The USD index has printed a weekly candle close above the key 90 level. The last day of trading for the month and the year is next Wednesday and traders will be watching to see if the index can print a monthly and yearly candle close above this key S/R level.
USDX weekly: chart form my Profit Source trading platform:
NB: the charts below are from my MT4 platform but have not fully updated. I have included them though to give some overall perspective on price position and movement.
Monthly: The December candle is still printing a bullish candle for now:
Monthly Ichimoku: The December candle is trading well above the monthly Cloud.
Weekly: Last week’s candle closed as a bullish candle following on from the previous week’s bullish engulfing candle.
Weekly Ichimoku: Price is still trading ABOVE the weekly Cloud.
Daily: Price traded higher last week:
Daily Ichimoku Cloud chart: Price traded above the Cloud all week and there is still an open bullish Tenkan/Kijun cross in play.
4hr: Price chopped higher last week.
4hr Ichimoku Cloud chart: Price traded above the Cloud all week. This chart is aligned with the daily chart and suggests long USD.
Monthly: The December candle is still printing a bearish coloured ‘Inside’ candle. I am still also seeing a larger-scale bullish ‘inverse H&S’ pattern developing here though.
Monthly Ichimoku: The December candle is trading within the monthly Cloud.
Weekly: The weekly candle closed as a bullish-reversal ‘Inverted Hammer’ candle. This formed at the support offered by the 38.2% fib of the 2012-2013 bull run.
Weekly Ichimoku: Price is still trading below the weekly Cloud.
Daily: Price chopped a bit higher last week but whether this was just testing the broken ‘Bear Flag’ trend line before bearish continuation remains to be seen. The 38.2% fib level has been support for now and will be the level to watch when trading resumes.
Daily Ichimoku Cloud chart: Price is still trading below the daily Cloud.
4 hr: Price chopped up and down last week but closed slightly higher.
4 hr Ichimoku Cloud chart: The EURX traded below the Cloud all week. This chart is aligned with the daily chart and suggests short EUR.
USDX: the USDX closed higher last week and, as suspected, got a boost from US GDP data. The index has also managed to print a weekly close above the key 90 level.
The 90 level remains as the key level to watch from here as this is a long term S/R level and any monthly or yearly candle close above this level would be a significant bullish shift. There is a 6-month duration support trend line well below current price now (see daily chart) but any future pull back would look to test the 89.50, 89 and 88.50 levels and, then, this trend line.
There isn’t a lot of economic data scheduled for next week given it is New Years Day on Thursday but Tuesday’s US Consumer Confidence data may trigger some movement that could determine whether the index will make of break the 90 level to close out the end of the year. Failing that, there is Friday’s ISM Manufacturing PMI that may impact here too for the weekly candle close.
EURX: the EURX closed slightly higher for the shortened trading week. Whether this was just a temporary reprieve for Christmas or a pause before attempting any pull back remains to be seen. Divergence between the EZ and US economies continues to be a dominant theme though and this was reinforced again last week with further upbeat US economic data. Last week’s bounce could also be viewed as price simply testing the Bear Flag’s broken trend line before bearish continuation and hence the 38.2% fib level will be the S/R region to watch next week.
Bear Flag: The weekly chart trend line break confirms the start of a Bear Flag. The length of the ‘Flagpole’ is about 500 pips or so. This would suggest a bearish continuation move below the trend line of about 500 pips as well. Such a move would bring the index down to near the 102 region. This is worth noting as this is also the 61.8% fib of the recent 2012-2103 bull run and is the ‘Shoulder’ position on the monthly chart’s ‘Inverse H&S’. I am looking for this index to head to test this 102 region. Any break and hold below the 38.2% fib region would support the development of this Bear Flag.
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.