Trade Week Analysis for 21/01/13

An extra 740 pips this week!
Last week: Continuing signals added an extra 355 pips to the tally from the previous week. The E/U added 50 (220), E/J 90 (460), A/J 40 (220), U/J 30 (170) but the G/U lost a further 25 to close at -50. The EUR/AUD signal eventually closed too at 170 pips too. There were new signals during the week as well giving an extra 385 new pips; E/J =160, U/J=100, A/J=50, E/U=25 and E/A= 50. Thus; 355 continuing pips + 385 new pips= 740 pips. The E/J, A/J and U/J are still open.
This week: The Euro dollar Index has broken through a major resistance level but the USD index is still above key support and these levels will test them both in the coming week. These S/R levels could prove to be too strong and result in extended choppiness or, even, a reversal to ‘risk off’. They could though, if breached and held, open the flood gates for major ‘risk on’ moves. I’ll be watching and ready to trade whatever direction takes hold, ‘risk on’ or ‘risk off’.
The rise in the USD late last week pushed the Ichimoku Charts back into divergence. I will be conscious of this as I assess trading signals next week.
NB:

  • Monday is a public holiday in the USA: Martin Luther King Day 
  • There are significant BoJ meetings on Mon & Tue and there are rumours that there will be another push to lower the Yen even further. Care will need to be taken trading the Yen pairs next week.
  • There are a few big companies reporting their earnings during the week and these need to be watched as their results can significantly impact broader market sentiment and, thus, market momentum. 
  • There is also talk of further ‘US Debt Ceiling’ meetings scheduled for this week and this could impact the broader markets as well. 
  • Keep an eye on your trading calendar and news.
A quick look at other instruments:
Many trading instruments are printing major new high and/or breakout levels: commodities (Oil and Gold), stocks (European, Asian and US markets) as well as currencies (E/U). There could be some consolidation following these prints or, even, reversal. 
S&P500: trading above the daily Cloud and printing a new high:


S&P500 weekly: history repeating itself! 

S&P500 (SPX) weekly

Dow Jones: trading above the Ichimoku Cloud and bullish

 Dow Jones weekly

VIX (fear gauge) A new Low; below 14! I had suggested this might surprise us with a break down, rather than up, and this seems to be the case, for the time being:
IYT: Transport ETF. This is a hugely bullish indicator for continued ‘risk on’:
FDX: A close above $100 would be very ‘confidence boosting’ for continued ‘risk on’ as well!
Oil: a bullish break out

Hong Kong: Hang Seng: a bullish break out

London FTSE: a bullish break out

Chile: a bullish break out
Currency Pairs:
E/U: The monthly bullish inverse H&S pattern is still valid. Price has also formed a bullish inverse H&S pattern on the weekly chart!  Price has broken out and up from trading within the smaller symmetrical triangle on the weekly chart. It is currently sitting just under the next major resistance level of the weekly 200 EMA. The E/J took over 2 weeks to wind and navigate its way up through its weekly 200 EMA and the E/U might face a similar battle. (Check the weekly E/J chart to see this). There is a very obvious ‘double top’ look about the E/U 4hr chart at the moment. I don’t have anything like a TS signal to SHORT here though AND it is worth remembering at this point that the EURX is sitting above major support in the form of the weekly 200 EMA and a major trend line at the moment. I would want to see the EURX collapse and a TS signal on the E/U before jumping in to SHORT the E/U. Price is still trading above the Cloud on the daily Ichimoku chart and on the 4hr chart which is still bullish as well. The weekly candle closed as a small bearish candle though. Euro Group Head, Jean-Claude Juncker, spooked Euro pairs early last week with comments warning against a too high Euro. This is a cautious reminder of how jittery the currencies are at the moment. 
  • I will look to SHORT the E/U on a new TS signal, if ‘risk off’ returns and if price holds down below the weekly 200 EMA.
  • I will look to LONG the E/U on a new TS signal and close and hold above the weekly 200 EMA.

E/J: Price bounced back down from the major 120 level early in the week and traded in a flag pattern until Thursday. The 120 level is the next major S/R level for this pair; as can be seen from the monthly chart. Price is back to trading just under this 120 level.  Price is still trading above the Cloud on the daily and on the 4hr chart which is bullish. The weekly candle closed as a small bullish candle. There is major BoJ news on Monday and Tuesday concerning Yen valuation so, great care should be taken trading yen pairs to start the week. There is an open TS signal on the E/J that has given 160 pips.
  • I will look to LONG the E/J on any new TS signal and hold above the 120 level. 
  • I STILL WON’T SHORT the E/J this week given the ongoing stimulus.

A/U: Price continues to be choppy on this pair as many traders would be conscious of the Aussie Governments desire to see the AUD trading lower and, also, of the prospect of possible looming lower interest rates. Price continues to loiter just under the major triangle trend line from the monthly chart. 
  • I will look to SHORT the A/U on any new TS signal, if ‘risk off’ returns and if price closes and holds below the daily bull trend line.
  • I will look to LONG the A/U on any new TS signal and if ‘risk on’ returns. 

A/J: Yen weakness continues to help this pair. Price traded in a bullish wedge pattern for most of the week. Price broke out and up from this pattern and gave up to 50 pips. Price is still trading above the Cloud on the daily and on the 4hr chart which is bullish. The weekly candle closed as a small bullish candle. There is major BoJ news on Monday and Tuesday concerning Yen valuation so, great care should be taken trading yen pairs to start the week.
  • I WON’T SHORT the A/J this week given talk of further BoJ stimulus.
  • I will look to LONG the A/J on any new TS signal and if ‘risk on’ returns. 

G/U: I really don’t like this pair. Price broke down mid week from trading above a weekly support trend line. It then loitered near the 1.6 level and above the daily 200 EMA for much of the rest of the week but broke down from these on Friday. It is trading below the Cloud on the daily and on the 4hr chart which is bearish. It has been reported that David Cameron was going to mention the possibility of the UK leaving the European Union in a speech last Friday. This talk was cancelled in the wake of the Algerian hostage crisis though. This uncertainty is no doubt putting pressure on the GBP.
  • I won’t look to the LONG G/U on any new TS signal. 
  • I won’t look to the SHORT the G/U on any new TS signal. 

USD/SGD: Price was choppy and flat for most of the week. I am not looking to trade this pair this week but will just keep an eye on it for any new trend. The weekly candle closed as a bullish, almost engulfing, candle. 

Swissie USD/CHF: This pair had a big boost this week which seemed out of proportion to the rise of the USD. Price has broken out and up from a triangle pattern on the weekly chart. Price is now trading above the Cloud on daily and on the 4hr chart which is bullish.  The weekly candle closed as a large bullish engulfing candle. 
  • I WON”T trade the Swissie.

Loonie: USD/CAD: Price action chopped mostly sideways on this pair last week until it had a big move up on Friday.  It is trading just under a bear trend line in a triangle pattern on the daily chart. Price is trading in the Cloud on the daily chart and above the Cloud on the 4hr chart which suggests choppiness. The weekly candle closed as a large bullish engulfing candle.
  • I WON’T trade the USD/CAD. 

Kiwi: NZD/USD: Price chopped sideways for most of the week and is still trading just under the bear trend line from the monthly chart. It is trading above the Cloud on the daily chart and in the Cloud on the 4hr chart so might continue to be choppy.  The weekly candle closed as a small bearish candle.
  • I MIGHT look to LONG the Kiwi on any new TS signal and if ‘risk on’ returns.
  • I MIGHT look to the SHORT the Kiwi on any new TS signal and if ‘risk off’ returns.

EUR/AUD: Price continues to be choppy on this pair. It is now trading above the Cloud on the daily and on the 4hr chart which is bullish. The weekly candle closed as an indecision style spinning top candle though.
  • I will look to LONG the EUR/AUD on any new TS signal.
  • I will look to SHORT the EUR/AUD on any new TS signal.

The Yen: U/J: I’ve started watching this pair again. This pair traded downwards in a bull flag pattern, like the E/J, to start the week. Price broke out from this flag on Thursday and gave a TS signal that is now up 100 pips.  It is trading above the Cloud on the daily and on the 4hr chart so is bullish.  The weekly candle closed as a bullish candle.
  • I won’t trade the USD/JPY

Gold/Silver: The bullish ‘Cup and Handle’ patterns on the weekly charts are still valid for the time being. The ‘handle’ part for both metal charts seems to be forming a bullish broadening ascending wedge pattern though now. The theory is that the breakout target is equivalent to the depth of the cup. The handle patterns can be seen on the daily charts and this is the area where you can see the bullish breakout. Both metals formed bullish weekly candles again this week. Price has rallied most of the week and bounced up from the support trend lines that date back to 2008. Both metals have closed the week above their monthly pivots and daily and 4hr 200 EMA levels. Gold is up near the breakout level of the ‘handle’ pattern of the weekly ‘Cup and Handle’ pattern.

Silver weekly

Silver daily 

Gold weekly

Gold daily