Weekend Update on Majors

EURUSD broke out of inner range @1.1210/15 having made a W bottom and 1.1450 is the next stop. W bottom target is 1.16. Also for the 1st time over a year this pair closed above 200SMA. which is bullish although I am not sure this IS the change of trend. Nevertheless, 1.1450 resistance looms large with RSI getting overbought and is a perfect spot to take profits and short. But if euro gets past this level, then 1.1685/1.1750 should come next.

 I am long from 1.1210 with a little top up around 1.1275 holding to 1.1450


GBPUSD no meaningful change from last weeks analysis. Cable broke out of the ascending triangle but follow thru so far is weak with long daily wicks on both sides . I am long since last Tuesday but patience is wearing thin and now wondering if a test of 1.56 is in the cards.

AUDUSD what seemed to me like Eve and Adam double bottom more looks like descending triangle and a daily break of support @0.7252 will confirm downtrend continuation to target 0.7015/50 range.

USDCAD - last week I mentioned weekly RSI divergence. Well, no divergence till we get a reading below 70 first. Instead my alternative bullish scenario is in play and as expected such crosses as EURCAD and GBPCAD performed spectacularly.

USDJPY - I sold the break of the ST uptrendline @123.81 I mentioned in my last post and managed to accidentally close the position at 122 (annoying) but I will short it on any rebound especially if it gets to 123. Today it opened lower and is testing another rising uptrendline @121.67 and is within 121.54-120.64 support range. I think a test of 120.64 is a near term possibility.

Have a look at Nikkei chart: on a 4th test it closed below a support at 19K since last March. I will happily short it on any rebound.

Have a nice week

Weekend Update on Majors

EURUSD is in a range. The plan is to trade inside both smaller and larger ranges. The middle of the range is at 1.1000/17 area. A range low of 1.0808 has become very important and a break of which will resume downtrend to 1.5000 or lower.

GBPUSD is coiling within Ascending Triangle (Right Angle Triangle) and I am betting on upside breakout. Got a small long position from this Friday @1.5660 (talk about impatience?!). If it breaks upwards, then target is prior high at 1.5862/1.5920 area which happens to be Fib 50% retrace from last year high to this year low as well. 

If it breaks down below uptrendline (sub @1.5500 currently), then this pair targets 1.5200 first. 

Another target:  June 17 high to July 07 low is roughly 590pips long. Subtracting it from 1.5670 high arrives at a downside target of 1.5080.

AUDUSD monthly support @0.7250 held and below that the next monthly support @0.7000/15 is next. Weekly RSI is showing a nice divergence and I am willing to play the long side. I would like to buy @0.74285 and target 0.7585-0.7600. I also see a mini Eve and Adam Double Bottom on a daily chart is  which is encouraging as it showed up after 800+ pips fall since May 12th. This pattern is 180pips wide and from its neckline @0.7430, we arrive at a measured target of 0.7610.

USDCAD is the weakest and is highly correlated to crude oil. Latest weekly high came on RSI divergence and either a break below 1.30 or weekly RSI close below 70 will confirm the divergence to target 1.2779-2800 area, to begin with. On a daily chart, I am also waiting for a small uptrendline break to confirm retrace.

Aware that my analysis suggests bearish USD stance, I am willing to trade trend continuation on the long side if USDCAD breaks through trendline drawn from recent highs.If this pair weakens further, then I will also look at the cross currency play via EURCAD or GBPCAD.

USDJPY - last 3 weeks had long upper wicks, so some parties are definitely buying the yen. It is in a congested zone with many support ranges below. Currently I am watching a short term daily uptrendline for a break. On the other hand bearish engulfing candle a couple of days ago gave no follow thru and I will be watching to buy at its high should price reverse higher instead.

Good luck next week

Setups I am watching

Hope you all had a nice weekend and recharged your batteries for this week. I hope this week brings us a lot of pips and points :)

News out of China are not conducive to risk at all. Just a quick look at Hang Seng index confirms a downtrend break and it currently is sitting at a support.So better hold at 22440. Accordingly, Ozzie and New Zealand Dollars are also having rough time  

AUDUSD Weekly

 Daily

4 hourly

NZDUSD Daily

USDJPY Daily

 4 hourly

AUDJPY Daily

 4 hourly

 EURJPY 4 hourly

Finally Dax30 - German export powerhouse is showing signs of exhaustion....no wonder given what is happening to Hang Seng. Get the chute ready?

Good luck

Updates

Short Opportunities

Call it a complex H&S with double heads or a double top but WTI Crude Oil finally broke down out of its 2 month long range today to close below 95. If 50SMA holds, then 95/95.50 should be a good opportunity. On sentiment front, hedgies apparently are extremely long positioned which supports our short idea.

Another short candidate is EURUSD which closed below its 50SMA and an uptrendline dating back to November. Admittedly, it is currently sitting at a major support range of 1.3245/85 and still above another uptrendline dating from late July. Should support hold, then we will likely retest broken uptrendline.

P.S. Cable had a range of 260 pips today. I am wondering whether we are in for a pause in selling?

One more chart: AUDJPY Ascending Triangle breaking down instead?

Trading trendlines with RSI

It has been a long time since I last posted on my blog. Mea culpa! It is not a good reason but all I can say is that trading actively keeps me busy and after a day's work all I want is to switch off.

Anyhow, the topic that I wanted to share with you is that of trading trendlines wit RSI. I did a couple of my own studies on this amazing indicator and to my surprise found lots of things that TA books do not even mention. I already started trading using my new found knowledge and to be honest I am excited. I would therefore like to share my findings with you. This post will be the first one in the RSI series articles,

Usually, a trendline that one draws on price and on RSI break down or out more or less at the same time. That would be a good trade since you are getting 2 confirming signals simultaneously. But what is more exciting is when RSI closes below or above the trendline ahead of the price. Check this 4h EURUSD chart:

In all four cases RSI broke its trendlines first, telegraphing us urgently that an uptrend/retrace/consolidation is about to come to an end. More importantly, it told us that those trendlines that we drew on EURUSD are about to get seriously violated. I want to underline that RSI trendline break means very high probability price trendline break.

This is an hourly chart showing in more detail the latest decline. Note how another trendline got broken down first, then EURUSD retested it and rolled over.

A couple of Dos and Don'ts:
 - drawing trendlines on RSI is very subjective. So draw using visible price swing highs and lows
 - do not draw steep trendlines on RSI as they will not work
 - wait for RSI to break and close below/above its trendline before you put your position on
 - stops must be at price swing highs for shorts and swing lows for longs.

In my next post, I will elaborate on RSI swing highs and lows

Good luck

Breakout opportunity in Gold

The chart speaks for itself

Good luck

Nasdaq100 futures

I thought I show some important levels to short. If this index closes at or above 2590 (above two long candles on 4H chart below), then 2624 is the likely minimum upside target

Good luck