Weekly Currency Index Technical Analysis – 16 February

Currency Index Notes:

From last week’s analysis we noted that CADJPY, EURAUD made for ideal long positions, while looking for short positions in EURNZD. Looking at the week’s performance, CADJPY rose 0.48%, EURAUD was up 0.7% and EURNZD short position gained 0.58%.

Australian Dollar Index:

  • Weekly charts continue a second week of choppy price action but still near the lower end of the smaller price channel
  • We would need to see a rise above 1.5128 in order for AUD to target 1.5344 support/resistance level
  • From the daily charts, we notice a reversal candlestick pattern, but nothing very conclusive.
Australian Dollar Index Weekly Analysis – 16/02/2015
Australian Dollar Index Weekly Analysis – 16/02/2015

Conclusion: Look for long positions in AUD only on a daily bullish close above 1.5128.

Canadian Dollar Index:

  • The sharp bullish reversal from the lower end of the major price channel saw a modest bullish continuation last week
  • Price action stalled near the lower support level at 1.5534 which could see price struggle
  • We would need to see a break above 1.5534 in order for price to retrace back to 1.59
Canadian Dollar Index Weekly Analysis – 16/02/2015
Canadian Dollar Index Weekly Analysis – 16/02/2015

Conclusion: Look for daily charts for price to close above 1.5534 to take longs

Euro Index

  • The bullish engulfing candlestick from the support resistance level saw a doji followed by another bullish close last week
  • The fact that price action is still below the upper resistance level makes it a bit tricky as price could be choppy
  • From the daily charts, we notice a small hanging man with Friday’s close turning bearish
  • We would therefore have to wait for at least till Wednesday for more clarity on the price
Euro Index Weekly Analysis – 16/02/2015
Euro Index Weekly Analysis – 16/02/2015

Conclusion: While Euro index looks bullish, it would be best to wait for more confirmation later during the week

Sterling Index

  • The bullish reversal for the Sterling index was quick and we are of the view that the uptrend is now back
  • Expect to see a dip to the support level between 2.96 – 2.95 levels before rallying
  • Last week marks 4 continuous weeks of bullish momentum with little to no pullbacks
  • Looking to the daily charts notice that failure to hold prices near the support level at 2.96 and 2.95 could see a decline to 2.8820 gap
Sterling Index Weekly Analysis – 16/02/2015
Sterling Index Weekly Analysis – 16/02/2015

Conclusion: Look for long positions on the GBP pairs on a pullback from the daily charts

Yen Index

  • Yen reversed from the support zone at 60.6 – 60.09 only to form a new resistance near the price channel
  • We can expect to see a possible move to the upside to previous resistance at 62.18 if price holds above 60.944
  • Alternatively, a break of 60.944 could see a test back to the previous support level near 60
  • Weekly charts shows a doji candlestick formation after last week’s bullish close
Yen Index Weekly Analysis – 16/02/2015
Yen Index Weekly Analysis – 16/02/2015

Conclusion: Stay aside Yen pairs this week

Kiwi Dollar Index

  • Last week saw a bullish continuation from the previous week’s bullish candlestick pattern
  • Price action is near the lower end of the rising price channel which could act as resistance
  • Daily charts do not show any clear patterns, so we would have to wait for a close above 1.442 level with a bullish candlestick pattern before taking any positions
Kiwi Dollar Index Weekly Analysis – 16/02/2015
Kiwi Dollar Index Weekly Analysis – 16/02/2015

Conclusion: Look to daily charts for possible bullish candlestick patterns to take long positions in the NZD pairs against weaker currencies

US Dollar Index

  • We notice a weakness in the US Dollar with the second week closing in the red at the top
  • Daily charts show a bearish engulfing pattern last Thursday followed by a bearish close on Friday
  • Daily charts show a ascending triangle at the top indicating a decline this week
US Dollar Index Weekly Analysis – 16/02/2015
US Dollar Index Weekly Analysis – 16/02/2015

Conclusion: Look to taking short positions in the USD against stronger currencies this week

Prepared with LiteForex Currency indices

Ideal Currency Pairs to trade this week

Take short positions in USDCAD and long NZDUSD, exit CADJPY long from last week