Monthly: The August candle is now printing a bearish, almost ‘Inside’, candle and is still under the key 100 level.
Monthly Ichimoku: The August candle is trading above the Cloud.
Weekly: Last week’s candle closed as a bearish, essentially ‘engulfing’, candle. Any bullish continuation from here will bring the 100 level back into focus but with some possible ‘Triple Top’ jitters. However, any bearish continuation will bring the 61.8% fib level, down near 87, the weekly 200 EMA and the previously broken triangle trend line, into focus….. a huge confluence area.
Weekly Ichimoku: The weekly candle closed ABOVE the weekly Cloud. It is worth noting that there has been a recent bearish Tenkan/Kijun cross here, although the angles are awful, and so I would want to see a new bullish cross before being too confident of any resumption of bullish momentum.
Daily: Price chopped lower last week with the only bullish day being on Friday; helped along by better than expected US PPI data. The 100 level remains as overall resistance above current price.
Daily Ichimoku Cloud chart: Price traded above the daily Cloud last week but did dip down to test its support which is holding for the time being.
4hr: Price moved lower to start the week but, then, essentially chopped sideways. Note the smaller Flag on this time frame.
4hr Ichimoku Cloud chart: Price moved down through the 4hr Cloud last week. This chart is divergent from the daily chart and suggests choppiness.
Monthly: The August candle is now printing a bullish, almost ‘engulfing’, candle and is still above the key 96 ‘Double Bottom’ level.
Monthly Ichimoku: The August candle is trading below the Cloud.
Weekly: The weekly candle closed as another bullish candle AND above the key 96 level. There have been two conflicting technical patterns competing over recent months, a basing-style bullish ‘Double Bottom’ and a ‘Bear Flag’, but neither pattern has clearly trumped yet.
Weekly Ichimoku: Price is still trading below the weekly Cloud BUT edging back up closer to this resistance zone. In Yin & Yang style there has been a recent Tenkan/Kijun cross on this index too; a bullish one although the angles are off here too. Thus, I would want to see a new bearish cross before being too confident of any resumption of bearish momentum.
Daily: Price chopped higher last week with three bullish days followed by two bearish ones.
Daily Ichimoku Cloud chart: Price moved back above the daily Cloud during last week but pulled back on Friday to close just above the support of the Cloud.
4 hr: Price rallied higher to start the week but then pulled back somewhat. This chart does have a bit of a Bull Flag look to it though!
4 hr Ichimoku Cloud chart: The EURX traded above the Cloud for all of last week. This chart is now aligned with the daily chart and suggests LONG EUR.
- Both indices continue consolidating sideways in weekly-chart Flag patterns and these have persisted for 5 months!
- Each week I keep anticipating which economic data-event might trigger a breakout on both of these index Flag patterns. I am beginning to think that there won’t be a decisive Flag breakout on either index until the Federal Reserve actually announce a specific date for any US interest rate increase.
USDX: The US$ had a bearish week but is still consolidating within a potential Bull Flag pattern. US$ weakness evolved early in the week following the Yuan devaluation by the PBoC. China ranks in the top two of trading partners with the USA and this PBoC currency move triggered some fear about a slowdown in the pace of global economic growth/recovery which, in turn, fed into doubt about the timing of any Federal Reserve interest rate increase. Friday was the only bullish day following upbeat US PPI data but the top of the daily Ichimoku Cloud also kicked in with some technical support. Whether this bullish uptick continues into next week remains to be seen but with no US data until Tuesday (Building Permits) we might have to wait until then to find out unless, of course, the PBoC rock the currency landscape again.
As mentioned over many recent weeks, I consider the US$ is still in no-man’s land whilst it trades above 92.50 and below 100. I am still waiting for a decisive breakout from this region to signal the next major directional move on the index as this choppy and range-bound price action has gone on for five 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 higher for the week, primarily on the back of US$ weakness, and is still holding above key support for the time being. The fact remains though that, despite progress being made last week with the Greek bailout deal, the Eurozone is trading within a monetary easing cycle and the US is emerging from one. However, this simple binary relationship between the two FX indices was complicated during last week by central bank activity from the PBoC. Whilst the Yuan doesn’t feature in the composition of either index the currency movement from China, the second largest of the global economies, is impacting price action of the US$ and, in turn, the EURX:
Global Economies by GDP: (click to enlarge)
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.