FOREX PRO WEEKLY, April 23-27, 2018

[Lolly Tripathy]

Regarding the Euro, for me it still does not seem to be a trend reversal because of the overlapping price action we see for weeks now.

It has been nearly two months since I first raised the possibility of the triangle scenario. Recall that triangles may form by themselves only in the wave 4, wave B, or wave X positions, they always precede the final wave of a sequence. And the idea fits in well with the phase where the greater advance seems to be:

View attachment 37239

We can see a series of three-wave structures that might form waves (A), (B), (C), (D) and (E) of the triangle. This most recent down move could be wave (C), and if it is, we should wait a few sessions to see the last two legs of the triangle forming wave (D) and (E).

So under this scenario we have to wait for the last two waves to unfold and then go long and set our stop below the low of wave (C) because we know that wave (E) cannot go beyond the end of wave (C).

The idea for this trade plan would be to anticipate a thrust out of the triangle towards 1.26x offering a good risk/reward trading opportunity. A less aggressive strategy would be to go long after a move beyond the (B)-(D) trendline, indicating the end of the triangle and the resumption of the uptrend.

Keep an eye on potential reversal in the red target zone. As soon as prices break the upper border of the grey channe we can use the bottom as working support for higher in wave (D).

Thank you so much dear

 

[Sive Morten]

Morning, guys,

Let's update our GBP view. On daily chart market mostly holds around 5/8 support area, which is 1.3965-1.40, as we've mentioned in our weekly reserach. Also this is daily OS level. Take a look that as GBP has dropped slightly lower, it has formed bearish reversal swing. It means that upside retracement should be moderate, 1/2-5/8 probably. In fact, we have DiNapoli bullish "Stretch" pattern in place. It also suggests upside bounce here:

On hourly chart we could estimate the reason, why GBP has dropped slightly lower. This is XOP target, and it has been completed recently. It means that most probable revesal pattern, that could be formed here is Double Bottom:

On 4H chart it could take shape of DiNapoli DRPO "Buy". Most probable destination is resistance cluster of two Fib levels and WPP around 1.41-1.4120 area. But first is the pattern...we need to get it before plans building on upside targets...

 

[Sive Morten]

Good morning, guys,

Today we will take a look at EUR again. Now a lot important events stand on the table. First, is US 10-year yield has reached and exceeded 3% level, which makes implied inflation stand above 2+%. Sreads with EU and Germany yields have widened.

This makes pressure on EUR on two ways. First, it makes more attractive US assets and currency and support carry traders who're starting to look in the side of USD.
Second, as you know speculators' positions stand at all time highs on EUR. Changing balance of interest rates could make hedge funds to unwind it.

Speaking on data releases, there are two events on the table - ECB meeting, and IQ US GDP release. US GDP is expected around 2%, while ECB forecasts are really blur. Recently there were not really positive data on EU economy. This could make ECB stands on hold till September, when QE programme will be over.

As you understand, in such environment, technical factors take a back seat. Still, On daily chart price has returned back to our K-support area, bottom of triangle and daily OS level. In, fact we have DiNapoli bullish "Stretch" pattern, which suggests at least some technical bounce.

At the same time ou 4H we have clear AB=CD pattern, which target stands slightly below 1.2154 lows. It means that chances on W&R are very significant.

The same suggestion we see on hourly chart. Take a look at reaction of reaching 1.27 extension. It is very lazy, a kind of bearish dynamic pressure. It means that 1.618 should be hit around 1.2145.

So, we have trading plan till the end of the week, which will not be easy to execute as you need to keep an eye as on fundamentals as on technicals. If ECB statement will be relativey positive - keep an eye on drop to 1.2145 area, and fast return up above 1.2155. This usually happens in a shape of long bullish engulfing (RRT by DiNapoli) pattern. This will be the sign that stops were grabbed and market could proceed with possible H&S pattern that I've drawn here.

If ECB statement will be negative and price will drop below 1.2140 and hold there - don't be long. To go long we need clear signs of failure downside breakout.

 

[Stag]

Regarding the Euro, for me it still does not seem to be a trend reversal because of the overlapping price action we see for weeks now.

It has been nearly two months since I first raised the possibility of the triangle scenario. Recall that triangles may form by themselves only in the wave 4, wave B, or wave X positions, they always precede the final wave of a sequence. And the idea fits in well with the phase where the greater advance seems to be:

View attachment 37239

We can see a series of three-wave structures that might form waves (A), (B), (C), (D) and (E) of the triangle. This most recent down move could be wave (C), and if it is, we should wait a few sessions to see the last two legs of the triangle forming wave (D) and (E).

So under this scenario we have to wait for the last two waves to unfold and then go long and set our stop below the low of wave (C) because we know that wave (E) cannot go beyond the end of wave (C).

The idea for this trade plan would be to anticipate a thrust out of the triangle towards 1.26x offering a good risk/reward trading opportunity. A less aggressive strategy would be to go long after a move beyond the (B)-(D) trendline, indicating the end of the triangle and the resumption of the uptrend.

Keep an eye on potential reversal in the red target zone. As soon as prices break the upper border of the grey channe we can use the bottom as working support for higher in wave (D).

We need to see prices breaking the grey cahnnel's upper boundary and back above the green line at 1.2246 impulsively for confidence further bullishness is in force. This would open the door advancing higher towards the green area.

Recent low at 1.215x should hold for any retracement to keep alive this bullish scenario.

 

[Venelin]

Euro is about to hit 50% fib retr. on weekly DRPO LAL i.e.- 1.2050 and 1.2075 OP confluence zone:

 

[Sive Morten]

Greetings,

So, guys we have the same issues on the table by far - rising US yields and overextended speculative positions. On dollar they stand short at maximum levels for 6.5 years, while on EUR we have all time high long positions.
As ECB comments were relatively dovish, positions were unwound, which mostly have hurt those currencies with highly saturated speculative positions. EUR is not an exception.

The euro fell to its lowest since mid-January at $1.211 after the European Central Bank announced its decision to keep monetary policy unchanged. The single currency had initially rebounded after Draghi played down concern over recent softness in data, but fell as the market digested the news and the U.S. dollar rallied.

Draghi “articulated a rising sense of concern about the economic momentum that sustained the euro zone during the last quarter of last year,” said Karl Schamotta, director of FX strategy and structured products at Cambridge Global Payments in Toronto, Canada.

“You’re seeing a washout of short dollar positions primarily,” said Schamotta. “It is a far too crowded trade at this point. The perception that the dollar is inevitably going to decline as the U.S. fiscal position worsens is not supported by history.”

Yesterday we've brought a lot of economical details on situation on FX market. EUR has made very important breakout of 1.2150 K-support area which could and probably will have far-going consequences.

But, talking about daily chart, next target that we will be watching is 1.1935 Fib support. Today EUR stands at daily OS and we do not expect solid drop, at least if GDP data will be flat. Major resistance now will be 1.2150.

As we have large AB-CD target - EUR could hit OP today around 1.2080. For taking short position it would be better to wait some rally to sell.

 

[Stag]

We need to see prices breaking the grey cahnnel's upper boundary and back above the green line at 1.2246 impulsively for confidence further bullishness is in force. This would open the door advancing higher towards the green area.

Recent low at 1.215x should hold for any retracement to keep alive this bullish scenario.

View attachment 37263

Morning guys, we had a breakout attempt, but prices soon reversed and fell well below the red key level at which the triangle scenario became invalid. And we have to accept when our analysis fails. The solution is to give time to the market to clarify itself and focus on the degrees that are clearest.

At this stage the drop still can be a part of a larger ABC correction building the C leg of that structure with a price target around 1.20. We can expect further weakness as long as prices are trading below 1.2216. But guys, when “the right look” turns to be unclear we have to step back and look at the daily or weekly chart and wait until the picture clarifies.

 

[Sive Morten]

But guys, when “the right look” turns to be unclear we have to step back and look at the daily or weekly chart and wait until the picture clarifies.

Well said, Stag.
Also, I like J.M Keynes words "When the facts change, I change my mind and what do you do Sir?"