Weekly Analysis

Weekly Analysis (04/10/2015)

Hi Guys, weekly blog post below covering my views on Cable, Euro, Aussie, Loonie and Yen.

Any questions, get in contact with me at enigmaforex@hotmail.com or @Enigma_FX

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GBP/USD

The Cable had a pretty grinding week, slowly making its way down to towards 1.51 level. What was interesting was price formed several price action patterns throughout the week.

Firstly on Monday we had an inside pin bar form inside the previous Friday’s range. This was at the two month low of 1.517 area. From there price grinded lower, and by Wednesday had created a bearish engulfing pattern, again off the 1.517 level. Finally on Friday we saw the creation of an inside bar fakey, where an inside bar pattern, has broken out in one direction, but reverses and closes within or below the initial inside bar set pattern.

GBP_Price Action Patterns

These patterns to me signal continued downside, however need to be weary of the fact these patterns have only caused a slow grind downwards instead of creating more confident moves. It should be noted that the weekly POC (Point of Control) was at 1.5154, just off that key low area. This could potentially be because people were closing out profits from the recent down movement at the support level/ closing out monthly positions.

What’s interesting about these past 5 candlesticks, is they all have long upper wicks, this to me indicates that the bulls have been trying to push the price up, but bears have always managed to re-gain control. Only after the negative NFP figure on Friday did we see a big move upwards, and even then by close price had re-gained over half of its daily movement back (having bounced off the 50 EMA on the 4hr chart).

Looking on NinjaTrader, LFX Order Flow indicator is still bearish, with Pysch momentum indicator still on it’s steady slope downwards, still below the 0 line. OBV is still declining, indicating negative volume pressure and downwards movement, with OBV LinReg Slope still below the 0 line.

With a close below 1.52 level, I still have a bearish bias.

GBP_NT_Daily & 4hr

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EUR/USD

The EUR stayed above the 1.11 level, with no decisive movement either way, again staying around the 50 EMA. However the Friday gave us a large Pin Bar after the NFP action, although with a bullish close.

Since this pair has been grinding higher for the past few months, sentiment on the LFX Order Flow has been bullish. The Pysch momentum indicator is bullish but is currently testing the 0 line. OBV LinReg Slope trending above the 0 line and OBV also grinding higher, shows us that there is positive upward pressure. However this is interesting as the Psych indicator has been grinding lower since the 24th of August, in accordance with price movement, but the OBV indicators have been making higher highs where as price has been making lower highs. According to theory, volume proceeds price, so a rising OBV with a divergence on price would indicate future bullish movement.

EUR_NT_Daily_OBV Divergence

With price tightening up from the 1.11 level and the bearish trend line from 24th August, I’m anticipating a breakout, preferably to the up side. But we will have to wait and see the aftermath of the NFP looks like on Monday.

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USD/JPY

Thought I would take a look at the Dollar Yen as the past few weeks has seen price tightening in a symmetrical triangle pattern.

Having plotted the triangle trend lines a while back, price has more or less stayed within its boundaries. With last Friday’s bar producing a larger than normal (compared to the past few days) doji bar (where it practically closed where it opened), interesting to note that the last three candlesticks has more or less opened and closed at the same level, indicating indecision in the market. However with a break outside of the triangle pattern and then a close back inside, suggests a fake breakout. The market push downwards, however didn’t have the momentum to keep the market at the lower prices.

As well as this, over the past few weeks, there have been a lot of long wicks on candlesticks on the upper and lower end of the symmetrical triangle trend line, again suggesting that there is no clear direction for this pair.

USDJPY_TV_Symmetrical Triangle

Looking at the weekly chart, price posted a pin bar just off the 50 EMA, although with a bearish close, but it seems the 118 level is the level to which a close below will suggest continued bearish movement, having been good support and resistance since the start of the Year.

USDJPY_TV_Weekly

Looking at the Order Flow, the indecision in the market is so much that the indicator hasn’t posted any bias of flow. The Psych momentum has been bearish since early June, however OBV LinReg is above the 0 line, albeit it has been pretty stagnant since the large drop on the 24th August. OBV however has been posting higher when price has been grinding itself into a tight range.

USDJPY_NT_Divergence

Although there isn’t any order flow bias, looking at the volume and tightening price action with the false breakout, this pair could be ready for a move upwards, will look for a break and close above the 120 level.

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AUD/USD

After the sell off from the double pin bars on the 50 EMA and resistance zone, the Aussie seems to have regained some of its losses, albeit slowly.
The currency pair found a short term support zone on 0.695, having bounced off it on the 10th and 24th September, and again on the 29th.

Price ended the week forming an inside bar, with the mother bar forming a pin bar off a short term resistance of 0.706. Potential stall before continued downwards movement?

AUD_TV_Inside Bar

The LFX Order Flow indicator is still bearish, however need to be aware that the Psych momentum indicator and OBV are starting to swinging upwards towards the 0 line.

Overall we could be seeing the start of a ranging market between 0.69 and 0.72, however I still have a bearish bias. Ideally will look for a break of inside bar and close back inside, or look to sell at any bounce off the 50 EMA or 0.715 zone to re-join bearish movement.

AUD_NT_Daily

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USD/CAD

Following on from last weeks commentary, I noted that it was worth keeping an out on the divergence between price and Psych momentum indicator / OBV LinReg Slope. After the bearish pin bar at the 1.335, price grinded higher for the next few days, just reaching above the high of the pin bar. Price then subsequently dropped heavily three days in a row. We are now hitting the 50 EMA, however, with the last price bar on Friday closes at it’s lowest point for the day, indicates considerable strength in the move.

Order Flow is still bullish, as is Psych and OBV, however both are close to the 0 line.

CAD_Daily

View would be still bullish and will like to re-join the trend at an appropriate level with a strong entry sign. However will keep an eye on indicators and price action suggesting further bearish movement.

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Disclaimer
Market commentary and trade ideas are solely my opinion and are not to be considered as trading advice. Presented in a blog format, it is intended for informative and entertainment purposes only. Please do not follow or act upon these opinions, you should undertake your own analysis and be aware of the risks involved.

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