Tipping Point? Two weeks of high impact data

Last week: I am still away following the 4-week trial of my algorithm off shorter time frame charts during the European and US sessions but I have completed the analysis and the results can be found through the following link. This is a bit of a brief update as I am starting to wend my way home and won’t be home until Wednesday.

Next week:

US$: The US$ closed lower for the week and below the key 98.50 level with just one October trading day remaining. A review of the FX Indices can be found through the following link.

Data: there is a lot of data to come over the next two weeks: there are four Central Banks reporting next week; the RBA, BoJ, FOMC and BoE plus there is NFP on Friday. The following week brings the US Presidential Election and the result of this could have a significant impact on the chart profile of many trading instruments.

Warning Signals: there are some distinct warning signals for equity Bulls and these include:

A bearish daily triangle break on the S&P500.
The bearish activity on the Russell 2000.
The bearish triangle breakdown with Junk Bonds.

However, there isn’t much momentum with any of these moves just yet but any uptick would obviously endorse these early warnings.

Tipping Point? It does feel like we are at a tipping point in the financial markets and perhaps the load of high impact data over the next two weeks, including the the US Presidential Election, may be sufficient to tip this balance decisively in either the direction of the Bulls or the Bears.

Stocks and broader market sentiment:

The S&P500, DJIA, NASDAQ, DAX, FTSE, TSX and Russell 2000 all printed bearish candles for the week. The FTSE continues to hold just under the 7,000 level though and I’m on the lookout to see where this closes after Monday as any monthly close above this 7,000 level would support an ascending triangle breakout akin to those seen on the S&P500, DJIA and, more recently, the NASDAQ.

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 has broken down from the daily triangle and is below the monthly chart’s 2,135 breakout level which is a significant bearish development. Watch for any make or break activity at the 61.8% fib near 2,100.

S&P500 weekly: The index closed with a bearish candle and below the 2,135 S/R level.

S&P500 monthly: The monthly candle is still bearish coloured with one trading day to go but it is still worth noting how bearish divergence has faded. I have been wondering over recent months what could trigger any test of the 1,600 breakout level, as seen on the multi-year chart below, and now ponder whether a Trump victory might achieve this?

Russell 2000 Index: this small caps index is considered a US market ‘bellwether’ and continues to hold above the Flag supporting a bullish breakout. However, last week’s candle was another bearish candle that closed below the key 1,220 S/R level so keep an eye on the monthly support trend line. I’m also still waiting to see momentum kick in here which, for now, is rather lacking.

VIX Index: The ‘Fear’ index printed a bullish coloured, essentially ‘Inside’ candle but is back above the 14 threshold level. This is still an ‘indecision-style candle for now though!

Copper Weekly: a huge bullish engulfing weekly candle and holding above the ‘2’ handle as it continues to coil within a triangle. I’m on the lookout for any breakout.

Junk Bonds: this printed a bearish weekly candle and a bearish triangle breakdown. A HUGE warning signal for sure.

Oil: Oil continues holding above the 2009 low of $33.50 but printed a bearish weekly candle and closed back below the key $50 threshold. Watch for any continuation with the bullish-reversal Inverse H&S pattern though as the target for this move is up near $70.

USO weekly: this triangle pattern is still worth watching for any potential breakout; up or down.

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

Sun 30^th: EUR, CHF and GBP Daylight Savings shift.
Mon 31^st: nil
Tue 1^st: CNY Manufacturing and Non-Manufacturing PMI & CAIXIN Manufacturing PMI. AUD Melbourne Cup & RBA Interest Rates & Rate Statement. JPY BoJ Interest Rates, Policy Statement & Press Conference. EUR French & Italian Bank Holiday. GBP Manufacturing PMI. CAD GDP.
Wed 2^nd: USD ISM Manufacturing PMI. NZD GDT Price Index. CAD BoC Gov Poloz speaks. NZD Employment Data & Inflation Expectations. AUD Building Approvals. GBP Construction PMI. USD ADP NFP & Crude Oil Inventories.
Thurs 3^rd: USD FOMC. JPY Bank Holiday. AUD Trade Balance. GBP Services PMI, Inflation Report and Bank Rate Statement. USD Weekly Unemployment Claims.
Fri 4^th: USD ISM Manufacturing PMI. AUD RBA Monetary Policy Statement and Retail Sales. CAD BoC Gov Poloz speaks and Employment Data. EUR various Services PMI. USD NFP.

Forex:

EUR/USD: This pair chopped higher last week to close back near the key 1.10 level and this is the one to watch next week for any make or break activity.

The 1.12 is a major S/R level for this pair and I would not be surprised if it heads back there to ‘bunker-in’ before the US Election.

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

The weekly candle closed as a bullish candle.

I’m watching for any new TC signal on this pair and the 1.10 level.

EUR/JPY: This pair continues consolidating within a daily chart triangle that is set within a larger weekly chart triangle and consolidation remains the theme. Price closed the week just below the upper trend line and key 115 level last week so this is the region to watch next week for any make or break activity.

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

The weekly candle closed as a bullish candle.

There is more EUR PMI data next week plus the BoJ and FOMC rate updates will impact here.

I’m watching for any new TC signal on this pair and the 115 level.

AUD/USD: The Aussie continues trading within a daily chart triangle and closed the week just below the key 0.76 level and this will be the region to watch next week for any make or break activity.

Price action continues to be squeezed towards the apex of the triangle though and under the major 3 ½ year bear trend line. The weekly chart also still shows a potential bullish-reversal inverse H&S brewing.

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

The weekly candle closed again as another bearish coloured Doji candle.

There is the RBA rate update and Chinese Manufacturing PMI data next Tuesday and AUD Trade Balance on Thursday with FOMC and NFP to impact here as well.

NB: I have relaxed the major 3 ½ year bear trend line just a bit to reflect recent S/R activity.

I’m watching for any new TC signal on this pair, the 0.76 region and the daily chart’s triangle trend lines.

AUD/JPY: This pair remains trading within a weekly chart triangle and traded to the upper trend line of this pattern last week. This happens to be near the key 80 level and will be the region to watch next week for any make or break activity.

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

The weekly candle closed as a small bullish candle.

There is the RBA and BoJ rate update as well as Chinese Manufacturing PMI data next Tuesday and AUD Trade Balance on Thursday with FOMC and NFP to impact here as well.

I’m watching for any new TC signal on this pair, the 4hr chart’s trend lines and the key 80 level.

NZD/USD: The NZD/USD drifted higher last week and on Friday it broke up and out from a 4 hr triangle pattern. The Kiwi looks like it wants to attempt the seven-week bear trend line and key 0.72 level again so this is the region to watch next week for any make or break activity.

The NZD/USD is trading in the 4hr Cloud but below the Cloud on the daily chart.

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

There is Chinese Manufacturing PMI data next Tuesday and NZD GDT Price Index and Employment data on Wednesday. US FOMC and NFP will impact here though too.

I’m watching for any new TC signal on this pair, the 4hr chart’s trend lines and the 0.72 level.

USD/JPY: The 104 level remains key key here and is the region to watch next week for any make or break activity.

Recall that this pair has held up and out from a weekly chart descending channel and this breakout supports my weekly chart ‘Inverse H&S’ pattern. However, I am still open to a possible pullback to test this broken channel trend line near the key 101.50 region.

Price is trading above the 4hr and daily Cloud.

The weekly candle closed as a small bullish candle.

There is the BoJ rate update next Tuesday and FOMC and NFP to impact here as well.

I’m watching for any new TC signal on this pair and the 104 level.

USD/CAD: The USD/CAD traded above the wedge trend line for most of last week and has now printed a small bullish weekly candle above this major 25-week trend line. The weekly chart suggests that a target for any bullish continuation would be up towards the 1.40 level as this is near the 61.8% fib of the major swing low move.

I do note a lack of any momentum on the 4hr and weekly chart’s though and mention that as a word of some caution here; data over the next two weeks could catapult this pair one way or the other.

Price is trading above the Cloud on the 4hr and daily chart and now, also, the weekly chart which is bullish.

The weekly candle closed as a bullish candle.

There is CAD GDP and Employment data next week as well as US FOMC and NFP to impact here. Watch, also, for any impact from the EU-Canada trade deal that is supposedly being signed over the w/e.

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 and the upper wedge trend line.

EUR/AUD: The EUR/AUD chopped higher last week and moved back above the 1.44 S/R level but it is still below the monthly chart’s recently broken triangle pattern. The monthly candle close on Monday needs to be seen to confirm any bearish breakout though.

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

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

There is the RBA rate update and Chinese Manufacturing PMI data next Tuesday and AUD Trade Balance on Thursday as well as US FOMC and NFP to impact here. There isn’t much EUR data but some second tier EUR PMIs may have some impact.

I’m watching for any new TC signal here, the monthly chart’s trend lines and the 1.44 level.

EUR/CAD: The monthly chart still shows a larger triangle in play with a smaller triangle on the weekly chart as well. Price action edged higher during last week and moved up above the recent 1.461 S/R region and to trade just below the weekly chart’s bear trend line. These are the two levels to watch next week for any make or break activity.

The monthly chart also shows that 1.50 has been a long-term S/R level and this may be a target if bullish momentum continues and the bear trend line is broken.

The EUR/CAD is trading above the 4hr and daily Cloud.

The weekly candle was bullish candle.

There is CAD GDP and Employment data next week as well as US FOMC and NFP to impact here. There isn’t much EUR data but some second tier EUR PMIs may have some impact.

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

EUR/NZD: the EUR/NZD last week continued to hold above the support of the weekly/monthly chart’s major triangle trend line. This trend line remains the one to watch for any make or break activity.

The EUR/NZD is trading in the Cloud on the 4hr chart and just below the Cloud on the daily chart.

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

There is Chinese Manufacturing PMI data next Tuesday and NZD GDT Price Index and Employment data on Wednesday. US FOMC and NFP will impact here though too. There isn’t much EUR data but some second tier EUR PMIs may have some impact.