AUDUSD - CHART OBSERVATION - Bull Flag ?

EURUSD - Very long-term chart - some perspective.

The chart below is the monthly chart of the EURUSD going back may years. Looking at the longer-term charts allow one to step back and offer a long-term perspective....

It is quote possible, (and this is something I have alluded to in the past) that the price action of the past few years has created a huge 'Bull Flag' pattern, which suggests significant gains for the Euro in the years ahead. (I would add the caveat that this assumes the patterns remains valid, which will probably mean remaining above 1.4000 in the coming months). - In light of this, price action in the past couple of weeks can be seen as part of a re-test and consolidation of the break-out of this pattern. I would expect further consolidation in weeks and months ahead, which suggests that much of the price action may remain between 1.40 and 1.50. - A solid break over 1.5000. I believe would be the start of further significant gains (Though in the current environment I do not think this is likely, whilst back below 1.4000 may start to call into question this particular longer-term view.

One further point, totally unrelated to markets:
As a huge football fan (Soccer for those of you who think carrying a ball is football), this weekend has been the magnificent and the ugly for followers of the beautiful game:

• First the magnificent; what a treat Saturday night was, Barcelona were incredible, a true joy to watch, I have had the pleasure to have seen them in the flesh twice over the past couple of years and they are truly mesmerizing to watch (even though it was against my beloved Arsenal). Saturday night was one of those occasions when 90 minutes was just too short.  - 
• Now the ugly - FIFA - the sooner Blatter and his cronies dissappear into the sunset with a rocket up their arses (asses) won't be soon enough,,, get out of our game and stop killing it...

Have a good day, regards

Steve

EURUSD - Major Bullish weekly pattern or part of downtrend?

The EURUSD continues to show strength consistent with a potential set-up that I have been highlighting  in recent posts, which has the potential to see EURUSD move higher towards the high 1.4000s. However it has a number of hurdles to overcome along the way, including the resistance which has defined the downtrend pretty much since the top in 2008. This resistance is represented by a line which connects Weekly closing highs through 2008 and 2009 and acted as resistance in late 2010. Over the next couple of weeks this line comes in at 1.4040/1.4055, it will be very interesting to see how price acts at these levels, if it does get there.

In the much bigger picture a clear and sustained break over the 1.4040/50 area would favour strongly a move towards much higher levels in the bigger picture and will support a shorter-term move towards the high 1.4000s. The next chart shows a large Bull-Flag pattern which supports this argument. The other option, is that since 2008 we have been in a downward trend, and that this move back towards 1.4000 is just a rally within the on-going downtrend, with the low 1.40s acting as resistance before this trend re-asserts itself.

One argument which leads me to favour the upside, is the rejection of the breakdown of a 'Head and Shoulder' pattern early last year. Often (but not always) failed Head and Shoulders pattern come back to eventually re-test the high of the pattern.

The chart below shows the much bigger picture. The line emphasised on the above chart is shown as the upper line on the Huge Bull Flag pattern.

There is every chance that the next few weeks will lead to some sort of Bullish or Bearish conclusion.

SP500 , Bund, US T-Note, USDJPY, + AUDUSD updates.

SP500


The break up yesterday on the SP500 Index above recent resistance would appear to suggest further gains ahead. Last week I highlighted a number of Bullish Technical Factors supporting the SP500 (Can be seen by clicking here), the breakout of the Neckline of a continuation inverted Head + Shoulders pattern further bolsters this. - Key now will be to see how this performs in the wake of this breakout, I still suspect that we may see a pullback in the next week or so after a probable further push higher, possibly to the neckline of the breakout at 1132 on the SP500, or I suspect perhaps deeper to the gap underlying the the recent consolidation around 1110-1113. - If this occurs, then subsequent price action on this pullback will provide a strong clue as to future direction. Bigger picture I favour a return to the highs of April 2010, if however, the pullback makes a successful break below the 1110 gap, then I may have to reconsider.

USDJPY FX

After last Wednesday's intervention inspired rebound on the USDJPY from a low below 83.00 to almost 86.00 the USDJPY has been consolidating just below 86.00, I still feel a stronger rebound remains a possibility. The pattern on the weekly chart supports this, the past 3 weeks has formed a Bullish 'Morning Star Pattern'. This can be seen on the Weekly chart shown below: Note how the entire downtrend from late April began with the Bearish form of this pattern, a Bearish 'Evening Star Pattern'. Dec 2009 also produced one of these patterns. I also refer back to the analysis I produced last week whereby I noticed a similarity between USDJPY recently and the period in early 2004, this can be seen by clicking here .

Thus far the USDJPY has not yet re-tested the breakout around 84.70, I do not rule this out before this makes further headway, however it is possible that a re-test may not yet occur and the USDJPY forges ahead, this will grow more likely on a sustained break over 85.90/86.00. The daily chart below shows the key resistance around 85.89-93.

BUND FUTURE

The following chart shows the Bund Future (German 10 Year Yield inverted) daily candle chart. The past few weeks have seen a significant retracement of the major June/July rally. Currently I feel this move is an on-going correction, I feel that there may be some further room to run on this move. If this correction does run further, then I have highlighted some levels where I feel this may run to, I have a cluster of supports around 128.20 - 128.45, with a key level just over there at 128.70. I am however keeping an eye on a possible breakout of a Bullish 'Flag' pattern on the US 10 year note future ( I will highlight this on the next chart) should this happen it is probable that the Bund would get dragged higher too, if that proves to be the case then the downside may not have much further to run on the Bund future. 
























US 10 YEAR NOTE FUTURE

The following chart shows the 10 Year Note Future continuation daily candle chart up to last nights close. I have highlighted what I believe is a Bull Flag pattern, this is a continuation pattern, a successful break of this pattern should see a further resumption of the strong rally seen over recent months. Note, this morning the T-note has broken above the upper flag line, however I would prefer to see whether the move is valid in US trading hours. Also, at the risk of missing a big move, I would like to see if any break can hold for a couple of days.

AUDUSD FX


Finally the AUDUSD, this broke above its key resistance of the past year. If this can now hold this break through the week, ideally over 93/94, then this suggests significant gains ahead in coming months for the AUDUSD. - A failure in the wake of the break of resistance could however be a signal of a deeper retrace. though for now I consider this the lesser probability. Weekly momentum studies are supportive, though shorter-term studies suggest immediate further headway and some consolidation are perhaps likely.