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Lots of opportunity last week!

February 16, 2020

Last week: There were some great trend-line breakout trade opportunities last week, all based on charts posted in my analysis, and so I hope you caught some of these moves! There were trend line breakout trades on: Oil for $2.20 (still going), Gold for $13, the SPX for 45 points, the Cable for 130 pips and on the ASX-200 for around 55 points. The plan this week remains the same: watch for any momentum-based trend line breakouts.

 

Coronavirus fear remains in check, for the time being at least, but it is the next few weeks that will be critical as the health impact on countries outside of China is evaluated. You would hardly know there is a back drop of potential fear with the ASX-200, S&P500, NASDAQ, DJIA and DAX closing the week at new all-time Highs. However, as noted over recent weeks, it is important to keep in mind that this analysis is Technical and chart-based but that any major Fundamental news items, as recently seen with Coronavirus, have the potential to quickly undermine identified chart patterns. This is why it is critical that traders appropriately manage their trade exposure and risk per trade.

 

Trend line breakouts and TC signals:  There were many great trend line breakout trades last week. Articles published during the week can be found here, here, here and here:

  • S&P500: a TL b/o for 45 points.
  • ASX-200: a TL b/o for 55 points.
  • GBP/JPY: a TL b/o for 60 pips.
  • Oil: a TL b/o for $2.20.
  • NZD/USD: a TL b/o for 50 pips.
  • GBP/USD: a TL b/o for 130 pips:

 

GBP/USD 4hr: the chart from early in the week:

 

GBP/USD 4hr: note how the ADX was a great clue here for this 130 pip breakout move:

 

  • Gold: a TL b/o for $13:

 

This Week: (click on images to enlarge):

 

    • DXY: US$ Index: The US$ index closed with a bullish weekly candle and a review of the FX Indices can be found through this link.

 

    • US Holiday Monday 17th February: this is to honor George Washington, the first President of the United States.

 

    • Indecision weekly candles: these have raised their ugly head again on: TLT (Doji), Gold (Inside), AUD/JPY (Spinning Top), NZD/USD (Spinning Top), GBP/USD (Inside), USD/JPY (Spinning Top) and GBP/JPY (Inside).

 

    • Oil: I have been warning traders over the last 5 weeks to watch for any mean reversion on Oil, especially given the bullish-reversal descending wedge forming up on the 4hr chart, and this finally evolved last week. The wedge breakout is up currently $2.20 so watch for any continuation.

 

    • AUD/USD: the Aussie closed with a bullish-reversal Morning Star pattern so traders would be advised to keep an open mind here.

 

    • S&P500: this chart is for all the traders asking how long this S&P500 rally can keep going for. I suspect similar questions would have been asked midway during the previous breakout phases!

 

S&P500 yearly: for those wondering how long this rally can extend:

 

 

    • DJIA weekly: has closed with a bullish weekly candle and at a new all time High:

 

 

    • NASDAQ composite weekly: has also closed with a bullish weekly candle and a new all time High:

 

 

    • DAX: The DAX has finally made a weekly close above the previous all time High, circa the whole-number 13,600. The index closed with a bullish weekly candle so watch for any continuation. Remember, ceilings become floors!

 

DAX weekly:

 

 

    • Russell-2000: The Russell-2000 is often viewed as the ‘Canary in the Coal Mine’ for US stocks but the index closed with a bullish weekly candle. Watch trend lines for any new breakout:

RUT weekly:

 

 

    • VIX weekly: the Fear index closed with a bearish weekly candle and back below the 14 threshold. Note the revised bear trend line:

 

VIX weekly:

 

 

Calendar:    Courtesy of Forex Factory:

 

 

 

Earnings:    Courtesy of Earnings Whispers: It is another busy week for earning. Watch on Tuesday for impact from Walmart’s earnings:

 

 

Markets:

S&P500: SPX:  The S&P500 closed at a new all-time High and this bullish action gave a great 4hr chart Bull Flag breakout trade for up to 45 points last week. There are revised 4hr chart trend lines to monitor for any new breakout so watch the ADX momentum indicator for clues about this next move: whether it be up or down!

As noted last week: any accelerated concern with Coronavirus could turn market sentiment in a heartbeat and reverse the broader uptrend of this index. That is why traders need to carefully manage their trade exposure and risk per trade. For the time being though, the weekly chart still shows higher Highs and higher Lows being printed which is the definition of an uptrend.

Bullish targets: any 4hr chart trend line breakout above 3,400 would bring the whole-number 3,500 into focus. 

Bearish targets: any bearish 4hr chart support trend line breakdown would bring 3,300  into focus.

  • Watch for any 4hr chart momentum-based trend line breakout:

 

 

ASX-200: XJO: The ASX-200 closed with a bullish weekly candle, and at a new weekly all-time High, which is bringing the 7,150 level into focus. This bullish move generated a decent triangle breakout trade for around 55 points last week and there are revised 4hr chart trend lines to monitor for any new breakout.

As mentioned last week: the ASX-200 continues to hold up pretty well considering the situation with Coronavirus, the ongoing Aussie drought and recent devastating bush fires. The fact that the index is still holding above pre-2020 Highs is pretty remarkable and I remind folk here of the trading saying that ‘Old resistance becomes new Support‘. I’m not making any predictions here but, whilst the index holds above 6,851.50, the pre-GFC High, there doesn’t seem to be any reason to be bearish. There are daily and weekly support trend lines in place and, until these are broken, the trend remains up.

Bullish targets: Any bullish 4hr chart trend line breakout above 7,150 will bring 7,200 into focus. 

Bearish targets: Any bearish 4 hr chart support trend line breakdown below 7,100 would bring 7,000 followed by the pre-2020 High of 6,893.70 into focus.

  • Watch for any 4hr chart trend line breakout:

 

 

Bonds: TLT Bond ETF: The flight to safety Bond ETF closed with another bearish-coloured indecision Doji weekly candle as uncertainty remains on the full impact of Coronavirus.

Price action is holding above the 144 S/R level and note the revised triangle trend lines on the daily / weekly charts.

NB: My charting software still has a bullish Wave 5 in progress so watch for any new push to 150 S/R.

Bullish targets: any bullish triangle breakout would bring the whole-number 150 into focus.

Bearish targets: any bearish triangle breakdown would bring the 144 S/R and the support trend line followed by the 135 S/R level back into focus.

  • Watch for any triangle trend line breakout:

 

 

Gold:  Gold gave a great trend line breakout trade for $13 last week and, whilst this bullish breakout may keep going, I have revised the 4hr chart trend lines.

The precious metal closed with a bullish coloured, almost ‘Inside‘, candle reflecting some indecision but watch for any continued march up to $1,600 S/R.

Daily chart Bull Flag details: Recall that there is a broader Bull Flag breakout in progress on Gold (see daily chart below). The length of the Daily chart’s Bull Flag pole is about $300 and, according to technical theory, this could be the expected move on any bullish Flag breakout (see daily chart). This Bull Flag breakout remains in progress and brings the $1,790 region into focus; this being the target of the $300 Flag pole above the $1,490 breakout level, and this target is up near previous S/R at $1,800 for added confluence.

Bullish targets: any bullish continuation would bring $1,600 back into focus on the way to the daily chart’s Bull Flag target, circa $1,790 and, then, $1,800.

Bearish targets: any bearish break of the support trend line would bring $1,550 back into focus.

  • Watch the 4hr chart’s support trend line and for any new make or break from current levels:

 

 

Oil: Oil has finally printed a bullish weekly candle, after 5 consecutive bearish ones, and it was essentially a bullish engulfing candle at that! I had been warning traders to watch for any mean reversion here, especially with the bullish-reversal descending wedge forming up on the 4hr chart and this finally evolved last week. The wedge breakout is up $2.20 so watch for any continuation. Caution is obviously needed given the potential for Coronavirus to impact market sentiment so manage any trade size and risk appropriately.

Bullish targets: any continued 4hr chart bullish wedge breakout would bring $58 and, then, $60 S/R back into focus as the latter is near the 61.8% Fibonacci retracement of the recent 4hr chart swing Low move.

Bearish targets: any bearish retreat would bring $50 back into focus.

  • Watch for any continued 4hr chart wedge breakout:

 

 

EUR/USD:  The EUR/USD closed with another large, bearish engulfing weekly candle and just above 1.08 making this the new support level to watch for any new make or break.

Bullish targets: any bullish bounce up from 1.08 would bring 1.09, 1.10 and, then, 1.11 into focus.

Bearish targets: any bearish break below 1.08 would bring the 20-yr support TL into focus.

  • Watch 1.08 for any new make or break and for any channel breakout:

 

 

AUD/USD: After 6 consecutive bearish weekly candles, the Aussie has finally printed a bullish one and, whilst this has a bit of an indecision-style Spinning Top look to it, the last three candle are shaping up with a bit of a bullish-reversal Morning Star formation:

 

AUD/USD: Morning Star?

 

As noted over recent weeks: price action has been hit hard here with the Coronavirus situation due to broad-based economic growth concern but, also, because of the fact that China is Australia’s largest trading partner and the impact on Tourism, Education and Trade could be considerable. Not much has changed here as the world monitors the spread of the virus outside of China. Any positive news on the health front could trigger a relief rally here, even if only temporary so traders need to watch for momentum-based trend line breakouts.

The AUD/USD closed just above the 0.67 level again keeping this the one to watch for any new make or break and there are revised 4hr chart triangle trend lines to monitor as well, BUT, note the declining momentum on the 4hr chart!

Don’t forget that there is a larger, bullish-reversal descending wedge setting up on the daily / weekly charts so keep an open mind here: as always, watch for momentum-based trend line breakouts!

Bullish targets: Any bullish 4hr chart triangle breakout would bring 0.68 followed by the 4hr chart’s 61.8% fib, near 0.69, into focus.

Bearish targets: Any bearish 4hr chart triangle breakout would bring 0.66 into focus.

  • Watch for any momentum-based 4hr chart triangle breakout:

 

 

AUD/JPY:  The AUD/JPY closed with a bullish-coloured Spinning Top weekly candle just under the 74 S/R level keeping this as the main horizontal level to watch for any new make or break.

Price action continues shaping up within a 4hr chart triangle, on very low momentum though, so watch trend lines for any new momentum-based breakout.

NB: as per previous weeks, AUD/JPY traders should keep an eye on the broader stock market as this currency pairs often trades in tandem with stock market sentiment. A stock market pullback might take the AUD/JPY along for the ride.

Bullish targets: Any bullish triangle breakout would bring 75 and 76 into focus.

Bearish targets: Any bearish triangle breakout would bring 73 and 72 S/R into focus.

  • Watch for any 4hr chart triangle breakout:

 

 

NZD/USD: The Kiwi closed with a bullish coloured Spinning Top / Inside weekly candle but continues to hold above the whole number 0.64 S/R level, albeit on declining 4hr chart momentum.

There are revised 4hr chart trend lines to monitor for any momentum-based breakout.

Bullish targets: any bullish 4hr chart triangle breakout would bring 0.65 into focus followed by the daily 200 EMA and 0.66 S/R level.

Bearish targets: Any bearish 4hr chart triangle breakout would bring 0.64 S/R and, then, 0.63 S/R into focus.

  • Watch for any 4hr chart momentum-based triangle breakout:

 

 

GBP/USD: The Cable closed with a bullish-coloured Inside weekly, reflecting indecision, but above the 1.30 S/R level.

There was a great descending wedge breakout here last week for 130 pips so watch the revised trend lines for any new momentum-based breakout.

Bullish targets: Any bullish 4hr chart triangle breakout would bring 1.31 and 1.31 into focus.

Bearish targets:  Any bearish 4hr chart triangle breakout below 1.30 would bring 1.29 and 1.28 into focus.

  • Watch for any momentum-based 4hr chart triangle breakout:

 

 

USD/JPY: The USD/JPY closed with a bearish-coloured Spinning Top indecision weekly candle under the key 110 S/R level and 5-year bear trend line. This is the resistance zone to monitor for any new make or break.

Bullish targets: Any bullish breakout above 110 S/R and the 5-year bear trend line would bring whole number levels on the way up to 115 S/R into focus. 

Bearish targets: Any bearish retreat from 110 would bring 109 into focus followed by 108.5.

  • Watch 110 for any new momentum-based make or break:

 

 

GBP/JPY: The GBP/JPY closed with a bullish coloured, almost Inside, weekly candle but back above the all important 143 S/R level making this the one to watch for any new make or break.

There are 4hr chart triangle trend lines to monitor for any momentum-based trend line breakout.

Bullish targets: any bullish 4hr chart triangle breakout would bring the 4hr chart’s 61.8% fib and weekly 200 EMA, near 146, into focus.

Bearish targets: any bearish 4hr chart triangle breakout below 143 would bring the 141.50 and 140 S/R levels back into focus.

  • Watch for any momentum-based 4hr chart triangle breakout: