FOREX PRO WEEKLY #2, March 19-23, 2018

[Sive Morten]

Today, in 2nd weekly research we will update our view on CAD. The reason - gold situation stands very similar to EUR and mostly we should wait for the same pattern and action on intraday charts as on EUR. I'm speaking about "222" Buy" pattern around 1302:

Meantime, Loonie is coming to culmination point and we should keep a close eye on any bearish signs for USD/CAD on coming week.

Fundamentals

Yesterday we've tried to shed some light on coming important fundamental events. Speaking particular on Canada, there are few more issues that impact right now on currency value.
Speaking on tariffs issue, although Canada was exempted, Trump said the reprieve would be in place so long as there was progress on talks to renegotiate the North American Free Trade Agreement. It means that
Canadian policymakers may wait for greater clarity on the future of U.S. trade policy after worries about a global trade war ramped up after President Donald Trump imposed tariffs on steel and aluminum imports this month.
Besides, recent statistics was not really positive as factory sales has dropped 1% in February. This was strongest drop in 6 month. Foreign investment in Canadian securities resumed in January after a dip in December but fell far short of the monthly purchases seen in much of the second half of 2017.

Anticipating of rate increase, to follow US policy also was muted as Governor Stephen Poloz's remarks reinforced expectations the central bank can take its time raising rates after hiking three times since last July.
In fact, he said that the economy may be able to generate more growth without higher inflation, given the
untapped potential in the labor market.

"The market interpreted that as it means that it's far less likely that the Bank of Canada will move forward with further interest rate increases," said Sean Coakley, market strategist at Cambridge Global Payments.
"At the same time, we've seen much more hawkish commentary out of the Federal Reserve in the United States and that's really positioned the U.S. dollar much stronger than the loonie," said Coakley.

COT Report

Recent CFTC data shows that speculative position stands long on CAD, although it has not changed significantly since the beginning of the year. Last week we see solid jump in open interest, while net position has not changed. It is difficult to suggest what the reasons was beyond this. It means that equal amount of shorts and longs were added, or some positions were locked. May be traders prepare for some action:

Technicals
Monthly

So, let's update our thrilling setup that we've discussed two weeks ago for the first time.

As two weeks has passed, market mostly has completed our suggestion on upside action to 1.3130 area. Meantime, monthly CAD keep standing in "Sell" mode, but now is bouncing up from strong monthly K-support and Agreement, as downside OP has been hit. Trend breakeven point in March by MACD stands at 1.3164. It means that until this point monthly CAD will be bearish and we could watch for chances to go short.
As March is coming to an end - it is also will be interesting to watch for bearish grabber here.

Weekly

Weekly CAD stands in "Buy". And forming clear AB=CD action. Market is not at Overbought, as monthly CAD either. Our suggestion that market should reach an OP target mostly has been completed.

OP creates super strong resistance area on weekly, which includes K-resistance and daily Overbought. Let's note for some case that XOP target also creates Agreement with major 5/8 resistance. Now we do not need it, but who knows what will happen in the future...

Now take a look again on monthly chart. As we've said - trend breakeven point stands around 1.3164, while our weekly resistance is 1.3131 It means that we could fade weekly "Buy" and try to sell from this strong weekly resistance, while monthly trend keeps bearish direction.

Thus, as a result we could get "222" Sell pattern. At the same time, we have to warn you - be patient. Despite how strong resistance is, upside action has rather good pace and momentum. So, if reversal indeed will happen - it will be accompanied by solid volatility and fluctuations around K-area, because market needs to calm down upside momentum.

It means that it is risky to take position blindly, just rely on strong area. Much better is to get clear bearish reversal pattern on lower time frames.

Daily

Here we have smaller AB-CD pattern by size, but not on importance. In fact, daily AB-CD specifies final point with more precision and it stands at 1.3158. Since it stands just 3 pips below monthly MACD - it inspires on getting monthly grabber.

Also take a look how strong upside action is. As on COP as on OP target market shows extension, as price has not stopped precisely at those levels. Reaction on OP was very small, just minor 3/8 retracement. So it will be rather tough task to reverse direction, despite existence of really strong barrier ahead.

Intraday

As market has not completed targets yet, we do not have yet any signs of reversal. Still, one of the tools that could be used is upside channel - if market will turn down, it definitely should break it. Inside the channel we have most recent AB-CD that points on 1.1390 area and, 1.618 extension of recent retracement that points precisely at 1.3130 level. If market will stop around 1.3130-1.3150 - this could lead to appearing of H&S pattern as reversal one. Currently is no other clues are visible yet here.

Conclusion:

As loonie is coming to final destination point we should be careful to any bearish signs in this area. Still, taking in consideration the strength of upside action, it would be better to wait clear bearish patterns before taking any bearish position.


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.

 

[shahsavari]

Thanks

 

[Sive Morten]

Good morning,

So, as we've mentioned in weekly research, situation on gold is very similar to EUR, but still some difference exist. On daily chart changes are coming slowly, price action stands rather tight, but major idea here is the same - either price will form some bullish pattern (probably it should be "222") and stand above 1302 lows, or downside action will continue.
Now, as gold has broken all intraday Fib levels, it's coming to final point where it still could be done:

Although yesterday price has shown an attempt to move higher, but it was not very reliable. Major AB=CD pattern has not been completed. Compares to EUR action - gold was not able to form upside reversal swing. So, the action that we see here is definitely not sufficient for making a decision on taking a long position yet:

It is interesting to note here, that market is forming large wedge pattern and 3-Drive "Buy" pattern could be formed inside it. At least upside action has started right from 1.27 extension. Besides - 1.618 coincides with AB=CD target right around 1302 lows:

That's being, said, it seems that it is still early to think about long entry...

 

[Sive Morten]

Greeting,

So, gold has confirmed our suspicions recently and shown another minor leg down. In general, picture on daily chart looks really heavy and not very good for bulls. Market was not able to re-establish upside trend after as first retracement as AB=CD retracement. Now it is slowly but stubbornly moving lower. This is not good. But theoretical chances on upside continuation holds as price still stands above 1300 lows:

As we've said, in this circumstances we need more bullish signs that could confirm upside continuation. But now we do not have any yet. On 4-hour chart potential AB=CD down is still possible. Recently gold has formed multiple grabbers but they do not change overall picture. Their target could be reached just on Fed volatility:

Besides, if we would suggest reaching of XOP retracement target - gold indeed could form 3-Drive "Buy" here, because 1.27 extension of this retracement potentially will coincide with 1.618 of 1st drive...
So, probably it is better to not take any steps until Fed release and see what will happen. As upside potential as downside will be solid. Thus, there is no rush with position taking.

 

[Sive Morten]

Greetings,

So, gold market also shows the same reaction as other USD-related assets due dovish Fed statement. Situation has become better for the bulls. Just we've said yesterday that gold stands at the edge of bullish scenario validity and uspide rally has followed.

Now daily trend has turned bullish, and we could keep an eye on chances for long position taking:

Currently I like 1325 area. First - because this is K-area, second - because this will be an Agreement with XOP target.
Still, as on EUR we need to control for two issues. First issue - downside AB-CD target should be hit, I mean XOP. Second, it would be better if some bullish reversal pattern will finalize downside action on 5-min chart. For example, butterfly. In this case it will be relatively safe to go long. Because this combinatio of support's strength and bullish reversal pattern almost 100% guarantee that some minor upside technical bounce will happen. It should give us chance to move stop to breakeven if even later gold will turn down again.
This is our favorable tactics of position taking...

 

[Sive Morten]

Greetings,

Today we will take a look at kiwi dollar, but in the beginning let's take a look at gold hourly chart. Our yesterday entry setup has been done perfectly -we've got everything that was needed for position taking - as AB-CD XOP target reaching right at K-support as bullish butterfly that finalize this process. That's what we would like to get on EUR as well, but didn't get it.

Now on kiwi dollar. Daily NZD finally has completed OP target. Previously we've expected this, but a bit differently. At the same time NZD shows W&R of previous lows right around major 3/8 Fib level. It means that we could count on some upside continuation on intraday chart:

On 4-hour chart we could recognize clear H&S pattern. But, market has not reached yet the bottom of right arm to keep perfect harmony:

It means that on 30-min chart we could watch for some AB-CD action down, to major 5/8 level. IT could be as COP as OP, depending on BC leg. It would be nice if we will get butterfly "Buy" here as well, the same as in example with gold market...