US$ and EUR$: both under pressure!

USDX

Monthly: The October candle is currently printing a bearish ‘engulfing’ candle. The candle is under the key 100 level.

DXYmonthly

Monthly Ichimoku: The October candle is trading above the Cloud.

USDXmonthlyCloud

Weekly: Last week’s candle closed as a small bearish candle, albeit with a long lower shadow reflecting some recovery late in the week.  Any bullish continuation from here will bring the 100 level back into focus with some possible ‘Triple Top’ jitters. However, any bearish breakdown below 92.50 will bring the 61.8% fib level, down near 87, the weekly 200 EMA and the previously broken triangle trend line, into focus.

USDXweekly

Weekly Ichimoku: The weekly candle closed WITHIN the weekly Cloud! This is the first time the USDX weekly candle has been in the Cloud since August 2014. It is also worth noting that the bearish Tenkan/Kijun cross is still open and I would want to see a new bullish cross before being too confident of any resumption of bullish momentum.

USDXweeklyCloud

Daily: Price chopped lower to start the week but recovered some lost ground on Thursday and Friday. The 100 level remains as overall resistance above current price.

USDXdaily

Daily Ichimoku Cloud chart: Price traded below the Cloud all week.

USDXdailyCloud

4hr: Price chopped lower last week but put in a bit of a bounce towards the end of the week following upbeat US CPI and Consumer Confidence data.

USDX4

4hr Ichimoku Cloud chart: Price traded below the Cloud all week. This chart is aligned with the daily chart, for now at least, and suggests SHORT US$.

USDX4hrCloud

EURX

Monthly: The October candle is currently printing a small bullish candle and is still above the key 96 ‘Double Bottom’ level.

EURXmonthly

Monthly Ichimoku: The October candle is trading below the Cloud.

EURXmonthlyCloud

Weekly: The weekly candle closed as a bearish coloured ‘Inside’ candle reflecting some indecision but it is still above the key 96 level. There have been two conflicting weekly-based technical patterns competing over recent months; a basing-style bullish ‘Double Bottom’ and a ‘Bear Flag’, but neither pattern has trumped just yet. Any bullish breakout though might target the 105.5 region near the weekly 200 EMA and 61.8% fib:

EURXweekly

Weekly Ichimoku: Price is now trading in the bottom of the weekly Cloud. The bullish Tenkan/Kijun cross remains open and, in much the same way as with the USD index, I would want to see a new bearish cross before being confident of any resumption of bearish momentum.

EURXweeklyCloud

Daily: Price chopped up and then down last week but finished off lower.

EURXdaily

Daily Ichimoku Cloud chart: Price traded above the daily Cloud all week.

EURXdailyCloud

4 hr: Price chopped up and down last week. Watch next week for any support from the 99-98.50 region as this is near the 50% and 60% Fibs, monthly pivot and 4hr and daily 200 EMAs:

EURX4

4 hr Ichimoku Cloud chart: Price traded above the 4hr Cloud until Friday but closed the week just below the bottom edge of the Cloud. This chart is divergent from the daily chart and suggests choppiness.

EURX4hrCloud

General:

  • Both indices closed lower for the week BUT both also continue consolidating sideways in weekly/monthly-chart Flag patterns that have persisted for over 6 months. 
  • The USDX and EURX are NOT ALIGNED for the same directional move on their Ichimoku charts.

Each week I keep anticipating which piece of economic data-event might trigger a breakout on both of these index Flag patterns. I still think there won’t be a decisive Flag breakout on either index until the US Federal Reserve actually announces either a specific date OR delay for any US interest rate increase.

USDX: The US$ closed slightly lower last week but continues consolidating within a potential Bull Flag pattern. Weak Retail Sales set a dovish tone for the US$ earlier in the week but then some upbeat CPI and Consumer Sentiment data helped it recover some of this lost ground. In general terms though recent mixed US data has raised some doubts about whether there will be any US interest rate this year or, possibly, at all. From a technical perspective, the index is trading below the 4hr and daily Ichimoku Clouds and is now also trading within the weekly Cloud and this added resistance will only work to hamper any future recovery efforts.

The US$ index broke below 95.50 the week before last and hasn’t been able to reclaim this level thus far. This is almost the mid-way point between the upper 100 and lower 92.50 breakout levels that I’m watching and so it gives some kind of indication about the position of equilibrium here. All rather poignant for me this week as I’ve been helping my son prepare for his HSC Chemistry!

As I’ve mentioned over many weeks, I still consider the US$ is in no-man’s land whilst it trades above 92.50 and below 100. I continue to wait for a decisive breakout from this region to signal the next major directional move on the index given that this choppy and range-bound price action has gone on for over six months now. Thus, the levels to keep watching on the USDX are:

  • The weekly chart Flag trend lines.
  • 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 closed lower for the week printing the first bearish candle after three bullish weeks and with the pullback being primarily triggered following some dovish ECB comments. ECB policymaker, Ewald Nowotny, raised expectations for further EZ easing saying it was “obvious” that additional instruments were necessary to spur price growth in the euro zone.

The index is still holding above key 96 support for the time being though and is still trading within a consolidation-style Flag pattern. The fact remains, however, that the Eurozone is trading within a monetary easing cycle and the US is trying to emerge from one. Next Thursday’s ECB Interest Rate announcement and Press Conference will be closely watched events though as traders look for any further guidance about future ECB easing.

The levels to watch on the EURX remain as:

  • The weekly chart Flag trend lines.
  • 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.