Wednesday, 15 June 2011

EUR/USD Potentially Another (Bigger) Head and Shoulders Top

With the EUR/USD moving lower, I can now see a potential Head and Shoulders Top formed over the past two weeks or so, marked in upper case. A break below 1.43 would confirm, and offer an initial target of 1.39 (1.43 minus the height of the Head). The smaller head and shoulders first noted on June 10 GMT is marked in lower case. Beautiful, so far.... but let's not get ahead of ourselves, or the market. 

EUR/USD Moves Lower

12 hours ago or so the EUR/USD trend looked to be turning back up, but the market has reversed lower, back below the 40 day moving average. At this time frame, the trend is not clear, however the hourly chart provides a clear edge...

The market has moved below the trend line formed from the late May lows. The trend is down at this time frame. A move below 1.43 would raise the odds that the trend at higher degree (daily chart) is turning down.

ASX 200 Potential For Double Bottom Fades

The potential for a double bottom on the ASX 200 has faded, with the market returning to its trading range. Given that the larger degree trend (daily chart) is down, the odds favour a break out to the down side. 

AUD/USD Chart Updated With Overnight Action

Overnight the AUD/USD tested yesterday's bullish scenario trend line. Why am I interested in this, given that I think a broadly sideways move is most likely, and given that I have stated previously that the bigger picture favours a turn lower? We must always keep our eyes wide open to new signals that the market is sending us. The three moving averages (40, 18, and 4 day) are all very close together, and if (IF) we see an upwards break of the trend line, all three will be very close to crossing bullishly at the same point. Many of the strongest moves I have seen have followed immediately after such triple crosses. So, it's worth keeping an open mind about the AUD/USD.  

EUR/USD Trend Turning Up

With the bullish 18 / 40 day moving average cross we must consider the trend to be turning up.