A winning formula: TL + TC

Last week: It was another great week for trend line breakout trades with possibly the largest number of breakouts recorded for the year delivering over 1,400 pips of movement. All of the potential candidate charts were posted on this site and well in advance to enable traders to try and catch these breakout moves for themselves. There are many more chart consolidation patterns in play again this week giving traders further trend lines to watch for any momentum-based breakout moves.

This new regime of watching for breakout patterns that trigger along with new 15 min chart TC signals is proving to be a most successful one. The breakouts generally trigger along with new TC signals on the shorter time frame producing a high degree of successful outcomes. The on-going challenge for me remains though that these trend line breakouts and new 15 min TC signals trigger more so during the European or US trading sessions when I am not at my charts.

Breakout trade results: Successful breakout trade tallies on the following Forex pairs were posted during last week here, here and here, or as highlighted, giving a combined 1,485 pips. Successful breakout trades were also noted on the major stock indices and these were initially summarised here:

Gold: 160 pips.
EUR/USD: 45 pips.
AUD/USD: 30 pips.
AUD/JPY: 170 pips.
GBP/USD: 150 pips.
USD/JPY: 100 pips.
GBP/JPY: 100 pips.
GBP/AUD: 330 pips.
GBP/NZD: 70 pips plus a second move for 90 pips.
EUR/NZD: 40 pips.
USD/CNH: 200 pips.
DJIA: 230 points.
S&P500: 30 points.
NASDAQ-100: 70 points.
FTSE-100: 80 points.
ASX-200: 70 points
DAX-30: 100 points.

This week:

US$: the US$ has printed its third consecutive bearish weekly candle and any sustained weakness will have implications for a number of currency pairs. A review of the US$ index can be found through this link.

End of month & quarter: This coming Friday 31st marks both the end of month and end of quarter so watch for any resultant flows.

Risk appetite? The Russell 2000 small caps index is often referred to as the ‘canary in the coal mine‘ and the current monthly candle is sending a bit of a warning as it shapes up with a bearish-reversal, almost, ‘engulfing’ candle, albeit with still a week of trading to go. A monthly support trend line remains intact but this bullish move has been on the go since 2009 and so some respite would not surprise. I note that the 50% fib of this swing high move is down at the 880 and previous triangle breakout level so any protracted weakness would have me looking for a test of this region. I’m wondering if the current political climate in the US and failure of the latest US health care reform effort or Brexit and Article 50 issues could further erode risk appetite in coming sessions and will look for clues about movement here; either up or down. NB: Note how the ascending triangle breakout has essentially completed as it came within a few points of the 1,420 target and so some pause or pullback even on just this basis would not surprise.

Silver: The chart for Silver is looking rather interesting again as price action nears a 6-year bear trend line so watch for any make or break of this level in tandem with moves on the US$ index.

USD/JPY: This also looks more interesting this week as it sets up within a potential 450+ pip Bear Flag that has a target down near the daily chart’s 61.8% fib and it’s this confluence that piques my interest!

Brexit: The UK Prime Minister will trigger Article 50 this coming Wednesday so watch for GBP reaction to this event, especially as many of the GBP Forex pairs have been looking rather bullish of late. Has all the bad news been priced in? Time and trend lines will hopefully tell!

TC Trigger: My new TC Trigger indicator is helpful for the early identification of breakout moves. I use this indicator primarily on the 15 min chart to look for any alignment of trend line breakout with a new TC signal. The TC Trigger page on my site has recently been update.

Calendar: The calendar is rather light-on this week:

Mon 27th: EUR German Ifo Business Climate.
Tue 28th: USD CB Consumer Confidence. CAD BoC Gov Poloz speaks.
Wed 29th: USD Crude Oil Inventories. GBP UK Prime Minister to trigger Article 50.
Thurs 30th: USD Final GDP & Weekly Unemployment Claims.
Fri 31st: GBP Current Account. CAD GDP.

Forex:

EUR/USD:The EUR/USD is only about 70 pips away from a daily triangle bear trend line and this will be the region to watch in coming sessions for any make or break activity.

Price is above the 4hr and daily Cloud.

The weekly candle was bullish.

There is only one item of high impact data but a bit of second tier data this week:

EUR/JPY: The EUR/JPY is trading within a 4hr chart triangle but this is set within a larger, daily chart triangle giving traders a few trend lines to watch for any make or break activity.

Price is below the 4hr and daily Cloud.

The weekly candle was bearish.

AUD/USD: The Aussie is setting up within a bullish-reversal descending wedge on the 4hr chart giving traders trend lines to watch for any make or break activity. This wedge is set within a larger triangle pattern on the daily chart.

Price is in the bottom of the 4hr Cloud and the top of the daily Cloud.

The weekly candle closed as a bearish coloured ‘Inside’ candle reflecting indecision.

There isn’t any high impact AUD data this week but watch out Friday’s CNY Manufacturing and Non-Manufacturing PMI and also for any shift in general risk appetite.

AUD/JPY: The AUD/JPY gave a large breakout move last week but price action came to rest down near a daily chart support trend line and so this will be the region to watch for any make or break activity in coming sessions.

Price is below the 4hr and daily Cloud.

The weekly candle was bearish.

GBP/USD: The Cable has been essentially chopping sideways since last October as the weekly chart shows but there does look to have been a breakout from a daily chart triangle pattern and so I’ll be watching for any signs of bullish continuation. This triangle has a height of 1,400 pips suggesting that this could be the extent of the move if momentum continues. The 4hr chart shows a wedge around recent price action giving us trend lines to watch for clues about any new breakout move.

Targets to watch if bullish activity continues:

Placing fibs of the daily chart’s triangle pattern shows that the 61.8% fib is near the daily 200 EMA at around 1.28 and so I’d be watching this region as one potential target.
Any 1,400 pip continuation move would take price up to near 1.40 which is previous S/R.

This upper region of the daily triangle could also prove to be a good turning point for the resumption of bearish trade and this week’s triggering of Article 50 by the UK Prime Minister, Theresa May, could be the event to affect just such a move. Thus, watch the 4hr chart’s triangle trend lines for clues about the direction of the next move here.

Price is above the 4hr and daily Cloud.

The weekly candle was bullish.

The only high impact data is Friday’s GBP Current Account data but watch also for impact from ongoing Brexit deliberations and this week’s triggering of Article 50.

NZD/USD: The Kiwi is consolidating within a 4hr chart wedge below a 7-week bear trend line giving traders a few trend lines to watch for any make or break activity.

Price is above the 4hr Cloud but below the daily Cloud.

The weekly candle closed as a bullish coloured ‘Spinning Top’ reflecting indecision.

There is no high impact NZD data this week but watch out Friday’s CNY Manufacturing and Non-Manufacturing PMI and also for any shift in general risk appetite.

USD/JPY: The 4hr chart shows the U/J forming up within a potential 450+ pip Bear Flag but, to confuse matters a bit, price is also resting above a wedge support trend line from a daily chart bullish-reversal style descending wedge. Thus, the bottom Flag and wedge trend line will be in focus to signal any bearish continuation move and the upper Flag trend line for any recovery move.

Bullish target: Any recovery move might target the 113 region as this is near the 50% fib of the recent swing low, the 4hr 200 EMA and the monthly and weekly pivots.
Bearish target: The 450+ pip Bear Flag target is down near the monthly 200 EMA at circa 106.50 which also happens to be the daily chart’s 61.8% fib for added confluence!

Price is below the 4hr and daily Cloud.

The weekly candle was bearish.

GBP/JPY: I’m still watching the 4hr chart’s wedge trend lines for any potential breakout. This pattern has been building for 4 months now and so any breakout might produce a significant momentum move.

Price is below the 4hr and daily Cloud.

The weekly candle was bearish.

USD/CAD: Price action remains within a longer-term ascending trading channel but is currently forming up within a 4hr chart triangle giving traders trend lines to watch for any momentum-based breakout.

Price is in the 4hr Cloud but above the daily Cloud.

The weekly candle closed as a bullish coloured ‘Spinning Top’ and as an almost ‘Inside’ candle with both patterns reflecting indecision.

Watch for impact from the BoC Gov Poloz speech on Tuesday and from CAD GDP on Friday.

GBP/AUD: This pair had been consolidating within a triangle for the last 10 months and the breakout finally came during last week. The daily charts shows the 61.8% fib of this swing low move to be up near the 1.85 region but there are numerous S/R levels to negotiate before then including 1.70 and 1.75. There could also be a bit of a pullback given the extent of last week’s bullish move.

The 4hr chart shows price within a recent wedge and so I’ll be watching these trend lines for clues about the next move here.

Price is well above the 4hr Cloud but in the bottom of the daily Cloud.

The weekly candle was large and bullish.

GBP/NZD: Price action broke up through the major S/R level of 1.77 last week but pulled back a bit towards the end of the week. This action is forming up a 4hr triangle giving us trend lines to watch for clues about any next move.

I’ve been suggesting for some months now that 1.67 may have been a ‘Triple Bottom’ and any hold above 1.77, as the next major S/R level, would help to support this thesis. Thus, watch the 4hr chart trend lines and the 1.77 for any momentum-based breakout move.

Price is above the 4hr and daily Cloud.

The weekly candle was bullish.

EUR/AUD: Price action is forming up within a 4hr chart triangle so watch these trend lines for any momentum-based breakout move. Note the larger triangle on the daily/monthly chart.

Price is above the 4hr Cloud but in the daily Cloud.

The weekly candle was bullish.

EUR/NZD: Price action is forming up within a 4hr chart wedge pattern so watch these trend lines for any momentum-based breakout move.

Note how this consolidation follows on from the earlier daily chart descending wedge breakout move so watch out for any resumption of this bullish move. I note with interest that the 50% fib of this swing low move on the weekly chart is up near the long-term S/R region of 1.675 and so this would be the target for any bullish continuation move.

Price is above the 4hr and daily Cloud.

The weekly candle was bullish.

USD/MXN: Price action has closed the week below the weekly support trend line and the key 19 S/R level which represents a significant breakdown. The weekly chart shows that the 61.8% fib of the major swing high move is down near 16 and so this would be the long-term target for any bearish continuation move. However, I’d expect the 19 level could be tested again before potential bearish follow-through so watch out for any recovery attempt here.

Price is below the 4hr and daily Cloud.

The weekly candle was bearish.

USD/TRY: This pair is trading within a 4hr chart triangle set within a larger daily chart triangle giving traders trend lines to watch for any momentum-based breakout move.

Price is below the 4hr and daily Cloud.

The weekly candle was bearish.

USD/CNH: This pair is trading within a 4hr chart triangle set within a larger daily chart triangle giving traders trend lines to watch for any momentum-based breakout move.

Price is below the 4hr Cloud but in the daily Cloud.

The weekly candle closed as a bearish coloured ‘Spinning Top’ reflecting indecision.

Gold: Gold is trading within a 4hr chart triangle under the key $1,250 S/R level giving traders trend lines and levels to watch for any momentum-based breakout move.

One important feature to keep in mind is that price action is now only about 600 pips away from the 6+ year bear trend line so keep that in focus if bullish activity continues.

Price is above the 4hr and daily Cloud.

The weekly candle was bullish.

Silver: Silver is looking more interesting each day, to me at least that is! It is trading within a triangle on the daily chart time frame but this is set within a bullish-reversal descending wedge on the weekly/monthly time frame. Price action is currently less than 30 cents away from a major bear trend line panning back 6 years and so this will be the region to watch for any make or break in coming sessions.

Price is above the 4hr and daily Cloud.

The weekly candle was bullish.