FOREX PRO WEEKLY #2, April 23-27, 2018

Sive Morten

Special Consultant to the FPA
Messages
18,564
Fundamentals

Today, guys we will take a look at CAD instead of gold. Here we will use a specific type of analysis, which is cross-sector and take a look at Crude Oil. But first - some words on CAD statistics. Previously we've talked a lot about NAFTA and tariffs issues. Now they take backseat as it seems that some compromise will be found. But declines for the loonie came even as Canada and Mexico said good progress had been made in talks with the United States to modernize the North American Free Trade Agreement (NAFTA).

Second issue that we've discussed is flat BoC policy. As May is coming and this is the month of rate decision, it seems that chances on rate increase stands low:

As Reuters reports - "the Canadian dollar weakened to an 11-day low against its U.S. counterpart on Friday after data showing domestic inflation rose at a slower-than-forecast pace further reduced expectations for an interest rate hike next month from the Bank of Canada. Canada's annual inflation rate in March edged up to 2.3 percent from 2.2 percent in February, the highest level in more than three years, Statistics Canada said. Analysts had forecast a 2.4 percent annual inflation rise.

The Bank of Canada left its benchmark interest rate on hold at 1.25 percent on Wednesday and said it did not know when or how aggressive it would need to be to keep inflation in check.

Chances of an interest rate hike in May have fallen to 27 percent from about 40 percent before the rate announcement."


Now to cross-section analysis. Everybody knows about tight relation between CAD and Crude Oil. Recently Crude Oil behaved rather well which provided good support to CAD and has become one of the major factors for CAD rally, as we've discussed in our previous research

Why we need to talk on CAD right now, because situation there could change very soon. Financial markets very often shows reaction a bit earlier than commodities, and crude oil stands one step from our major target. Setup on crude oil was so important, that we've prepared separate weekly research to it. Analysis that we've made there has worked good and now it is coming to an end. Crude stands near monthly target:
oil_m_23_04_18.png


Upward action is slowed, because price struggles with weekly Overbought. Since our B&B "Buy" trade has started (I keep this chart unchanged) - upside action could be finalized by clear butterfly "Sell" pattern:
oil_w_23_04_18.png


You could ask - what relation to CAD all this stuff has? If you carefully read our previous analysis, we've talked about deep upside retracement that should happen, because market has too strong upside momentum (I mean CAD/USD), which can't be ignored and faded in a blink of an eye. It needs some reverse action. This will let you to take short position, if you've missed initial chances to do it. And current upside action on CAD could be the beginning of this retracement.

COT Report

CFTC data gives nothing new as reversal on CAD is just started. Investors keep net short on CAD, but it stands stable last 4 weeks and not at extreme level:
upload_2018-4-22_14-3-30.png


Technicals
Monthly

Here I keep the link to first research on this subject that was started more than month ago.

CAD has completed first leg down out from 1.3130 weekly resistance. Meantime, monthly CAD keep standing in "Sell" mode, standing in retracement up from strong monthly K-support and Agreement, as downside OP has been hit.

Our context for trading is based here on AB-CD upside retracement and "222" Sell pattern. Setup will be valid until price stands below recent top and keeps trend bearish. As there is just one week till the end of the April, here we need to keep an eye on possible bearish grabber. It could confirm downside action to 1.22 area.

Invalidation point for this setup stands around 1.3130 highs. If grabber will not be formed and price will turn bullish - it could mean that downside retracement is over and CAD could proceed higher, for example, following to our larger scale scenario - larger "222" Buy right from K-support area.
cad_m_23_04_18.png


Weekly

To be honest, guys, setup that we have on weekly chart overextends our suggestion of just deep upside retracement. In fact it could turn everything from top to bottom and make upside continuation on monthly chart real.

As first drop out from strong resistance and Agreement was good, now it has stopped. Two weeks ago CAD has formed bullish grabber. Last week we do not have a grabber but overall price action and appearing of bullish engulfing pattern makes us to expect something serious.

In such circumstances it would be better to not go short. In fact, grabber that has been formed here suggests action above previous top, i.e. above 1.3125. It means that ultimately, we could get no grabber on monthly chart and indeed upside action could continue. So, risk factor stands in place. Right now it is mostly impossible to say - whether it will be just W&R of previous top, or, real upside continuation. One thing we could say definitely - it is not time yet to take position on downside continuation.

cad_w_23_04_18.png


Daily

Daily trend has turned bullish. Within 1-2 weeks we could get a lot of patterns of different scale for trading. Thus, we already have in place weekly grabber and engulfing pattern right at major daily 5/8 Fib support. It means that upside action will take the shape of AB=CD pattern.

Second moment, it is time to recall our uncompleted XOP target. Previously it was really source of disturbing for us. Initially we thought that market will completed and then turn down, but this has not happened. Now this XOP gets special meaning in the light of weekly grabber... As it has theoretical target above 1.3125 - it makes possible XOP completion.

That's why right now we should take off the table thoughts on re-establishing of short positions. We could make suggestions on possible large AB=CD down etc., but currently it looks too blur. On coming week upside action will stand in major focus.
cad_d_23_04_18.png


Intraday

Now intraday setup mostly will be interesting for those who have bullish view on CAD and want to go long.
In the beginning of the week CAD could move slightly higher to complete XOP target around K-resist
ance area:
cad_4h_23_04_18.png


After that pullback should start. This could happen simultaneously with Crude oil upside continuation as it has not hit major target yet for few cents as we saw on the chart in the beginning of research. This should be the time of decision making - whether to go long or not. Currently, it seems that 1.2680 area will be interesting - K-support around WPP. If it will be accompanied by some pattern, say, "222" Buy - all the better.
cad_1h_23_04_18.png


Conclusion:

So, CAD has completed first leg down, but future of second one now stands blur as already some patterns exists that put this perspective under question.
Meantime, now it's not a second leg down but upside retracement stands on the table, that coming week will be dedicated to.


The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.
 
Guys,

İt is a bit late to enter below trade but I would like to share for educational purpose. I couldnt have time to post it sorry.

USD/TRY

Monthly trend turned into a buy and testing expansion clusters of controlling COP + secondary COP.
View attachment 37188

Looking at our daily we have strong dynamic pressure on buy signal and market is retracing due to monthly COP resistance.

View attachment 37189

Finally the daily is testing confluence + OP agreement and the market is oversold. This market can be treated according to B&B + Stretch + Standart Trend Trade (Fading daily sell against weekly and monthly up trends)

View attachment 37190

For stretch plan

Drop two lower TF which is 1hr . Look to exit at 1 hr agreement.

For B&B

Because of market is retracing from montly COP we should look to exit at 4hr confluence around 4.06-4.06 and not wait major F5 at 4.12

For standart trade plan

Target is next OP which will be at 4.26 very high propably.
Stop should be below XOP+F5 agreement. This is a bit long term trade. You should eye spot weekly macd predictor + the montly close for a possible of stop grabber sell signal. İf we loose one of trends we should look to exit ımmediately.


View attachment 37191

UPDATE

All targets have reached for B&B and stretch trades. STP is still in play. That was one the highest possibility trade setup we can see in the markets.

USDTRYH4.png
 
Greetings everybody, let's go back to Gold market.

Gold, as other markets, stands under pressure of rising US yields. As on EUR, here, on Gold short-term bullishs setup also has been broken. Now the most probable destination point is 1300 area on daily chart:

gold_d_24_04_18.png


At the same time today some upside retracement could follow due daily OS and completion of some intraday targets and patterns. Thus, on 4-hour chart gold has completed our AB-CD around 1320:
gold_4h_24_04_18.png


While on hourly chart it takes the shape of "222' Buy pattern:
gold_1h_24_04_18.png


This combination means that upside bounce could happen, at least to nearest 3/8 Fib level around 1335.

Besides, on 4-hour chart we have nice thrust down, that could become a source of DiNapoli direction patterns - either B&B "Sell" or DRPO "Buy"...

It would be better to focus on these setups right now and do not marry any position by far.
 
Greetings everybody,

On Gold market situation is very similar to GBP, that we've discussed today as well, at least on intraday charts.

On daily time frame gold positions looks a bit weaker, because it has no Fib levels, just daily OS, that keeps prices by far. At the same time, if we consider daily picture in complex, it seems that chances on further drop somewhere to 1300-1305 area are not bad. May be not today, not tomorrow but in perspective of 1-2 weeks.
Because, actually gold has failed chance for upside breakout week ago:
gold_d_25_04_18.png


As yesterday price has not reached 3/8 Fib level, we haven't got B&B "Sell" pattern. It means that upside retracement could be triggered by DRPO "Buy" pattern. As major OP target has been reached already price should not drop below 1320 lows, only minor W&R is acceptable. Dropping below lows will mean that downside action will continue and no retracement will happen:
gold_4h_25_04_18.png


On 1H time frame this pattern could take shape of Double Bottom. Potential target of upside bounce is 1342.
gold_1h_25_04_18.png
 
Greetings, guys

It's time to update our CAD view, as first stage of our trading plan mostly is completed. Market has reached daily resistance of 5/8 Fib level, former neckline and daily OB.
As we've discussed in weekly research, before upside action will continue some pullback should happen. Within 1-2 sessions we will get bulk of important data - ECB meeting, IQ US GDP release and others.
cad_d_26_04_18.png


On 4-hour chart we have DiNapoli DRPO "Sell" in place and CAD also could form H&S pattern. As we mostly have bullish context right now, we do not call you to take short position, but mostly watch for deep to go long.
It seems that first suitable level stands around 1.2735-1.2755 K-support. If H&S pattern will be formed, its target also will coincide with this level.
cad_4h_26_04_18.png


Thus, if you look chance to go long and if retracement will start indeed - keep an eye on this level.
 
Good morning,

Gold stands under impact of the same factors - rising US yields and too saturated speculative positions against the USD on the one side and in favor of Gold, EUR etc. on the other side.

It means that GDP impact today, whatever it will be, should be short-time.

As we've suggested, as gold has failed to hold above major support levels on intraday charts and first triangle breakout attempt was failed - downside action to lower border of triangle is logical. Now market stands near daily K-support of 1311-1316 area. Price is not at OS. This level has been tested three times already, that's why it seems that 1300-1305 is more reliable as support on daily chart:
gold_d_27_04_18.png


This is also confirmed by our AB-CD pattern o 4H. Gold has shown just minor reaction on OP target. Next one is XOP @1305:
gold_4h_27_04_18.png


The wedge pattern that you see here, could be really tricky, just because it is usually treated as bullish. But, wedges also could be "patterns of acceleration", when market breaks out in the same direction. Personally, guys, I suspect that here we have precisely this issue. At least, I do not want to trade it long, despite it has good 3-Drive shape on 1H:
gold_1h_27_04_18.png


Definitely it will depend on GDP release. Minimum target stands @ 1326 - top of 2nd Drive. Of course, you could make your own decision on whether to take it or not.
IMO, upside potential is too limited, while downside risks are solid with this pattern and I do not want to take long position based on it. GDP should be rather weak, definitely below 2% to trigger stable upside action here, but I'm not sure that this will happen.
 
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