FX & Stocks: charts & trend trading

Last week: I noted last Wednesday how the FX Indices were back to being divergent and these periods generally support better momentum trading opportunities off the 30 min chart time frame during the European and US sessions. This proved to be the case and the 30 min charts of the EUR/JPY, NZD/USD, GBP/USD, USD/JPY and, the exotic, USD/TRY support this observation. I suspect that, given the wait for US rate hike news and the various elections across Europe, then shorter time frame trading during periods of greater momentum might remain the safest option for trend trading.

EUR/JPY 30 min:

NZD/USD 30 min:

GBP/USD 30 min:

USD/JPY 30 min:

USD/TRY 30 min:

This week:

US$: The US$ closed lower for the week but has held above the key 100 level setting up a monthly-chart Bull Flag pattern. A review of the FX Indices can be found through the following link.

Data: The weekend brings the Italian Referendum and Austrian Election and, in the coming week, there are three central banks reporting interest rate updates: RBA (AUD), BoC (CAD) and ECB (EUR).

Gold and Silver: both are holding up for the time being and I have reviewed these two in a separate article that can be found through the following link.

EUR/USD & NZD/USD: both of these pairs have printed bullish-reversal ‘Morning Star’-style weekly candle patterns so it might pay then to keep an open mind on these two.

GBP/USD: after 6 bearish monthly candles the Cable has finally printed a bullish November candle and the new December candle is bullish at the moment too. Watch trend lines and fib levels if bullish momentum contiues:

Updates: I am busy over the next few w/e in the lead up to, and including, the Christmas week so updates may be less frequent and more brief during this period.

Stocks and broader market sentiment:

All of the majors, bar the DJIA, closed lower for the week but a bit of a breather wasn’t too surprising given it was month-end and that the US indices have recently been printing new highs.

I continue to watch out for further clues as to any new momentum move, long or short though! In particular I’m looking out for:

S&P500 daily chart: New highs again during last week and the recent Bull Flag pattern still looks valid.

S&P500 weekly: The index closed with a bearish coloured indecision style ‘Inside’ weekly candle.

S&P500 monthly: The November monthly candle closed as bullish and ‘Engulfing’ and at an all-time high. Keep in mind that the recent bearish divergence has faded.

S&P500 yearly: I still think that 1,600 is the new baseline for this index but whether this is tested again before continuation remains unclear:

SPY monthly: this ETF is sniffing new air now too as it traded above the 220 level for the first time ever!

Russell 2000 Index: this small caps index is considered a US market ‘bellwether’ and continues to hold above the Flag supporting a bullish breakout. It has just printed a bearish engulfing candle though but still holds above 1,300.

VIX Index: The ‘Fear’ index printed a bullish coloured ‘Spinning Top’ weekly candle right near the 14 threshold level.

Copper Weekly: Copper has printed a bearish coloured ‘Inside’ / ‘Spinning Top’ candle following the big move after the bullish triangle breakout. I still expect a test of this breakout trend line could evolve before any potential continuation. Watch for any weekly close above the 200 EMA though to support a move up to the 61.8% fib near $3.50.

Oil: Oil continues holding above the 2009 low of $33.50 and printed a bullish weekly candle above the key $50 threshold. Watch for any continuation here given the bullish-reversal Inverse H&S pattern suggests a target up near $70.

USO weekly: there has been a bullish breakout from this triangle pattern so watch for any follow-through. The 61.8% fib of the recent swing low move is up near previous S/R at $16 so watch for any target of this region.

XJO weekly: is respecting the bear trend line for now.

Trading Calendar ‘High Impact’ data Items to watch out for:

Sun 4^th: EUR Italian Referendum.
Mon 5^th: GBP Services PMI. USD ISM Non-Manufacturing PMI.
Tue 6^th: AUD RBA Interest Rate update. CAD Trade Balance. NZD GDT Price Index.
Wed 7^th: NZD RBNZ Gov Wheeler speaks. AUD GDP. GBP Manufacturing Production. CAD BoC Rate Statement. USD Crude Oil Inventories.
Thurs 8^th: AUD Trade Balance. CNY Trade Balance. EUR ECB Rtae update & Press Conference. USD Weekly Unemployment Claims.
Fri 9^th: CNY CPI & PPI. USD Prelim UoM Consumer Sentiment.

FOREX:

EUR/USD: The E/U traded sideways below 1.07 again for most of last week and this remains the level to watch for any make or break.

The weekly chart shows that the EUR/USD has been consolidating in a horizontal range bound by the 1.15 and 1.045 levels for the last 20 months.

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

The weekly candle closed as a small bullish candle giving the weekly chart a bullish-reversal Morning Star appearance.

There is the Italian Referendum and Austrian Election over the w/e and an ECB rate update to impact here next week.

I’m watching for any new TC signal on this pair and the 1.07 and 1.045 levels.

EUR/JPY: This pair has now made a monthly candle close above a 23-month bear trend line marking a bullish breakout.

I’m watching for any bullish continuation to possibly target the previous S/R area near 134 / 135 as this is also near the weekly chart’s 61.8% fib.

Price is now trading above the Cloud on the 4hr and daily chart.

The weekly candle closed as a bullish candle.

There is the Italian Referendum and Austrian Election over the w/e and an ECB rate update to impact here next week.

I’m watching for any new TC signal on this pair.

AUD/USD: Price action chopped up and down last week forming up within a triangle pattern ahead of Friday’s AUD Retail Sales data. Upbeat data helped to lift this pair but it still closed within the 4hr chart’s triangle pattern although it did close the week above the psychological 0.74 level.

Price is trading below the Cloud on the 4hr (just) and daily charts.

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

There is the RBA rate update on Tuesday, GDP on Wednesday and Trade Balance data on Thursday from AUD as well as China.

I’m watching for any new TC signal on this pair, the 4hr chart’s trend lines and the 0.74 region.

AUD/JPY: Not much has changed here this week. The A/J continued on higher again following its bullish breakout above a 2-year bear trend line and I’m on the lookout for any continuation through to test the previous S/R region of 89 which is between the weekly chart’s 50% and 61.8% fib levels.

Price is trading above the Cloud on the 4hr and daily charts.

The weekly candle closed as a bullish candle.

There is the RBA rate update on Tuesday, GDP on Wednesday and Trade Balance data on Thursday from AUD as well as China.

I’m watching for any new TC signal on this pair and the 89 level.

GBP/USD: The Cable finally broke out on Thursday from the daily chart’s symmetrical triangle pattern in a move that eventually gave up to 170 pips. I would expect any bullish continuation to possibly target previous S/R near the GFC low of 1.35. This level is between the daily chart’s 50% and 61.8% fibs and near the daily 200 EMA for added confluence.

The monthly chart did end up forming a bullish-reversal ‘Inverted Hammer’ candle but this could also be viewed as a bit of an indecision style ‘Inside’ candle. Regardless though, it was the first bullish candle in 6 months and so some further recovery would not surprise. Even if just in a ‘what goes down must come up’ kind of way!

Remember: The Cable has been trading under a bearish trend line for the last 8 years, since peaking at 2.1161 in Nov of 2007 (see monthly chart below). Price plunged during the following 2008 year with the Global Financial Crisis and bottomed near the whole-number region of 1.35. Price action chopped higher after that though and made another peak at 1.7191 in July 2014 but has traded lower since then. In fact, the recent Brexit vote result triggered further lows for the Cable down to the 1.28 whole-number region. This price action has resulted in another bear trend line, of 2 year duration, forming up since that 2014 peak.

Price is now above the 4hr and daily Cloud but below the weekly and monthly Clouds.

The weekly candle closed as a bullish candle and the monthly candle closed as a bullish-reversal ‘Inverted Hammer’.

There is GBP Services PMI and Manufacturing Production data to monitor here next week.

I’m watching for any new TC signal on this pair and the 1.35 level.

GBP/JPY: This pair, like the EUR/JPY, has continued higher after now making a monthly chart bullish breakout above a 12-month bear trend line. Bullish continuation will have me looking up to previous S/R near 167 as this is also near the weekly chart’s 61.8% fib.

Price is trading above the Cloud on the 4hr and daily charts.

The weekly candle closed as a bullish candle and the monthly candle was bullish and engulfing.

There is GBP Services PMI and Manufacturing Production data to monitor here next week.

I’m watching for any new TC signal on this pair and the 167 level.

Kiwi: NZD/USD: The Kiwi chopped up and down last week but, despite having trouble reading this pair, I note it has formed a sort of bullish-reversal ‘Morning Star’ pattern on the weekly chart; something to keep in mind in coming sessions.

The NZD/USD is trading above the 4hr Cloud but below the daily Cloud.

The weekly candle closed as a bullish candle following last week’s bullish-reversal ‘Inverted Hammer’ candle. The weekly chart, like the EUR/USD, has a bit of a bullish-reversal ‘Morning Star’ look to it that has formed at key 0.70 support. This 0.70 remains the level to watch for any make or break.

There is NZD GDT Price Index data and an RBNZ Gov Wheeler speech as well as CNY data to monitor here next week.

I’m watching for any new TC signal on this pair and the 0.70 level.

The Yen: USD/JPY: The USD/JPY chopped higher last week but stalled just under the key 115.50 level which happens to be the weekly chart’s 61.8% fib region and the top of the weekly Cloud so, some resistance here was always expected, by me at least.

Any bullish breakout above 115.50 would have me looking at the 78.6% and then 100% fibs with the 124 in greater focus as the ‘neck line’ of the bullish-reversal Inverted H&S that I have been stalking here for AGES!

Price is trading above the 4hr and daily Cloud.

The weekly candle closed as a bullish candle.

There is no JPY data next week but watch for impact from USD data.

I’m watching for any new TC signal on this pair and the 115.50 region.

USD/CAD: The USD/CAD has closed lower for the week as the CAD got an uplift from the rise with Oil pricing.

Price is trading below the 4hr Cloud but above the Cloud on the daily chart.

The weekly candle closed as a bearish candle.

NB: USD/CAD traders need to keep an eye on Oil though as it has now broken the key $50 level and any hold above this level would help to support the CAD$ and keep pressure on the USD/CAD. Just FYI: I’m stalking a bullish-reversal ‘Inverse H&S on Oil with the ‘neck-line’ at $50 and the target at $70.

I’m watching for any new TC signal on this pair and the monthly chart’s triangle trend lines.

EUR/AUD: The EUR/AUD remains below the previously broken monthly chart support trend line and back near the strong recent S/R level of 1.44.

Price is trading in the Cloud on the 4hr chart but below the Cloud on the daily chart.

The weekly candle closed as a bullish coloured, almost ‘Inside’, candle and ‘Spinning Top’ candle reflecting indecision.

For the EUR there is the Italian Referendum on Sunday and an ECB rate update to impact here next week. For the AUD there is the RBA rate update on Tuesday, AUD GDP on Wednesday and Trade Balance data on Thursday from both AUD as well as China.