Weekly Currency Index Technical Analysis – 16 March

Currency Index Notes:

From last week’s analysis, we had recommended to sell NZDUSD, targeting 0.72 from 0.74/0.75 levels, short GBPAUD, GBPCAD, AUDUSD, NZDCAD and to buy USDJPY. As of market close on Friday, 13th March the recommendations performed as follows:

NZDUSD: Rallied to 0.74 and dipped lower below 0.72, +2.7% Profit
GBPAUD: +1.18% Profit on Short
GBPCAD: +0.83% Profit on Short
AUDUSD: +1.04% Profit on Short
NZDCAD: -0.87% Loss on Short
USDJPY: +0.49% Profit on Long
AUDNZD: +0.61% Gain since 2nd March on Long

  • Continue to remain holding AUDNZD and exit half the position at 1.05 and exit towards 1.07
  • Continue to hold AUDUSD, NZDUSD shorts

Australian Dollar Index

  • The Aussie Dollar managed to reach/retrace back to the support/resistance region between 1.542 – 1.5344
  • It would be tricky from here on despite the bias is to the downside back to 1.5128
  • Daily candle on Friday closed bearish in this region but weekly candle was bullish
  • The fact that the Aussie dollar is back in the support/resistance level indicates a few remaining upward thrusts before the Aussie dollar declines
  • Alternatively, a break out from the smaller falling price channel could indicate the intention to test the next resistance/support at 1.578 – 1.567.
Australian Dollar Index Weekly Analysis – 16/03/2015
Australian Dollar Index Weekly Analysis – 16/03/2015

Conclusion: Do not take any new positions in AUD until the trend offers a more clear picture

Canadian Dollar Index

  • Price action continued to push higher as expected and there is still a lot of room left for testing 1.59 broken support for resistance
  • There is a possibility that on the daily time frame, the Canadian dollar could dip to 1.556 – 1.533 to establish support before pushing higher
  • If this turns out to be true, CAD would be ideal to buy on the dips
  • Daily candlestick shows two consecutive days of bearish price action indicating short term weakness, while weekly is still bullish
Canadian Dollar Index Weekly Analysis – 16/03/2015
Canadian Dollar Index Weekly Analysis – 16/03/2015

Conclusion: Trend is not clear and it would be best to wait for the Canadian dollar to dip to 1.556 zone for renewed buys

Swiss Franc

  • We did not cover the Swiss franc for the past few weeks but this week the SNB meets which could offer volatility
  • After the infamous break of the peg in January, the Swiss franc rallied but failed and quickly declined back to the support level
  • If this support hold, the Swiss franc could continue to push even higher, while a break of the support at 1.9797 could weaken the currency even more
Swiss Franc Index Weekly Analysis – 16/03/2015
Swiss Franc Index Weekly Analysis – 16/03/2015

Conclusion: Up or down, a retest back to 2.047 for bullish breakout or 1.9797 for bearish break out is more ideal

Euro Index

  • Price broke down from the previous low at 2.145 after the doji reversal near the second support/resistance level
  • Weekly candle close just outside the third support/resistance level so a retest back to 2.1458 is very likely
  • Daily/Weekly outlook is very bearish so the Euro could see more weakness
  • Next support is at 2.055, a long way to go
Euro Index Weekly Analysis – 16/03/2015
Euro Index Weekly Analysis – 16/03/2015

Conclusion: Sell Euro on rallies on stronger currencies

Sterling Index

  • As noted from last week, the Sterling Index dropped back to the broken resistance near 2.96 – 2.95 to establish support
  • Question is if the support will be successful, failure to hold prices could see a further decline lower to 2.91 level
  • Weekly candlestick is bearish engulfing both the highs and lows from last week
  • Daily candlesticks show price stalling near the potential support zone
  • On both daily and weekly price is above their respective EMA’s so we assume that the uptrend is still intact
Sterling Index Weekly Analysis – 16/03/2015
Sterling Index Weekly Analysis – 16/03/2015

Conclusion: Start adding small positions to GBP longs

Yen Index

  • The weekly doji three weeks ago saw a bearish follow through back to the support zone
  • Price is held by the weekly EMA in the support zone
  • On the daily, the Yen formed a close to bearish engulfing pattern indicating short term strength to continue in the Yen
  • Ideally, we expect a break lower and then a retest for the declines to continue
  • Daily charts also show a fake break out from the small triangle pattern
Yen Index Weekly Analysis – 16/03/2015
Yen Index Weekly Analysis – 16/03/2015

Conclusion: Take or hold long positions in Yen

Kiwi Dollar Index

  • As noted last week, price retraced back to the support/resistance level at 1.473 and is now back above its weekly EMA
  • Daily charts show a lower high being made indicative of a decline lower
  • Candlesticks do not offer any conclusive evidence of price action
  • We are inclined to be biased to the downside on account of the lower high
Kiwi Dollar Index Weekly Analysis – 16/03/2015
Kiwi Dollar Index Weekly Analysis – 16/03/2015

Conclusion: Continue to hold NZD shorts but only against stronger currencies or currencies that have an upward bias.

US Dollar Index

  • Price action is at an all time high and just a few pips from the all time resistance at 2.016
  • Daily or weekly candlesticks do not offer any insights
  • It would be best to stay out of the USD pairs this week and see how things unfold
  • The main question is will the Dollar index break out from 2.016 or will we see a sharp correction from here
  • Any declines will be halted near 1.96 levels so despite the sell off, USD remains a buy
US Dollar Index Weekly Analysis – 16/03/2015
US Dollar Index Weekly Analysis – 16/03/2015

Conclusion: Stay aside USD this week

Prepared with LiteForex Currency indices

Based on the above analysis our recommendations are as follows:

  • Buy GBPCAD from 1.8623
  • Sell GBPAUD on a rally or sell at market targeting 1.8927
  • Buy GBPNZD at market