Weekly Currency Indices Update: 04 – 08 May 2015

Candlestick Patterns (Daily, Weekly)

Index Daily Weekly
AUD Bearish DCC 3 days ago. No specific pattern identified on Friday’s close Bearish with a shooting star like candlestick. No specific pattern identified
CAD Bearish since the last 3 candles. No specific pattern identified Doji, one candle ago with a bearish candlestick
GBP Bearish engulfing on body one day ago, followed by a large bearish candlestick on Friday’s close Bearish candlestick. No specific pattern identified
JPY Bullish since past 5 daily candles after a bullish engulfing on 27/04. No specific pattern identified Bullish for the past 3 weeks after a bullish engulfing on 12/04
NZD Bearish for the past 3 candles after a bearish engulfing pattern formed on 29/04 Second week of bearish continuation after previous week formed a bearish engulfing pattern
USD Inside bar break out on Friday Third week of bearish continuation after bearish engulfing was formed on 12/04

Technical Analysis

Australian Dollar Index – AUDLFX (1.5208)

  • Weekly chart shows price breaking from the previous lows at 1.5355
  • Decline is identified by a bearish triangle/pennant pattern with a minor retrace to 1.5355
  • Measured move indicates further downside to 1.368
  • The potential double top at 1.654 to the lows at 1.5355 indicates a measured move target to 1.41
  • The region of 1.41 – 1.368 marks a previous support/resistance level, around 10th May 2009 and 2nd April 2006 on the weekly charts
  • A close below 1.492 will indicate a continuation to the downside
  • From the daily charts, AUD attempted to break above previous resistance at 1.5355 region but failed. Previous reversal at this level was a doji followed by a bearish candlestick pattern and the most recent price action at this level was a strong bearish decline
  • Immediate target to the downside is 1.5, where there is a strong support on the daily (this view comes close to the weekly’s potential target of a close below 1.492).
  • From the H4 chart, there is a minor trend line break, which indicates a possible pull back to 1.524 (about 40 pips from current levels)
AUDLFX - Weekly Chart, 04/05/2015
Australian Dollar Index – Weekly Chart, 04/05/2015
AUDLFX - Daily Chart, 04/05/2015
Australian Dollar Index – Daily Chart, 04/05/2015

Australian Dollar – Conclusion: Aussie could be bearish this week targeting 1.5 lows. A break below 1.5 could spell a longer term weakness in the currency. It would be best to short AUD against other stronger currencies with the potential to size the trade to exit partially when 1.5 is hit while holding the remaining position to eye the larger move.

Canadian Dollar Index – CADLFX (1.593)

  • Resistance on weekly chart is identified at 1.593, where the weekly candle has closed
  • To the downside, a pending test of support sits at 1.5605
  • Plotting the median line, we can see why price formed a doji and followed by a bearish candlestick
  • A test to 1.5605 looks imminent from the weekly charts
  • From the daily charts, price action consolidated near 1.6155 – 1.6075 and failed to break higher.
  • This resistance level was previously a support level
  • Median lines plotted shows a possible retracement to 1.599 – 1.593
  • A break outside the lower median line could then see an initial target to 1.5740 and a break lower will target 1.5605
  • Risk to this view is the longer term falling trend that was previously broken.
  • Current price action is close to retesting the break out of the falling trend line which if holds, could see price turn bullish
  • But the risk of such an event is very minor
CADLFX - Weekly Chart, 04/05/2015
Canadian Dollar Index – Weekly Chart, 04/05/2015
Canadian Dollar Index - Daily Chart, 04/05/2015
Canadian Dollar Index – Daily Chart, 04/05/2015

Canadian Dollar – Conclusion: The Canadian dollar looks bearish and until we see a test to 1.574 we do not expect any major moves to the upside. It would therefore be recommended to look to short the Canadian dollar against stronger currencies.

British Pound – GBPLFX (2.9325)

  • The British Pound has run into a longer term resistance near 3.011 – 2.937
  • It is unlikely that this resistance will be broken and therefore we can expect to see a downside move
  • Support comes in at 2.793 – 2.719
  • Plotting the pitchfork, we notice price interacting with the median line and declining in this area of resistance
  • The minor rising trend line however needs to be broken in order to clear way for more declines
  • On the daily chart, we notice price now close to the minor trend line
  • On a break, we could expect a retracement to 2.9370 following which downside targets would be the immediate support at 2.912 followed by 2.847
  • The pitchfork plotted on the daily shows a considerable resistance at 2.912, so this is an important level to watch
British Pound Index - Weekly Chart, 04/05/2015
British Pound Index – Weekly Chart, 04/05/2015
British Pound Index - Daily Chart, 04/05/2015
British Pound Index – Daily Chart, 04/05/2015

British Pound – Conclusion: Look for a break of the trend line and a retest to 2.9370. Only on break of support at 2.912 can we expect to see a sharper decline in the currency. When price retraces to 2.937 or on break of 2.912, sell British Pound

Japanese Yen – LFXJPY (62.002)

  • There was a strong support/resistance area between 61.11 – 60.12
  • Price action formed a small bullish engulfing on body, three candles ago in this region and followed up by a break out
  • We could now expect a dip back to 61.11 before price heads higher
  • To the upside, 64.14 is a price zone that needs to be broken to post fresh highs
  • Price action from the daily charts is more evident as we notice price breaking out from the falling price channel
  • Friday’s close came in the region of 62.31 – 62.02 a previous support/resistance level
  • We could now expect a decline down to 61.11 before price starts to rally
Japanese Yen Index - Weekly Chart, 04/05/2015
Japanese Yen Index – Weekly Chart, 04/05/2015
Japanese Yen Index - Daily Chart, 04/05/2015
Japanese Yen Index – Daily Chart, 04/05/2015

Japanese Yen – Conclusion: Look to buy Yen in the short term against weaker currencies and once price drops to 61.11, look to sell the Yen

New Zealand Dollar index – NZDLFX (1.4606)

  • Price is mostly ranging on the weekly charts between 1.511 and 1.407
  • To the upper range at 1.511, there seems to be a triple top kind of pattern formed, while to the lower end at 1.407 the double bottom is weak
  • For now, we can expect the Kiwi Dollar to post declines to 1.407 which if breaks could see a decline to 1.303, the triple top target
  • On the daily charts, within the range of 1.511 and 1.407, we notice the trend line being broken followed by a quick pullback to the region of 1.4985 – 1.491
  • Immediate support comes at 1.4535 – 1.446 and we could expect a bounce from here
  • A break below 1.4535 – 1.446 is required to expect a move to the lower weekly range of 1.407
Kiwi Dollar Index - Weekly Chart, 04/05/2015
Kiwi Dollar Index – Weekly Chart, 04/05/2015
Kiwi Dollar Index - Daily Chart, 04/05/2015
Kiwi Dollar Index – Daily Chart, 04/05/2015

New Zealand Dollar – Conclusion: Look to sell the Kiwi dollar on a bounce from 1.4535. We expect a bounce to be a bit longer this time, towards 1.476, which makes for an ideal target to sell the currency from.

US Dollar Index – USDLFX (1.9372)

  • From the weekly charts, price action found resistance at 2.0135 – 1.9860, previously held at October 2008 and then briefly retested around February 2009
  • Support comes in at 1.875 through 1.8475 and we expect price to drop and test this support level
  • From the daily charts, price has reversed and we expect the current rally to stall near 1.947 through 1.9595
  • The bounce from current levels is also validated by the interaction with the median line and a short term support /resistance level at 1.9345 – 1.922
US Dollar Index - Weekly Chart, 04/05/2015
US Dollar Index – Weekly Chart, 04/05/2015
US Dollar Index - Daily Chart, 04/05/2015
US Dollar Index – Daily Chart, 04/05/2015

US Dollar Index – Conclusion: US Dollar Index could see short term strength. It is therefore best to stay aside and wait for how price action forms near 1.947 through 1.9595. Any bearish indications here, should be a sign to sell the US Dollar upon break below 1.9345 – 1.922

Euro Index – EURLFX (2.1690)

  • The Euro Index found unusual support near 2.1305 through 2.109 and saw a sharp demand pushing price higher
  • To the upside, the Euro index is likely to hit resistance at 2.2175 through 2.1960
  • From the daily charts, we notice price breaking the trend line and dipping lower to find support.
  • In the short term, 2.15 is a support level most likely to be tested
  • A dip from here (2.15) will be a good level to go long on the Euro against weaker currencies
Euro Index - Weekly Chart, 04/05/2015
Euro Index – Weekly Chart, 04/05/2015
Euro Index - Daily Chart, 04/05/2015
Euro Index – Daily Chart, 04/05/2015

Euro Index – Conclusion: Wait for the Euro Index to drop to 2.15. Preferably some kind of bullish candlestick price action at this level will offer some great trading opportunities to be long on the Euro

The views and opinions expressed in the analysis Weekly Currency Indices Update: 04 – 08 May 2015 is purely for educative purposes and should not be construed as trading advice. Forexpromos.com is not liable for any losses you might incur as a result of the above analysis.

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