Weekly Currency Index Technical Analysis – 9 February

Currency Index Notes

There was not much of a follow up from last week’s analysis. Our only recommendation was to look for long positions in EURNZD on a dip. Looking back at last week’s price action, we do however notice that there hasn’t been any significant change to EURNZD price action.

Australian Dollar Index:

  • The Aussie Dollar is up 0.19% for the month and week, while closing 0.65% higher for Friday
  • We notice a consolidation near the lower trend line of the price channel
  • When using the RSI, there is a clear bullish divergence with RSI printing a lower higher low while AUD prints a lower low
  • This indicates a short term move to the upside and the most likely rally towards the broken support/resistance level at 1.54 – 1.53
  • We need to see a H4 or preferably daily close above 1.512 in order to take a short term intraday long positions in AUD
AUDLFX Weekly Analysis – 09/02/2015
Australian Dollar Index Weekly Analysis – 09/02/2015

Conclusion: Expect a short term reversal in AUD for the week ahead. A close below the recent lows will indicate a continuation of the downtrend.

Canadian Dollar Index:

  • CAD has been considerably stronger for the week, closing 1.39% up
  • From the weekly charts, the bearish flag pattern seems to be holding well
  • Last week’s bullish candlestick is however nothing significant but we expect a rally towards 1.59 levels or even as high as the break out level at 1.61
  • For the moment, with price action near the lower support line of the price channel, we prefer to take long positions in CAD pairs against weaker currencies
CADLFX Weekly Analysis – 09/02/2015
Canadian Dollar Index Weekly Analysis – 09/02/2015

Conclusion: Look for long positions in CAD for this weak but only against weaker currencies

Euro Index

  • After the bullish engulfing pattern was form a week before, last week’s price action has formed a doji
  • We notice the doji formation coming in with a gap, therefore if we see this week’s price action opening with a gap lower, it could potentially spell more weakness in the Euro
  • For the week, the Euro index managed to gain just 0.02%
  • When switching to the daily charts, there is a possibility of a bullish flag formation alongside a potential inverted head and shoulders pattern
Euro Index Weekly Analysis – 09/02/2015
Euro Index Weekly Analysis – 09/02/2015

Conclusion: Euro could likely move through a choppy session and therefore advisable to stay aside from this currency for this week.

Sterling Index

  • This is the third week of gains in the Sterling Index while for the month, the total gain was 0.96%
  • After the brief break down from the ascending triangle, price quickly moved back up closing inside the trend line
  • There is a massive bearish divergence being formed, which gives a downside target to 2.78, but considering this is the weekly, we need to wait for a close below the first trend line
  • A new trend line plotted with the recent lows forms the next TL to watch
Sterling Index Weekly Analysis – 09/02/2015
Sterling Index Weekly Analysis – 09/02/2015

Conclusion: Due to the lack of clear candlestick patterns, it is best to stay aside GBP pairs for this week

Yen Index

  • Price managed to reverse from the marked support zone and formed a Bullish engulfing pattern
  • From the daily charts, we expect a small dip to 60.944 as a confirmation of a completed correction
  • If this happens, then we can expect to see the bullish trend in JPY resume
  • If there is no retracement to 60.944 and price pushes higher, we can view this as a temporary move with the correction back to 60.68 – 60.09 still being valid
  • To the upside, expect a rally to as high as 62.184
  • The week ended with the Yen losing 1.62%
Yen Index Weekly Analysis - 09/02
Yen Index Weekly Analysis – 09/02/2015

Conclusion: Long positions in JPY preferred against absolutely strong currencies only.

Kiwi Dollar Index

  • The New Zealand dollar closed the week with a decent 1.3% gain
  • Weekly candlesticks formed a piercing line pattern, which indicates a possible correction to the downtrend
  • Because the decline was rapid, and based on the piercing line pattern, we expect a rally back to retrace the broken support at 1.47
  • The only risk being the Weekly moving average that could act as resistance
Kiwi Dollar Index Weekly Analysis – 09/02/2015
Kiwi Dollar Index Weekly Analysis – 09/02/2015

Conclusion: Look for short term long positions in the New Zealand dollar

US Dollar Index

  • The Dollar index was down 0.2% for the week and we are starting to see signs of weakness
  • There was a doji candlestick followed by last week’s hanging man type of a pattern on the top
  • We would however need to see a clear follow through before taking short positions in the US Dollar
US Dollar Index Weekly Analysis – 09/02/2015
US Dollar Index Weekly Analysis – 09/02/2015

Conclusion: Stay aside USD pairs this week until a clear direction emerges

Prepared with LiteForex Currency indices

Ideal Currency Pairs to trade this week

CADJPY, EURAUD seem to be ideal candidates to take long positions in, while EURNZD makes for a good short candidate.