Trend lines, Tax and Trump.

Last week: It was another week with some great trend line breakout trades and TC signals. The US stock indices offered a few excellent trade opportunities and, with the US Senate passing Trumps Tax Reform agenda, the indices just might continue to offer more of the same. Brexit news helped to trigger some great trend-trading opportunities across GBP pairs and may also continue to do so in coming sessions. The same drill applies for trying to catch trend moves on all trading instruments though: watch for momentum-based trend line breakouts from consolidation patterns.

Trend line breakout & TC signal tally: these were abundant last week and noted on my site here, herehere and here:

  • Gold TC: 90 and 200 pips (TC).
  • NZD/USD: 50 pips (TC).
  • DJIA TC: 270 & 370 points (TC).
  • S&P500 TC: 26  & 31 points (TC).
  • EUR/USD: 55 pips (TC).
  • GBP/USD: 110 pips (TC) & 100 pips.
  • GBP/JPY: 380 pips.
  • GBP/AUD: 340 pips.
  • GBP/NZD: 400 pips.
  • NASDAQ-100: 120 & 60 points (TC).
  • EUR/JPY: 130 pips (TC).
  • USD/JPY: 40 pips.
  • EUR/AUD 80 pips.

Next week:

  • US Tax Reform: the GOP’s Tax Reform bill was passed by the US Senate after market close so watch for any impact on market sentiment in coming sessions. Whilst not Law yet this step does offer a significant psychological boost for Republicans after their previous failure to organise the repeal of Health legislation.
  • FX Indices: the US$ continues to hold above 92.50 support and an update on both FX indices can be found through this link. It will be interesting to see how the US$ reacts to the US Senate’s passing of the tax reform bill though. I would expect Stocks to cheer this decision but wonder if the burden of the projected increase to US deficit might weigh on the US$?
  • Brexit: The GBP rallied last week on news of a potential Brexit Divorce settlement, or was it on the feel-good news of a Royal wedding? Wedding plans are well underway but Brexit progress remains vexed and in the news. Watch further news updates for any new impact on GBP pairs, especially on the GBP/USD.
  • NASDAQ: this index has printed 13 bullish monthly candles, and just two bearish ones, since breaking out above the 5,200 level and from the ascending triangle. I’m still watching for an eventual move up to 9,200 following the same path that the DJIA and S&P500 have already completed:

  • ASX-200: this continues to consolidate around the major 6,000 S/R level but watch for any new breakout especially with all of the AUD and CNY data slated for the coming week:

  • Bitcoin: the weekly chart is rather impressive and, despite a wobble mid-week at $10,00, there is no real slow down in sight yet:

  •  This is just a brief update as I have been away for the w/e.

Calendar: Lots of scheduled AUD and CNY data next week and then there’s NFP to finish off with. However, non-scheduled news items, such as US tax reform and Brexit, might take precedence this week:

Forex:

EUR/USD: Closed with a bearish coloured ‘Spinning Top and ‘Inside’ candle and both reflect indecision. The EUR/USD continues consolidating under the psychological 2.0 S/R level so watch this and the 4hr chart’s triangle trend lines for any new breakout.

Any close and hold above 1.20 would have me looking up to 1.25 as this is previous S/R, near the monthly chart’s bear triangle trend line and is also the weekly chart’s 61.8% fib so there is a lot of confluence around this region:

EUR/JPY:  This is consolidating under the psychological 134 S/R level. Watch the 4hr chart’s triangle trend lines for any new breakout.

Recall: there has been a recent Tenkan/Kijun cross on the monthly chart and that these are rare events and usually good for 2,500+ pip moves:

AUD/USD:  The Aussie closed with a bearish coloured Doji indecision-style weekly candle and continues consolidating near the psychological 0.755 S/R level. Watch the 4hr chart’s channel trend lines for any new breakout.

There is a lot of high impact data to impact here next week including AUD Current Account, AUD Retail Sales, the RBA rate update, AUD GDP, AUD Trade Balance, CNY Trade Balance, CNY Caixin Services PMI, CNY CPI and CNY PPI as well as all of the US data and then with NFP to close out the week. One or other of these items might be enough to shake the Aussie out of this trading channel!

AUD/JPY:  This is consolidating near the psychological 85 S/R level and above a major support trend line. Watch the 4hr chart’s triangle trend lines for any new breakout. This pair could get a real boost if Stocks rally on US tax reform news though:

NZD/USD:  The Kiwi closed with an indecision-style bullish-coloured weekly ‘Spinning Top’ candle and continues consolidating in a descending wedge above the psychological 0.68 S/R level. Watch the 4hr chart’s wedge trend lines for any new breakout:

GBP/USD: The Cable looks to have broken out from a 15-week triangle but the upper trend line that was broken had been in force for over 3 years. Thus, watch for any potential follow-through given this significant triangle breakout.

The 1.50 area is previous S/R and near the monthly chart’s bear triangle trend line so this would be the obvious longer-term target for any move higher. Watch the whole-number levels on the way if price does head in that direction though.

Watch for impact from Brexit news but also from GBP Construction and Services PMI and Manufacturing Production data:

USD/JPY:  This is consolidating near the psychological 112 S/R level. Watch the 4hr chart’s triangle trend lines for any new breakout:

GBP/JPY:  This closed with a good sized bullish weekly candle and is now consolidating under the psychological weekly 200 EMA S/R level. Watch this level and the 4hr chart’s trend lines for any new breakout.

I wrote a separate article about the GBP/JPY on Friday that remains pertinent and it can be found through this link.

GBP/AUD:  This is consolidating under the psychological 1.8 S/R level and weekly 200 EMA. Watch the 4hr chart’s triangle trend lines for any new breakout:

GBP/NZD:  This is consolidating under the psychological 2.0 S/R level and near the weekly 200 EMA. Watch the 4hr chart’s triangle trend lines for any new breakout:

EUR/AUD:  This continues to hold above the psychological 1.55 S/R level and it is important to note that the monthly candle closed above this key level. Watch the 4hr chart’s triangle trend lines for any new breakout. I would not be surprised to see a test of this 1.55 region though even if there is to be a continued push higher.

he notes from last week remain relevant here: 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 is consolidating above the psychological 1.675 S/R level.

Gold: Closed with a bearish weekly candle and right on $1,280 S/R. Watch the triangle trend lines for any new breakout:

Oil: Closed with a bearish-reversal ‘Hanging Man’ candle and right on the weekly 200 EMA S/R level. Watch for any pullback here and, if so, keep the 4hr Fib levels in sight as targets:

Stock Indices: I’ll be watching the following 4hr chart trend lines for any breakout activity:

S&P500 4hr:

DJIA 4hr:

NASDAQ-100 4hr:

DAX-30 4hr:

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