergent and suggests further choppiness. The weekly candle closed as a bearish ‘inside’ candle reflecting some indecision.
  • I’m watching for any break above the upper trend line on the monthly channel.

Silver: Silver has broken below the long term monthly support trend line. Price is still trying to hold above the $28 level and chopped sideways above this level all week. The $26 level is the next major support level after $28. The weekly candle closed as a small, bearish, spinning top ‘inside’ candle. This reflects the indecision with this metal.

Gold: Gold has also broken down through major monthly support that dates back to early 2008. This is a major break down for the metal. The next major support level seems to be at $1,525. Price might have bottomed for this metal though as it has chopped up and sideways this week. The slowdown in the rally of the USD has most likely helped support price here this week. The weekly candle closed as a small but bullish candle. This is actually the first really bullish candle out of the last 6 weeks. Recall that the USD index had the first bearish candle in the last 6 weeks; fulfilling their inverse relationship. I’m watching Gold closely this week to see if price continues to tick upwards. A close above the monthly pivot @ $1,606 would be quite significant. I’m also keeping an eye on Gold and other commodity stocks too.