Weekly Analysis (01/05/2016)

Posted on Posted in Weekly Analysis

Hi Guys,

This weeks post covers my view on Cable, EUR, Aussie & Kiwi.

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

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GBPUSD

After breaking out of the trendline (neckline) and 1.44, the pound has continued its way higher. On Monday we saw a fairly large gap up and posting a bullish indecision bar. Tuesday pushed higher still, hitting up against the 1.46 resistance zone, which put a stop to price briefly, the rest of the week saw price pushing up against 1.46 and on Friday it broke strongly above this level, only to be rejected at 1.4668 which is the highest price has reached since it reached this level back in February. Although it closed bullish, this is a pin bar off previous highs and nearing the long term downwards trend line, so could push price back lower before continuing higher.

This recent bullish movement was triggered from the break of the neckline of a long term inverse head and shoulders pattern created from the beginning of 2016. Although not the perfect H&S’s as in straight neckline and straight shoulders, the concept is the same and once it had broken the neckline and the 1.44 level, price managed to pave its way higher.

GBPUSD_TV_01052016

> Resistance Areas: 1.510, 1.48, 1.46 & 1.44
> Support Areas: 1.40 & 1.366

Reviewing the Cable on the NinjaTrader platform, we can see that Order Flow is still being indecisive at the moment, currently not printing any signal. Psych momentum is still bullish, still in an uptrend since the beginning of the year. OBV LinReg has now moved below its mid-point. With OBV ticking up slightly.

GBPUSD_NT_01052016

With the break of 1.44 and neckline from the inverse H&S’s pattern, I’m expecting more bullish movement. However we may see a re-trace possibly back down to 1.45 off the back of Friday’s pin bar close off 2016 highs. Any move down towards this level could be a great opportunity to enter in anticipation of higher moves.

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EURUSD

The EUR has had a strong week this week, having posted 5 consecutive days of bullish closes. After last weeks bearish close at the 1.12 area price immediately re-gained that lost ground on Monday. Although Tuesday and Wednesday’s candlestick produced long wicks off the 1.34 zone we still saw bullish closes and momentum continued upwards. Friday’s movement produced the largest move of the week having shot from the 1.35 level all the way up to key resistance of 1.146, and in fact touched up against that level pretty much to the tee, before retracing slightly.

EURUSD_TV_01052016

> Resistance Areas: 1.146
> Support Areas: 1.08, 1.052 & 1.11

On NinjaTrader Order Flow had started to print a bullish signal. Psych Momentum is still bullish and has moved higher still. OBV LinReg has broken above its mid-point and is now testing it again. OBV has moved up along with price and is testing OBV highs.

EURUSD_NT_01052016

We are now back within the range area from about three weeks ago, between 1.146 and 1.134. With Friday’s strong bullish close, it is looking like 1.146 may break and if we do and manage to hold above it, this could open up further upside movement all the way up to 1.17. Any re-trace back down to 1.34 may be a good opportunity to get long.

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AUDUSD

I said in my last weekly analysis that any move down to 0.76 could be a good opportunity to get long, however price managed to reach this level in a c. 200 pip downward movement on Wednesday. Monday and Tuesday produced bullish bars, however fairly small, before price plummeted south. The end of the week saw price make a small break above the level, however ended up closing a few pips below 0.76 support level.

AUDUSD_TV_01052016

> Resistance Areas: 0.79
> Support Areas: 0.706, 0.695, 0.69, 0.725, 0.74 & 0.76

Reviewing NinjaTrader, we can see that Order Flow is still bullish, along with Psych Momentum. OBV LinReg is above its 0 line and OBV has moved up slightly compared to last week. Interesting to note that although price dropped significantly, the drop in the OBV wasn’t as big in comparison and hadn’t dropped below OBV lows of the previous week. With price creating lows, this is showing potential bullish divergence, something to watch out for.

AUDUSD_NT_01052016

With price back down at 0.76, small bullish divergence and a strong uptrend, this potentially be a good place to get long. Price may however move back down slightly and test the lows of this past week, the 50 EMA and the long term upwards trend line.

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NZDUSD

After dropping significantly the previous week, this week has seen those losses re-gained. After a slow start on Monday, Tuesday and Wednesday saw price push up into the 0.689 level, and drop down again. Only on Thursday did price break through this area and make a strong close, with Friday posting higher still.

The Kiwi has been moving in a sharp zig-zag movement upwards since March, posting higher highs and high lows, and after Thursdays large move upwards it seems that this patterns is continuing.

NZDUSD_TV_01052016

> Resistance Areas: 0.72
> Support Areas: 0.674-0.669, 0.65-0.645, 0.624 & 0.689

Reviewing NinjaTrader, Order Flow has still not printed any signal. Psych Momentum however has stayed bullish. OBV LinReg is still below its 0 line. OBV itself has moved up slightly along with price. It is to be noted that there is some divergence between price and OBV. Since the beginning of March price has been rising in this HH/HL pattern whereas OBV has been on a steady decline since the same time and hasn’t broken the high of OBV since March.

NZDUSD_NT_01052016

Will keep an eye out for whether price breaks up above the previous swing high at 0.705 considering the long term divergence with price and OBV. But we could see a drop back to 0.689 before continuing higher with the HH/HL pattern. If we see price break below the recent swing low of 0.68, I will be considering a more bearish bias.

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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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