Weekly Currency Index Technical Analysis – 23 February

Currency Index Notes:

From last week’s analysis, we recommended to go long on NZDUSD, exit CADJPY longs and to go short on USDCAD. For the week, NZDUSD longs gained +0.4% and USDCAD is -0.53%

Australian Dollar Index:

  • Last week, the Aussie closed bullish after a spinning bottom candlestick pattern. This shows that a retracement to 1.5344 is the next level the Aussie will head to
  • From the daily charts, price managed to close above 1.5128 support level. We expect a dip down to this price point as the ideal set up to go long
  • However, price action could simply continue its bullish momentum and rally towards the 1.5344 levels
Australian Dollar Index Weekly Analysis – 23/02/2015
Australian Dollar Index Weekly Analysis – 23/02/2015

Conclusion: Look for long positions on AUD

Canadian Dollar Index:

  • Last week the Canadian dollar was weaker and the weekly candlestick shows a bearish close
  • Switching to the daily charts, we notice a head fake to the upside before prices declined
  • The fact that this reversal forms near the bottom of the larger bearish flag tells us that prices could fall further before rallying
  • Expect a weaker continuation in the Canadian dollar with a dip back down to test the lower price channel
  • Daily charts shows an inside bar formed during last week followed by Friday’s bearish close indicating weakness in the short term
Canadian Dollar Index Weekly Analysis – 23/02/2015
Canadian Dollar Index Weekly Analysis – 23/02/2015

Conclusion: Look for short positions on the CAD this week

Euro Index:

  • Price has been trading mostly between the support and resistance levels
  • Thursday’s price action on the daily charts shows a strong doji reversal pattern forming followed by Friday’s small bearish close
  • These patterns indicate indecision and as such the Euro has still not made up its mind on direction
  • On the weekly charts we notice last week also closing in a doji
Euro Index Weekly Analysis – 23/02/2015
Euro Index Weekly Analysis – 23/02/2015

Conclusion: Stay aside Euro currencies this week

Sterling Index:

  • Last week closed with a doji and the appearance of this at the top is indicative of a possible indecision
  • Although price remains supported above the 2.96 – 2.95 price zone, we can expect a decline down to this level from current 2.98 price point
  • From the daily charts we notice a three bar reversal with a lower high on either ends after Thursday’s high
  • So we suspect that a decline to test the support at 2.96 – 2.95 is very possible
Sterling Index Weekly Analysis – 23/02/2015
Sterling Index Weekly Analysis – 23/02/2015

Conclusion: Wait for the support to be tested to go long, or short GBP but not more for a day or two

Yen Index:

  • Price continues to trade within the falling price channel but there seems to be a support formed near 60.94 levels
  • Friday’s candlestick closed bullish, engulfing Thursday’s small bodied candlestick, indicating a possible upside move on the horizon
  • From the weekly charts we notice two straight weeks of indecision after the bullish engulfing was formed three weeks ago
  • Looking closer on the daily charts, price seems to form a bullish pennant pattern with a potential upside break out, which gives a target to the previously marked resistance level at 62.6 – 62.7 levels
Yen Index Weekly Analysis – 23/02/2015
Yen Index Weekly Analysis – 23/02/2015

Conclusion: Look for short positions in the Yen this week

Kiwi Dollar Index:

  • A piercing line candlestick formation three weeks ago has resulted in a strong rally in the Kiwi Dollar Index
  • Weekly candlesticks show price at dynamic resistance of the 52 week EMA
  • An unfilled gap at 1.4419 looks ideal for a drop with also shows confluence with the trend line
  • On the daily charts price action has been showing indecision so we expect a potential drop to the gap before rallying towards the eventual target of 1.4731
Kiwi Dollar Index Weekly Analysis – 23/02/2015
Kiwi Dollar Index Weekly Analysis – 23/02/2015

Conclusion: Look to short NZD for the first part of the week or go long when support is tested at 1.4419

US Dollar Index

  • On the daily charts, price action has broken out from the rising wedge pattern with a small retest to the break out level + past resistance level at 1.9391
  • Expect to see a decline this week down to 1.87 level
  • There is the trend line which comes in as the first support so watch for some bounces from this trend line before the decline
  • We expect another retracement to happen on breaking of the trend line
  • From the weekly charts, last week closed with a lower high although prices were bullish.
US Dollar Index Weekly Analysis – 23/02/2015
US Dollar Index Weekly Analysis – 23/02/2015

Conclusion: Stay short on USD against stronger currencies

Prepared with LiteForex Currency indices

Ideal Currency Pairs to trade this week

  • GBPUSD: Expect to see a decline and then a rally. We prefer to wait to buy the dips instead
  • AUDUSD: Remain long on AUDUSD or look for long entries on retracements
  • NZDUSD: Expect a dip before a rally
  • AUDJPY: Take long positions but hold no later than a few days. Intraday longs preferred