Weekly Currency Index Technical Analysis – 26 January

Currency Index Notes

From last week’s analysis, our recommendation to short NZDJPY resulted in a clear profit, while USDJPY was ranging for most part.

AUDLFX:

  • The weekly bearish flag was indeed validated and price reached its target
  • Friday’s close coincides with the lower support line of the falling price channel
  • We could therefore see a minor bounce from here. It is unsure whether we will a rally or if price will break down from the price channel
  • Note the confluence of the price channel’s support line and a horizontal support level
  • Daily charts indicate a possible retracement to 1.534
AUDLFX Weekly Analysis – 26/01/2015
AUDLFX Weekly Analysis – 26/01/2015

Conclusion: Look to the daily charts after Monday for signs of continued bearish momentum in AUD pairs.

CADLFX:

  • The break out from the rising trend line has been rapid with weekly candlesticks closing below the major support
  • Daily charts shows a second up day with Thursday’s candlestick being a somewhat weaker version of a piercing line formation
  • However, we are not sure until we see price rally and close above 1.553
CADLFX Weekly Analysis – 26/01/2015
CADLFX Weekly Analysis – 26/01/2015

Conclusion: Will need to wait for more confirmation next week, preferably from daily charts

CHFLFX:

  • It seems quite likely that we will have to wait until price closes above the rising price channel’s resistance line
  • Daily charts shows a possible bullish pennant being formed
CHFLFX Weekly Analysis – 26/01/2015
CHFLFX Weekly Analysis – 26/01/2015

Conclusion: Continue to stay aside from CHF pairs

EURLFX:

  • Price stalled right near a support level. We could therefore expect price to move in either directions
  • Daily charts shows a small retracement and then a close near the second support level
  • A bounce could possibly be on the cards this week before the bearish trend resumes
EURLFX Weekly Analysis – 26/01/2015
EURLFX Weekly Analysis – 26/01/2015

Conclusion: Watch for daily time frame candles

GBPLFX:

  • After a break out from the rising wedge pattern, last week closed bullish but price stalled near the support/resistance level
  • We could either see a small rally higher to test the 52 week EMA and the break out price level or we could see a continuation of the bearish trend
  • Daily charts shows a very steep bearish flag pattern
GBPLFX Weekly Analysis – 26/01/2015
GBPLFX Weekly Analysis – 26/01/2015

Conclusion: Look towards shorting GBP pairs against stronger currencies probably after Monday’s close

LFXJPY:

  • Price retraced since last week to test the broken support at 63.63 for resistance and promptly turned lower
  • Support comes in at 60.66 which has confluence with 200 EMA
LFXJPY Weekly Analysis – 26/01/2015
LFXJPY Weekly Analysis – 26/01/2015

Conclusion: It is likely that Yen could turn weaker for some part this week. But recommended to stay aside for now

NZDLFX:

  • Price broke down from a smaller time frame bearish pennant and quickly reached its target
  • Price is close to support but because there was no retracement on break out, we could see a potential rally to test the broken support for resistance
NZDLFX Weekly Analysis – 26/01/2015
NZDLFX Weekly Analysis – 26/01/2015

Conclusion: There is nothing clear in NZD this week, so it is best to stay on the sidelines.

USDLFX:

  • Price declined to find support near the rising trend line and quickly reached higher
  • Failure to make a higher high indicates a potential change of trend in the daily charts
  • Weekly charts shows a doji at the top followed by a bearish candlestick and last week’s bullish candlestick.
USDLFX Weekly Analysis – 26/01/2015
USDLFX Weekly Analysis – 26/01/2015

Conclusion: We will have to wait for the trend line to be broken to confirm a change of trend. Look to daily charts for potential bearish candlestick patterns to short USD against stronger currencies

Prepared with LiteForex Currency indices

Ideal Currency Pairs to trade this week

From the weekly perspective, there are no clear signals for this week. We do note that the US Dollar could possibly turn lower or range but not make any further highs, which should see the start of a correction in the USD. That said, look to the daily time frame for possible clues.

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