Stocks bullish, FX choppy & US$ at major support

Last week: Despite some choppy FX price action there were five TC signals last week with all of them being profitable and contributing to a total possible pip haul, thus far, of 960 pips: USD/CAD closed for 220 pips, NZD/USD closed for 90 pips, GBP/NZD closed for 100 pips, EUR/UAD open at 330 pips and GBP/AUD open at 220 pips.

Stocks had a bullish week with a number of stock indices attempting Bull Flag breakouts and, whilst we are yet to see a Flag breakout on the S&P500, there has been a new bullish Tenkan/Kijun cross on the weekly chart. Thus, watch for any continuation and possible Bull Flag breakout on this index.

This week:

US$: The US$ had a bullish week so watch for any continued bounce up from major 92.50 support. A review of the FX Indices can be found through the following link.

USD/JPY: this has closed the week with a bullish-reversal ‘Inverted Hammer’ candle off major weekly 200 EMA support. Thus, whilst it seemed to do little last week, be prepared for any potential bounce higher here from this point.

EUR/USD: there looks to be a bit of a bearish-reversal style ‘Evening Star’ formation on the weekly chart. Just something to keep in mind this week ahead of the ECB interest rate announcement and the ECB President Draghi Press Conference.

GBP/USD: continues consolidating within a daily chart triangle with tension coming from Brexit-related GBP£ weakness and recent US$ weakness. This at least gives us trend lines to watch with this week’s GBP Employment data.

Oil: Oil flirted with the daily 200 EMA resistance zone during the week but closed on Friday below this key resistance. There hasn’t been a weekly close above the daily 200 EMA since mid 2014. Watch how this opens next week though following the w/e Doha Oil Summit:

NB: next w/e is a long w/e for us and so updates will be brief. Also, I am away for over four weeks from the end of April and updates will be very brief and few during that time.

Stocks and broader market sentiment:

All of the major stock indices closed higher for the week: The S&P500, DJIA, NASDAQ, Russell 2000, Canada’s TSX, the German DAX and the Aussie XAO & XJO.

Also of note is that the DJIA, Russell 2000, NASDAQ, FTSE, TSX and Aussie XAO/XJO printed ‘Bull Flag’ style breakouts, albeit some of them are rather subtle (click on charts for a larger view):

NASDAQ weekly:

FTSE weekly:

DJIA weekly:

Russell 2000 weekly:

TSX weekly:

XAO weekly:

There has not been a Bull Flag breakout just yet on the S&P500 but this index has printed a new bullish Tenkan/Kijun cross on the weekly chart so watch for any bullish continuation and possible Bull Flag breakout on this index.

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: The index closed just below the Flag’s upper trend line and is still at a critical make or break level here.

S&P500 weekly: The index closed with a bullish candle and just below the Bull Flag’s upper trend line. Traders need to keep note of this Flag trend line and the 2,100 and 2,135 levels in coming sessions.

S&P500 weekly Cloud: the index is above the weekly Cloud and has just printed a new bullish Tenkan/Kijun cross. This is deemed a ‘weak’ signal though as the cross evolved below the Cloud.

S&P500 monthly chart: The April candle is now printing a small bullish coloured candle and the monthly trend line remains intact. Any break of this support level though would suggest to me of a more severe pull back.

Russell 2000 Index: this small caps index is considered a US market ‘bellwether’ and the Bull Flag looks to have triggered. The weekly candle was a bullish candle.

VIX Index: The ‘Fear’ index has printed a bearish candle and is back below the 14 threshold level.

Copper: closed with a bullish weekly candle and still above the key 2.0 level and within a long-term triangle.

Oil: Continues holding above the 2009 low of $33.50, printed a small bullish weekly candle and has held up and out from a 21 month bear trend line.

Trading Calendar Items to watch out for:

Sun 17^th: IMF Meetings: Day 2. Doha Oil Summit.
Mon 18^th: IMF Meetings: Day 3. NZD CPI.
Tue 19^th: AUD Monetary Policy Meeting Minutes. EUR German Zew Economic Sentiment. USD Building Permits. AUD RBA Gov Stevens speaks. CAD BoC Gov Poloz speaks. NZD GDT Price Index.
Wed 20^th: GBP Employment data. USD Crude Oil Inventories.
Thurs 21^st: EUR German Constitutional Court Ruling. GBP Retail Sales. EUR Interest Rate & Press Conference. USD Weekly Unemployment Claims.
Fri 22^nd: CAD Core CPI & Retail Sales. Day 1 ECOFIN Meetings. Eurogroup Meetings.
Sat 23^rd: Day 2 ECOFIN Meetings.

Forex:

EUR/USD: The E/U continued to respect the recent ‘Double Top’ level near 1.15 last week and drifted lower in response to developing US$ strength. Despite this, the daily chart continues to show higher Highs and higher Lows which is overall bullish for the time being. However, the weekly chart suggests a possible bearish-reversal pattern with the last three weekly candles forming a pretty close rendition of a bearish-reversal ‘Evening Star’ pattern!

Regardless of these two conflicting daily vs weekly pictures, the daily chart shows price trading within a triangle pattern and this is set within a larger triangle on the monthly chart.

The key event for this pair next week is the ECB meeting with the interest rate announcement and Press Conference where both events could trigger movement for the pair. There is also a lot of PMI data on Friday that could impact sentiment here as well.

Any bullish breakout above 1.15 would have me looking at the 1.18 S/R level in the first instance as this is just above the most recent HIGH and a 38.2% fib level. After that I’d be looking at the 1.22 level as this is a congested zone holding the weekly 200 EMA, a previous monthly triangle trend line and the 50% of the weekly chart’s 2014-2015 swing low move.

The key levels to monitor on the EUR/USD include:

1.12: this is a major S/R level from the monthly chart as it is the 61.8% fib of the 2000-2007 swing high move.
1.15: a recent Double Top resistance level.
1.18: this is major long term S/R level (seen on the monthly chart).
1.22: weekly 200 EMA, a previous monthly triangle trend line and the 50% of the weekly chart’s 2014-2015 swing low move.
1.045 /1.040: the recent & longer term support levels marking the lower boundary of a potential Bear Flag.

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

The weekly candle closed as a bearish candle giving the chart a bit of a bearish ‘Evening Star’ appearance. It’s not a text-book example of this pattern but close enough to notice:

I’m watching for any new TC signal on this pair and the revised daily-chart triangle trend lines.

EUR/JPY: The E/J essentially chopped sideways above the major support of the weekly chart’s 50% Fib level last week following on from the big fall of the week before.

The weekly chart here shows a potential bullish-reversal descending wedge pattern and so I’ll be watching these trend lines for any breakout; bullish or bearish. Whilst price closed below the 123 region I still consider the 122 region as the big one to watch here though. This is long term S/R and the 50% fib of the recent swing high move so it may be the place to watch for any potential bounce. This level is also just above the wedge trend line and so the combination of the two may provide some decent support.

A failure of 122 to offer any support though would have me watching the 115 / 115.50 region as this is also long-term S/R and the 61.8% fib of the recent swing high move (see weekly & monthly charts).

I’ve been posting this monthly Cloud chart on and off over recent months and the bearish Kijun /Tenkan cross did prove to be a bearish signal indeed! Price is trading within the monthly Cloud but watch the bottom of the Cloud for any support if price does get down that far:

EUR/JPY monthly Cloud:

Price is trading below the Cloud on the 4hr and daily chart which suggests SHORT EUR/JPY still for now.

The weekly candle closed as a small bearish candle.

I’m watching for any new TC signal, the 122 level near the 50% fib and the descending wedge trend lines.

AUD/USD: The A/U chopped higher last week but stalled at a recent 4hr chart ‘Double Top’ region. The daily chart here shows this pair continuing to hold above a support trend line and essentially printing higher Highs and higher Lows which won’t make the RBA very happy.

Any bullish breakout above the 4hr chart’s ‘Double Top’ region will still have me focussed on the 0.80 cent level. This is a psychological whole number level, previous S/R and the rough location for the junction of the bear trend line that has been in force since the decline started back in late 2012.

Price is trading above the Cloud on the 4hr and daily charts which suggests LONG AUD/USD.

The weekly candle closed as a bullish ‘engulfing’ candle.

I’m watching for any new TC signal on this pair and the 4hr chart’s ‘Double Top’ trend line.

AUD/JPY: The A/J is giving Fibonacci sceptics a real run for their money! The daily chart shows how price had bounced up off the 61.8% fib of the recent swing high move. The 4hr chart shows how price, on Friday, bounced down off the 61.8% fib of the recent swing low move.

In spite of these bounces though, price action continues trading within a triangle on the weekly/monthly charts and has held above major 80 support that also happens to be the 50% fib of the 2008-2013 swing high move.

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

The weekly candle closed as a bullish coloured, almost ‘Inside’ candle.

I’m watching for any new TC signal on this pair and the 4hr chart’s 61.8% fib.

GBP/USD: The GBP/USD chopped up and down last week and can still be seen conforming to a daily chart triangle pattern. Watch these trend lines for any breakout with this week’s GBP Employment data.

Bullish targets: The weekly chart shows that this daily-chart triangle is set within a larger descending wedge. Any bullish triangle breakout will have me focused on the 1.46 S/R level and, after that, the weekly chart’s wedge trend line. Any bullish weekly-chart wedge breakout would have me focused on the following higher levels:

the 1.50 S/R level and then,
the 50% fib near the weekly 200 EMA and 1.55 S/R level and then,
the 61.8% fib near the 1.60 S/R level and also near the monthly chart’s bear triangle trend line.

Bearish targets: any bearish daily-chart triangle breakdown would have me focused on the following lower levels:

the 1.40 S/R level.
The 1.35 S/R level and GFC low region.
The 1.30 level which is near the monthly chart’s 78.6% fib.
The 1.05 region which is near the monthly chart’s 100% fib.

Price is trading in the Cloud on both the 4hr and daily charts suggesting choppiness.

The weekly candle closed as a bullish-reversal ‘Inverted Hammer’ styled candle.

I’m watching for any new TC signal on this pair, the daily chart’s triangle trend lines and the 1.40 and 1.46 levels.

GBP/JPY: The GBP/JPY gravitated back to the Double Bottom region near 154.50 following the huge bearish move of the week before.

Bearish target: Any move and hold back below 154.50 would have me looking for a possible test of the weekly chart’s 61.8% fib down near 147 as this is previous S/R giving it added significance (see the weekly & monthly chart).

Bullish target: Any move and hold back above 154.50 would have me looking for a possible test of the 4hr chart’s 61.8% fib up near 159/160.

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

The weekly candle closed as a small bullish-reversal styled ‘Inverted Hammer candle but this was also an ‘Inside’ candle suggesting indecision. However, given price closed at the ‘Double Bottom’ support the bullish-reversal pattern may curry some favour here so be prepared (open-minded) for any bounce in the coming sessions.

I’m watching for any new TC signal on this pair and the 154.50 level.

Kiwi: NZD/USD: The NZD/USD rallied up to the upper wedge trend line last week triggering a new TC signal that gave 90 pips before closing off.

I note that any bullish wedge breakout might target the 50% of the 2014-2015 swing low move as this is also near a strong level of previous S/R at 0.75 and the weekly 200 EMA (see weekly chart).

Price is trading above the Cloud on the 4hr and daily charts suggesting LONG NZD/USD.

The weekly candle closed as a bullish candle.

There is NZD CPI and GDT Price Index data to impact here this week.

I’m watching for any new TC signal on this pair, the revised wedge trend lines, the 4hr chart’s support TL and the 0.75 level.

USD/JPY: The U/J continued to find support from the weekly 200 EMA last week and drifted a bit higher following on from the large bearish move of the week before. I had though price might retrace higher to test the 61.8% fib of this latest swing low move, as this was up near the previous S/R level of 111, but price hasn’t made it back that far as yet.

The weekly chart shows that price action has not traded below the weekly 200 EMA in over three years and, despite the decent fall last week, it has really only pulled back to the 38.2% fib of the 2012-2015 swing high move. Thus, I see potential for a deeper technical-based pull back even as part of overall bullish continuation. A pull back to the 61.8% fib of any move is considered reasonable and this would bring price down to the 95 region. Now the ‘elephant in the room’ of course remains as the BoJ and whether they might intervene. The 100 level is one which has been on my radar for many months as this is near the 50% fib of the swing high move, is long term S/R and it would also help shape up the bullish-reversal ‘Inverse H&S’ pattern I’ve got going. I do note that the 106.5 level is recent S/R as well as the 38.2% fib so watch for any reaction there too. I also note the bullish-reversal weekly candle that has formed at this major weekly 200 EMA support and so, whilst open to further falls, there is potential to bounce back up from here.

Monthly Chart Bullish Cup’ n’ Handle pattern: There still looks to be a longer-term bullish Cup ‘n’ Handle forming up on the monthly chart. The theory behind these patterns is that the height of the ‘Cup’ pattern is equivalent to the expected bullish move from the ‘handle’ breakout. The height of the Cup for the U/J weekly chart is around 4,800 ~ 4,900 pips. This may seem like a massive move but the longer term chart below shows this move to be reasonable as it would take the U/J up near the 50% fib of the 1985-2012 swing low move. Note the 101.5 level on the other monthly MT4 chart though. Any pullback down to this level, apart from helping to form up the huge Handle for the Cup ‘n’ Handle, would also help to develop a bullish ‘Inverse H&S’ pattern.

Price is trading below the Cloud on the 4hr & daily charts which suggests bearish U/J.

The weekly candle closed as a bullish-reversal ‘Inverted Hammer’ candle and this formed off major weekly 200 EMA support so should be noted.

I’m watching for any new TC signal on this pair, the weekly 200 EMA and the 111 level.

USD/CAD: The USD/CAD chopped below the 1.30 major S/R level last week and the TC SHORT signal, that had triggered last Friday, ended up giving 220 pips before closing off. This is another pair that keeps printing lower Highs and lower Lows which is bearish.

The continued weekly close and hold below 1.30 support has me looking at the 61.8% fib retrace level down near 1.155 as a possible bearish target as this is also near the weekly 200 EMA for added confluence. However, any close back above 1.30 would have to be read as bullish.

Monthly Chart Cup ‘n’ Handle? The monthly chart shows a developing bullish Cup ‘n’ Handle pattern with a neck line at 1.30. This is worth keeping an eye on as the pattern would be worth up to 3,500 pips as this is the height of the ‘Cup’. The interesting point is that the target for this pattern would put price up at the highs reached back in 2002 and this is equal to a 100% Fib retracement of the 2002-2007 bear move.

Price is trading below the Cloud on the 4hr and daily chart which is bearish.

The weekly candle closed as a bearish candle and back in the weekly Cloud.

I’m watching for any new TC signal on this pair, the daily chart’s channel trend lines and the 1.30 level.

GBP/AUD: This pair drifted lower again last week and triggered a new TC signal that has given up to 220 pips. Price has now also closed the week below the weekly chart’s 50% fib at 184.

Price action has been conforming to a recent descending trading channel but any bearish break below this would have me looking to the 1.77 region as this is previous S/R and is near the weekly chart’s 61.8% fib level.

Price is trading below the Cloud on the 4hr and daily charts which is bearish.

The weekly candle closed as a bearish ‘engulfing’ candle.

There is an open TC SHORT signal on this pair.

EUR/AUD: This pair chopped lower last week and broke down below a wedge trend line and triggered a new TC SHORT signal that has given up to 330 pips. Price action stalled at the weekly 200 EMA to finish the week and this will be the level to watch at market open. However, there is also a larger triangle on the weekly chart and traders need to watch for any potential support from lower trend line of this pattern.

The 1.55 – 1.75 remains a congested trading zone over the longer term and monthly time frame keeping me focussed on the impact of price action at the boundaries. However, the hold below 1.55 looks rather bearish for the longer term now!

Price is trading below the Cloud on the 4hr and daily charts which is bearish.

The weekly candle closed as a bearish engulfing candle.

There is an open TC SHORT signal on this pair.

GBP/NZD: The GBP/NZD dropped below the 2.065 S/R level last week and triggered a new TC signal but this only gave 100 pips before price pulled back to the key 2.065 level again.

This chart now has a bullish-reversal descending wedge appearance on the 4hr and daily charts but the weekly chart shows all of this price action forming up within a weekly triangle. It is almost 900 pips down to this weekly-chart triangle trend line though so any break below the wedge would have me looking for a test of this region. After that, any break below the triangle support trend line would have me looking for any test of the previous 2013 low near 1.77. Conversely, any close and hold back above the 2.065 level would have me looking for a test of the upper wedge trend line and, after that, the 2.10 level.

The GBP/NZD is trading below the Cloud on the 4hr chart and the daily suggesting a bearish bias.

The weekly candle closed as bearish candle.

I’m watching for any new TC signal on this pair, the revised wedge trend lines and the 2.065 level.

EUR/NZD: the EUR/NZD had a bearish week but did not trigger a clean TC SHORT signal. Yet, despite this bearish action, it continues consolidating within a daily chart triangle and under key 1.675 resistance.

An bearish breakdown from the daily chart’s triangle would have me looking for a test of the weekly chart’s 61.8% fib as this is also the region of a recent low (near 1.57).

Any bullish breakout from the daily chart’s triangle would have me looking for a test of the daily chart’s 61.8% fib up near 1.76.

I am finding this is one of a couple of pairs that often gives a decent 15 minute-chart trend trade during the Asian session and last Friday was an example of this:

The E/N is trading below the Cloud on the 4hr and daily charts which is bearish.

The weekly candle closed as a bearish engulfing candle and pushed below the weekly Cloud.

I’m watching for any new TC signal on this pair, the 1.675 level and the daily chart’s triangle trend lines.

Silver: Silver continued its move up from the key $15 level and from the recent triangle pattern last week. Price action stalled at the $16 level and monthly 200 EMA resistance level though as US$ strength resumed but it did manage to close the week above these two S/R levels.

Silver is trading above the Cloud on the 4hr and daily charts which is bullish but it is the weekly Ichimoku Cloud that bears noting. Price has not traded above the weekly Cloud in over four years but is trading up near the top of this resistance zone and looking like it might try for a breakout. Worth watching!

The weekly candle closed as a bullish candle.

I’m watching for any new TC signal and the $16 level.

Gold: Gold continued following on from the previous week’s bullish Flag breakout but stalled, once again, at the weekly 200 EMA. Price has not made a weekly close above the weekly 200 EMA in almost three years and so this remains as considerable resistance. The latest pull-back from the weekly 200 EMA has set up a potential bearish H&S pattern on the daily chart giving traders a neck-line trend line to monitor in coming sessions.

I’m keeping an open mind with Gold and can see reasons for both weakness and strength with the precious metal.

Bullish targets include:

The weekly chart’s swing low 50% fib near $1,415. This is also near the monthly chart’s bear trend line.
The weekly chart’s swing low 61.8% fib near $1,500.

Bearish targets include:

The H&S neck line.
The daily chart’s 50% fib near $1,165 and the daily 200 EMA.
The monthly chart’s 61.8% fib level near $1,150.
The daily chart’s 61.8% fib which is just under the long term S/R level of $1,145.

Gold is now trading in the bottom of the Cloud on the 4hr chart and just above the Cloud on the daily chart suggesting choppiness.

The weekly candle closed as a bearish coloured ‘Spinning Top’, and almost ‘Inside’, candle suggesting a fair amount of indecision.