TC trades returned 800 pips last week. Sign of things to come?

Last week: There were three successful TC signals and one failed signal but the total haul was 800 pips. Given the TC signal drought of late I’m encouraged that this might be a sign of more trends to come. The pip tally was: U/J= 200 pips, E/J= 220 pips, GBP/JPY= 380 pips, with all three still open, but Gold ended flat.

Next week:

Monday: is a Bank Holiday in the USA and Canada.
Data: Three Central banks report interest rates next week: the RBA, BoC and ECB. There is also some high impact CNY data to monitor as well.
Monthly candles: I posted during last week about the monthly candle formations for August and this post can be found through the following link.
US$: The US$ closed higher for the week despite the NFP miss. A review of the FX Indices can be found through this link.
Russell 2000: the small-caps index is starting to look quite bullish on the weekly and monthly charts. Is this index going to lead the broader markets higher?

USD/JPY vs S&P500: a comment on these two instruments:

The correlation chart of these two caught my attention this week. I have highlighted regions, on the 15-year chart below, where the USD/JPY and S&P500 have traded with positive correlation. The two have been trading with divergence for most of 2016 but Yen weakness developed last week and triggered a new uptick in the USD/JPY to mach the trend seen with the S&P500 and I’ll be watching to see if any new positive correlation continues from here. There has been Yen strength since late 2014 for the EUR/JPY and AUD/JPY pairs and since mid 2015 for the GBP/JPY and USD/JPY pairs and so some bounce activity, even if just a relief rally, would not be out of order here.

I will also be watching to see if Yen weakness outpaces US$ strength at all in case this ultimately weakens the US$ index with respect to the USD/JPY. If so, we could see some divergence develop between the USD/JPY and the US$ index. These two often trade in tandem but not always as the 15-year chart below reveals. I have highlighted, to the best of my ability using ‘Paint’, periods where the U/J and US$ index have been divergent and you can see how they’ve pretty much traded in tandem since 2014:

Stocks and market sentiment:

The major stock indices closed with small but bullish coloured weekly candles. I’ll be watching to see if bullish sentiment accelerates at all, especially if the USD/JPY rallies.

S&P500: the weekly candle closed as a bullish coloured ‘Spinning Top’ and ‘Inside’ candle reflecting indecision:

NASDAQ: bullish momentum is starting to pick up here:

DAX: bullish momentum is picking up following the triangle breakout:

FTSE: ditto here. Watch the 7,000 level for any make or break:

Russell 2000: ditto here too! Note the bullish look on the monthly chart as well:

TC Signals:

USD/JPY: This TC LONG signal has given up to 200 pips and, when I first posted this signal, the trade was under water therefore allowing for full potential to be achieved here.

I’d mentioned last week that I was looking for the U/J to test the 104.5 region near the 61.8% fib and that is exactly where price peaked at on Friday! Check out the first of the 4hr charts below that shows this clearly.

I also noted on Thursday how this pair had printed a bullish-reversal ‘Hammer’ candle for August which supported some bullish sentiment here.

The 4hr and daily charts show price action now up testing the upper trend line of an 8 month trading channel and so this is the region to watch for any make or break in coming sessions. However, a 61.8% fib pullback of the recent rally would bring price back down to near the key 101.50 level and so a test of this region could well evolve before any potential channel breakout so keep an open mind here. (I’ve shown this 61.8% fib pullback to 101.50 on the second 4hr chart below).

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

The weekly candle closed as a bullish candle.

Watch for any impact from Monday’s BoJ Gov Kuroda speech

There is an open TC LONG signal here BUT keep an eye out for any breakout from the recent 8-month descending trading channel.

EUR/JPY: The previous week’s triangle breakout also triggered a new TC LONG signal at the start of last week and this has given 220 pips. An important feature to note is that the E/J finished the month above the key 115 level and printed a type of bullish-reversal monthly ‘Hammer’ candle supporting renewed bullish sentiment.

I’m open to the idea here of a possible pullback before any potential bullish continuation though and, if so, I’d be looking for a test of the 61.8% fib which is down near the 4hr chart 200 EMA and the monthly pivot. Failing that, a test of the key 115 level would also be a possibility.

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

The weekly candle closed as a bullish candle.

Watch for any impact from Monday’s BoJ Kuroda speech and the ECB rate decision.

There is an open TC LONG signal here BUT watch for any pullback to test the 115 region.

GBP/JPY: this pair finally broke away from the key 134 level and a new TC signal has given up to 300 pips.

I’d noted on Thursday how this pair had printed a bullish-reversal ‘Hammer’ candle and, so far, so good. I’m open to a pull back here though as well before any potential bullish continuation and I note a 61.8% fib retracement would bring price back down to near the key 134 level which is near the weekly and monthly pivots for added confluence.

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

The weekly candle closed as a bullish candle.

Watch for any impact from Monday’s BoJ Kuroda speech and GBP Manufacturing PMI data.

There is an open TC LONG signal here BUT watch for any pullback to near the key 134 level.

Other Forex:

EUR/USD: this pair keeps chopping sideways and never strays too far from the key 1.12 level.

The 4hr chart shows price forming up within another triangle so watch for any trend line breakout that evolves with increased ADX momentum.

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

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

There is an ECB Interest Rate decision this week to impact price action here as well as the USD-sensitive data.

I’m watching for any new TC signal and the 4hr chart’s triangle trend lines.

AUD/USD: The Aussie continues to consolidate below a major 3 ¹/₂ year bear trend line. It closed marginally higher for the week but printed a bullish coloured ‘Spinning Top’ reflecting the indecision that exists here at the moment.

The weekly and daily charts show this pair consolidating within a triangle and this is giving us trend lines to watch for any breakout.

Price action is holding above the weekly Cloud for the first time in over three years which is worth remembering:

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

There is a bit of AUD-sensitive data next week: The RBA interest rate decision on Tuesday, AUD GDP on Wednesday, AUD and CNY Trade Balance on Thursday and AUD Home Loan data and Chinese CPI and PPI on Friday.

I’m watching for any new TC signal and the daily chart’s triangle trend lines.

AUD/JPY: The A/J gave a triangle breakout trade last week that was worth over 150 pips but this move did not trigger an new TC signal.

Price is now above the 4hr and daily Cloud which is a bullish shift.

The weekly candle closed as a bullish candle.

There is a bit of data to impact this pair next week next week: There is a BoJ Gov Kuroda speech on Monday, the RBA interest rate decision on Tuesday, AUD GDP on Wednesday, AUD and CNY Trade Balance on Thursday and AUD Home Loan data and Chinese CPI and PPI on Friday.

I’m watching for any new TC signal and the key 80 level.

GBP/USD: The Cable has printed three bullish weekly candles in a row now and the possibility of the ‘Double Bottom’ off 1.28 may be evolving. The ‘neck line’ for any such pattern looks to be near the 1.35 level which is a key level being the GFC LOW and so this seems to be the level to watch in coming sessions for any make or break activity.

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

The weekly candle closed a bullish candle.

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

NZD/USD: The Kiwi closed the week with a small bullish candle but it couldn’t manage to close above the key 0.73 or 0.74 S/R levels.

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

The weekly candle was bullish.

There is NZD GDT Price Index data on Tuesday, CNY Trade Balance on Thursday and CNY CPI and PPI on Friday to possibly impact here.

I’m watching for any new TC signal and the 0.73 and 0.74 levels.

USD/CAD: The Loonie remains range-bound in the four month trading channel and continues oscillating either side of the key 1.30 level.

There is the BoC Interest Rate decision on Wednesday and CAD Employment data to impact here as well as all of the USD data.

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

The weekly candle closed a bearish coloured Doji.

I’m watching for any new TC signal, the trading channel trend lines and the 1.30 level.

Gold: Gold continues to consolidate under a wedge trend line that dates back five years. The 4hr chart shows that price has been chopping sideways within a 10-week duration channel, under this major bear trend line, bound by the $1,380 level above and, roughly, the $1,300 level below. I note that Gold printed a bullish-reversal weekly ‘Hammer’ candle though and so I’ll be looking for any bounce activity off the bottom of this recent channel.

Price is below the 4hr Cloud, just above the daily Cloud and still above the weekly Cloud.