Weekly Currency Index Technical Analysis – 19 January

Currency Index Notes

Last week’s SNB induced volatility has thrown most of the analysis out of gear. We would therefore recommend caution this week. According to our trading strategy and analysis, readers who followed our recommendations from last week, would have had no exposure to the Swiss franc volatility last week.  From our trade recommendations from last week, NZDJPY moved as expected including AUDUSD despite the volatility (where we mentioned our readers to cover to break even as soon as possible). The only loss was that of the EURUSD.

AUDLFX

  • Weekly candlestick has resulted in a bearish engulfing candlestick
  • This week’s high coincides with an intermediate low in the downtrend, indicating that we could see possible downside moves in the Aussie this week
AUDLFX Weekly Analysis – 19/01/2015
AUDLFX Weekly Analysis – 19/01/2015

Conclusion: Look to short AUD against extremely strong currencies

CADLFX

  • The bearish continuation is expected as the low of the piercing line was taken out
  • The spike and failure to close below or near the falling trend line indicates potential bullish retracement this week
  • We could therefore expect CAD to rise for at least the first half of the week
CADLFX Weekly Analysis – 19/01/2015
CADLFX Weekly Analysis – 19/01/2015

Conclusion: Long positions in CAD recommended but cover to Break even ahead of ECB and BoC meetings

CHFLFX

  • The volatility this week has led us to take a longer term view from the monthly charts
  • The resistance level at 2.0471 and 1.9797 has been broken and we could expect to see a retest back to this level in the longer term
  • Swiss franc is at the resistance of the price channel, so a decline is expected, but we would prefer to wait for a clear confirmation
CHFLFX Weekly Analysis – 19/01/2015
CHFLFX Weekly Analysis – 19/01/2015

Conclusion: Keep an eye out on the Swiss Franc. No clear trade bias for this week

EURLFX

  • The break out to the downside has left quite a bit of distance on the table
  • The spike/rejection near support of 2.1653 – 2.155 could possibly see a retest back to 2.20 – 2.21 and even to the break out level higher up at 2.28
  • Friday’s candle formed a doji near the support and price could head either way
  • 2.14 – 2.15 is a strong support level to watch for
EURLFX Weekly Analysis – 19/01/2015
EURLFX Weekly Analysis – 19/01/2015

Conclusion: Stay aside for this week, price action shows a potential upside bias, but we need more confirmation.

GBPLFX

  • The break down from the consolidation pattern shows scope for a potential retracement
  • Price was sharply rejected near 2.83 levels and we could see a retracement back to 2.88
  • Expect GBP to likely turn bullish this week
GBPLFX Weekly Analysis – 19/01/2015
GBPLFX Weekly Analysis – 19/01/2015

Conclusion: Best to stay aside and wait for price to retrace back to the break out level.

LFXJPY

  • Plotting a price channel, we find price ranging between the support and resistance levels plotted
  • Price bounced off the 200-day EMA
  • Weekly candlestick is confusing as it points to an outside bar
  • Price on the weekly charts did not however drop to the 52-week EMA
LFXJPY Weekly Analysis – 19/01/2015
LFXJPY Weekly Analysis – 19/01/2015

Conclusion: Look to the daily candlesticks for bearish patterns near resistance and look to take long positions in Yen.

NZDLFX

  • Price declined as expected from the resistance level last week
  • Support was found on the daily charts trend line with Friday closing bullish
  • The support level looks strong as a confluence of 200-day EMA and the trend line
  • The marked support level at 1.4855 was broken, so a rally to test this for resistance is quite likely
NZDLFX Weekly Analysis – 19/01/2015
NZDLFX Weekly Analysis – 19/01/2015

Conclusion: Long NZD but don’t hold for more than 2 or 3 days

USDLFX

  • The US Dollar fell from the highs but managed to find support near the daily trend line
  • We notice a decent reversal/rejection near the marked support level at 1.868
  • A retest to the hammer low at 1.9132 could pave way for future direction
  • From the weekly, the bearish candlestick after the doji, right near the top is a cautionary sign
USDLFX Weekly Analysis – 19/01/2015
USDLFX Weekly Analysis – 19/01/2015

Conclusion: USD weakness is coming, but we need a clear confirmation of the same

Prepared with LiteForex Currency indices

Ideal Currency Pairs to trade this week

  • NZDJPY: Look to short from 91.85 with stops above 92.28, targeting 89.5
  • USDJPY: Look to short from 118.4 – 118.5 with stops above 120, targeting 113.5