Weekly Analysis (27/11/2016)

Posted on Posted in Weekly Analysis

Hi Guys,

So it’s been a while since I last posted my Weekly Analysis. Have been concentrating on something else (to be revealed soon), but want to start posting on here again. This is a longer post than usual but lets get into it.

I’ve always been interested in volume and the flow of price, so in these posts I will be looking at the overall flow of volume and momentum of price layered against simple technical analysis techniques, think trend lines, breakouts, patterns, support and resistance etc.

I won’t be placing any trades in line with these posts as I am trading another strategy, which is more mechanical then discretionary, but blogging about technical aspects of charts is more interesting.

Indicators:
> Psych Momentum (LittleFishFX bespoke indicator) [Daily = 5 period] [4hr = 30 period]
> OBV
> Linear Regression of OBV [Daily = 6 period] [4hr = 30 period]

What I will be looking for is the confirmation of volume with price movement. I.e. if the LinReg OBV crosses above or below its 0 point and Psych Momentum does the same on both the daily and 4hr, and its in line with say a break of resistance/support, then we can see that there is confluence in the move.

The volume data that makes up my OBV is being pulled from FXCM as I don’t pay for a superior data feed at the moment. FXCM although will only show the main flow of its own books, it is one of the largest retail brokers around and is a good starting point, but a data feed such as Reuters which follows the banks order flow would be more accurate. And this is what I am trying to do, follow the flow of orders (volume) from the larger banks and institutions and hop onto the moves in the short term. We could chuck in the Commitment of Traders Report (available from LittleFishFX as a handy indicator) to follow the non-commercial flow of money but wanted to keep things fairly simple as well as not overcrowd the charts.

Will hope to get a post out every week again and review the usual four currency pairs, and occasionally an additional pair if something looks interesting. But 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

> Resistance Areas: 1.281, 1.331, 1.366 & 1.40
> Support Areas: 1.20

The Pound has gone through quite a bit recently, BREXIT primarily but also the volatility of the US Elections. Ever since the highs in mid 2014 it has just been heading South and at the start of October (2016) it reached historic lows.

gbp_tv_weekly_26112016

Since the fall from BREXIT, the Pound found some support around 1.28 area, and then moved sideways for the next three months. It wasn’t until the start of October that we saw price break this 1.28 support area and make new lows, when it broke this level it dropped off fairly quickly with no retracements. Price has slowly been moving upwards from the lows of 1.200 but found some resistance from the 50 EMA.

gbp_tv_daily_26112016

Looking at the NinjaTrader charts, we can see that on the daily we had a confluence signal with the break of 1.28 support of LinReg OBV and Psych. And on the 4hr chart a bearish signal had already been given, so confluence of daily and 4hr signals with the break and close below 1.28 /1.285 provided a higher probability set up. It is to be noted that this was in line with the longer term trend of price and volume.

The set up I just pointed out turned out to be quite an obvious one in hindsight and in reality we would have taken it. But we wouldn’t look to take a trade every time the Psych or LinReg OBV prints a signal, sometimes we get one signal and not the other, sometimes there isn’t confluence signals between the daily and 4hr, but more importantly some signals are printed within the ‘mess’ of price, we would ideally want a strong move and/or break of a TL or S&R to obtain that edge. Obviously this is all discretionary and I’m not provided a defined strategy, just observing price movements against volume movement.

gbp_nt_4hrdaily_26112016

The only thing I have my eye on with this pair now is the break of short term rising trend line from the lows and the trend line formed from the recent highs. On the daily we have a small triangle pattern, the order flow has recently turned bullish on the daily, and on the 4hr volume on the LinReg OBV has crossed its 0 line and Psych recently turning bullish as well. This lines up both time frame, but I would want to wait and see a break of the small triangle pattern and 1.2521 level for a confirmed signal.

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EURUSD

> Resistance Areas: 1.1456, 1.08 & 1.105
> Support Areas: 1.0516

The Euro is currently at an interesting place. Reviewing the weekly chart we can see it has been bouncing between 1.1456 and 1.0466 levels since the start of 2015. In this time, price has hit up against the 1.1456 area more than 8 times, all of which couldn’t produce a close above on the weekly charts. Price has hit the lows just twice in the same period, but is currently back down at these levels after a sharp fall at the start of November.

eur_tv_weekly_26112016

On the daily chart we kept within a nice downwards trend channel since a high (1.146) back in May and it has only been this week that we have seen a strong breakdown of the lower trend line back into the lows. Unlike the Pound, we are not at historic lows with the Euro, but a further move and break of the lows would mean we would be in territory not seen since 2003!

eur_tv_daily_26112016

Looking at the volume and momentum on the NinjaTrader charts, we can see that the large move downwards was confirmed on the daily with Psych and OBV signals, along with a break of a key support level. By the time the daily signal had been printed the 4hr charts had already picked up on this downwards movement and both daily and 4 hr signals has continued to stay bearish with this long move down. The 4hr OBV LinReg however did cross briefly above its mid point but has now ducked below again. The Psych is just nudging up against its mid point as well but is still bearish.

Because this move has been strong, a bullish signal confirmed on both time frames, break of 1.0664 and the 4hr 50EMA could likely signal the retracement before further downside. We will have to wait and keep an eye out on the action.

eur_nt_4hrdaily_26112016

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AUDUSD

> Resistance Areas: 0.76, 0.77 &0.79
> Support Areas: 0.74, 0.725 & 0.70

The Aussie this has gained some ground since the start of 2016, on the weekly we put in a higher high at the 0.78 area in April, then down to a lower high in May , but price has failed to push up and make another higher high above 0.78. Price has over the past few months bumped up against 0.77 but failed to make a close above on the weekly. Recently the upwards trend line starting from the lows of 2016 has been broken and price has been moving away from the resistance of 0.77/78.

aud_tv_weekly_26112016

On the daily, we can see over the past week that price has retraced after a sharp fall. Friday’s candlestick moved back up into a bit of resistance 0.7448 area and saw a slight rejection. It is to be noted that we have now closed back above the 0.74 level of support/resistance which has been a key level in the past.

aud_tv_daily_26112016

On Ninjatader we can see the move down that broke the trend line pre-confirmed by the Psych and LinReg OBV signals on the daily. Interestingly and key to note is the OBV itself, is heavily to the upside. The peak of OBV coincides with the peak in price up into the key resistance of 0.77/0.775 area, but unlike price which has been making lower lows, the OBV hasn’t dropped off in the same manner.
This week the daily has printed bullish signals on the Psych and LinReg OBV, having seen price retrace slightly. On the 4hr it wasn’t until Friday that similar signals printed in confluence. Interestingly on the 4hr OBV it is firmly in a down trend.
Now signals on both time frames have lined up, a close above 0.7468 on the four hour could produce further upside. Price is hitting up into the resistance of 0.745, so if price can break and close above strongly I will be keeping an eye out on some continued bearish movement.

aud_nt_4hrdaily_26112016

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NZDUSD

> Resistance Areas: 0.77, 0.74 & 0.72
> Support Areas: 0.674 & 0.689

Similar to the Aussie, the Kiwi has made ground since the start of the year. It’s been a slow and grinding rise but has created a nice trend channel, but recently the lower trend line has been broken. The last weekly candlestick closed bullish, but has seen some rejection off the 50 EMA .

nzd_tv_weekly_26112016

Looking on the daily chart, price has broken down from the 0.745 highs, created a higher low in the over all trend, but then price put in a lower high at the beginning of November instead of a higher high and now price has surpassed this higher low, now a lower low in the new trend!? Especially as we have broken the longer term trend line.

nzd_tv_daily_26112016

Reviewing the flow on NinjaTrader we can see that the strong move down has been supported by the flow of volume as well as signals provided by the Psych and LinReg OBV. But again it was the break of the short term trend line that would have provided the entry. On the 4hr the same signals was confirmed.
Recently though the 4hr Psych has turned to the up side, but the LinReg OBV is slightly below its 0 line having been up and below a few times recently with no decisive direction. There is a sloping downwards trend line starting from the resistance zone of 0.71, for a more decisive upside movement I would be looking at a stronger OBV move as well as a clean break of the TL, however the resistance area will be a concern. It also should be noted we would require a bullish signal on the daily as well for a confluent entry.

nzd_nt_4hrdaily_26112016

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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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