US$ rally looking vulnerable.

USDX

Monthly: The April candle is currently printing a bearish candle. This candle has a while until it closes but it does seem to be pointing to a possible change following on from 9 months of bullish candles. Clearly, the 100 level is proving to be some decent resistance.

DXYmonthly

USDXmonthly

Monthly Ichimoku: The April candle is above the Cloud.

USDXmonthlyCloud

Weekly: Last week’s candle closed as a bearish, albeit almost ‘Inside’, candle. It is worth noting that a 61.8% fib pull back of this lengthy US$ rally would bring price down to near the previous monthly triangle breakout region:

USDXweekly

Weekly Ichimoku: The weekly candle closed well ABOVE the weekly Cloud.

USDXweeklyCloud

Daily: Price opened with a small bullish candle for Monday but was followed by four bearish days. The 100 level remains as resistance above current price as it forms a potential ‘Double Top’ region. Technically, the ‘neck line’ of this ‘Double Top’ would be closer to 96 but I am more focused on the S/R region of 95.50:

USDXdaily

Daily Ichimoku Cloud chart: Price dipped into the top edge of the Cloud on Thursday and Friday’s action pushed it in deeper. This is the first move into the daily Cloud in over 9 months which I consider noteworthy and it does seem like a change is in the air. There has, however, been a recent bullish Tenkan/Kijun cross and as this formed above the Cloud it is deemed a ‘STRONG signal. We shall see!

USDXdailyCloud

4hr: Price peaked up at the key 100 level on Monday but fell away from this major resistance for the rest of the week. Price pulled back below the 61.8% fib of this recent bull run but found support from the 4hr 200 EMA during Friday’s Asian session. The EMA gave way during the later session though as did the 97.50 level and, even though all of these levels were tested during the US session, price closed the week below the 4hr 200 EMA, the 61.8% fib and the 97.50 support levels. I will be on the lookout next week for any move and hold below the 95.50 level. A close and hold below this level would suggest we could be in for more of a pull back.

USDX4

4hr Ichimoku Cloud chart: Last week’s pull back resulted in the index moving back below the 4 hr Cloud. This chart is divergent from the daily chart and suggests choppiness.

USDX4hrCloud

EURX

Monthly: The April candle is printing a bearish coloured Doji BUT is still below 96 support.

EURXmonthly

Monthly Ichimoku: The April candle is still below the Cloud.

EURXmonthlyCloud

Weekly: The weekly candle closed as a small bullish candle with a long lower shadow. This candle almost has a bullish-reversal ‘Hammer’ look to it given it has formed at support and after a long downtrend. The weekly chart shows 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 move back above 96 might see the index target this region.

EURXweekly

Weekly Ichimoku: Price is still trading well below the weekly Cloud.

EURXweeklyCloud

Daily: There were three small bullish daily candles last week.

EURXdaily

Daily Ichimoku Cloud chart: Price is still trading below the daily Cloud but the bullish Tenkan/Kijun cross has closed and there has been a new bearish cross. This is deemed a ‘STRONG’ signal as the cross evolved below the Cloud.

EURXdailyCloud

4 hr: Price chopped higher last week.

EURX4

4 hr Ichimoku Cloud chart: The EURX traded up towards the 4hr Cloud last week and closed in the bottom of this resistance region. This chart is divergent from the daily chart and suggests choppiness.

EURX4hrCloud

Comments:

Daily and 4hr Cloud alignment: The FX indices are not aligned at the moment. This suggests that EUR and USD based FX pairs could be choppy in coming sessions.

USDX: the USDX closed lower last week following a batch of disappointing US economic data and this 9 month rally is starting to look a bit vulnerable and showing some signs of fatigue.

The index tested the key 100 resistance level on Monday but, then, retreated from there and kept falling. It fell through the 61.8% fib retracement level to find temporary support from the 4hr 200 EMA but ended up closing the week below that too and also the 97.50 level.  Price could easily bounce back up next week BUT I still prefer to see a new close and hold above 100 before being confident of any sustainable bullish US$ continuation.

The key US$ levels to watch in coming sessions include:

  • Any new close and hold above 100 would support bullish continuation.
  • Any new close and hold below 95.50 would support a deeper pullback.

There are only two pieces of high impact data for the US$ next week and these aren’t until Thursday (Unemployment Claims) and Friday ( Core Durable Goods). Eurozone data might shake the US$ next week though and any increasing Grexit talk would most likely lift the US$ at the expense of the EUR.

EURX:  The EURX closed higher last week despite Greece and Grexit rumblings. Divergence between the EZ and US economies continues to be a dominant theme with the Eurozone entering a monetary easing cycle with the US emerging from one but new US$ weakness has boosted the EURX. The fate of the EURX has been more in the hands of USDX flows than of any Euro-related data over recent sessions BUT watch for any continued pressure from Grexit related news.

The levels to watch on the EURX, apart from the key 96 level, include:

  • 105.5: 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 move back above 96 and continued recovery effort might see the index target this region.
  • 94: Any hold below 96 might suggest bearish continuation as it represents a break of a monthly chart ‘Double Top’. If so, the recent low printed near 94 will come back into focus.

There is a lot of high impact EUR data spread throughout the whole of next week and this starts with a speech from ECB President Draghi on Saturday night. So, keep a close eye on your trading Calendar. 

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, Ebola, 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.