Monthly: The July candle is still printing an, essentially, bullish engulfing candle….just.
Monthly Ichimoku: The July candle is trading above the Cloud.
Weekly: Last week’s candle closed as a bearish coloured, essentially, ‘Inside’ candle pointing to some indecision and, just perhaps, potential weakness. However, the previous weekly candle had broken up through a bear trend line and this pullback might just be a case of the index testing the strength of this broken ‘old’ resistance to see if it has turned into effective ‘new support’. Thus, the direction the index takes next week might determine whether this move is the start of a reversal or just a temporary pullback. Any bullish continuation from here though will bring the 100 level back into focus with some possible ‘Triple Top’ jitters.
Weekly Ichimoku: The weekly candle closed ABOVE the weekly Cloud.
Daily: Price chopped lower last week with two decent bearish days and three muted bullish ones. The 100 level remains as overall resistance above current price.
Daily Ichimoku Cloud chart: Price traded above the daily Cloud last week.
4hr: Price chopped lower last week and down towards the previously broken trend line.
4hr Ichimoku Cloud chart: Price traded back down into the 4hr Cloud last week. This chart is divergent from the daily chart and suggests choppiness.
Monthly: The July candle is printing a bearish coloured Doji candle and is currently back just above the key 96 ‘Double Bottom’ level.
Monthly Ichimoku: The July candle is trading below the Cloud.
Weekly: The weekly candle closed as a bullish coloured, essentially, ‘Inside’ candle and back above the key 96 level. The previous weekly candle closed below a recent triangle pattern which suggested a Bear Flag breakdown but price action has since reclaimed that trend line. There have been two conflicting technical patterns competing over recent weeks; a basing-style bullish ‘Double Bottom’ and a ‘Bear Flag’ and whilst last week it seemed that the Bear Flag might be trumping, this week, I’m not so sure.
Weekly Ichimoku: Price is still trading well below the weekly Cloud.
Daily: Price chopped higher last week with two quite bullish daily candles being printed.
Daily Ichimoku Cloud chart: Price chopped higher but is still under the daily Cloud.
4 hr: Price chopped higher last week and retraced back up to the 61.8% fib of the recent swing low move but this fib level and the 4hr 200 EMA are proving to be resistance to price action. Any failure to close back above these two levels would support the case for a resumption of the bearish trend whereas a close and hold above these two levels would have to read as bullish.
4 hr Ichimoku Cloud chart: The EURX moved back up through the 4hr Cloud last week. This chart is divergent from the daily chart and suggests choppiness.
FX Index Alignment: the EURX and USDX charts are no longer in alignment.
USDX: The US$ had a bearish week and whether this is simply a temporary pullback to test a broken trend line before bullish continuation or a sign of further weakness remains to be determined.
For me though, as mentioned over recent weeks, the US$ is still in no-man’s land whilst it trades above 92.50 but below 100. Last week’s Bull Flag breakout suggested renewed bullish momentum but I am still waiting for a decisive breakout from this region to signal the next major directional move on the index. This choppy and range-bound price action has gone on for almost five months now but next week’s FOMC could provide some guidance to help determine which direction the index might head from here.
Thus, the levels to keep watching on the USDX are:
- The psychological 100 level above current price. This is the top of the recent trading range.
- The 92.50 level below current price. This is the bottom of the recent trading range.
EURX: The EURX reclaimed some lost ground last week but whether this is a decent recovery in process or just a test of a broken trend line before bearish continuation, in harmony with the US$, is yet to be determined. The fact remains that, despite ongoing negotiation with the Greek-debt bailout, the Eurozone is trading within a monetary easing cycle and the US is trying to emerge from one. With only one item of EUR sensitive scheduled news this week, Monday’s German Ifo Business Climate, it might be up to FOMC to help shape the next move on the EURX.
The levels to watch on the EURX remain as:
- The 105.5 level: The weekly chart reveals that a 61.8% fib retracement of the recent lengthy bear move is back up near the 105.50 level and weekly 200 EMA. Any hold back above 96 and continued recovery effort might see the index target this region.
- The 96 level:This is a major support level for the EURX and a possible bullish ‘Double Bottom’ region.
- The 94 level: Any break and hold back below 96 might suggest bearish continuation as it represents a break of the monthly charts ‘Double Bottom’. If so, the recent low printed near 94 will come back into focus.
Note: The analysis provided above is based purely on technical analysis of the current chart set ups. As always, Fundamental-style events, by way of any Ukraine, Eurozone or Middle East events and/or news announcements, continue to be unpredictable triggers for price movement on the indices. These events always have the potential to undermine any technical analysis.