FOREX PRO WEEKLY, March 07-11, 2016

[Sive Morten]

Fundamentals

Reuters) - The U.S. dollar fell, hitting one-week lows against the euro on Friday after a drop in U.S. wages in February overshadowed strong jobs growth and supported views that the Federal Reserve was in no hurry to hike interest rates.

Average hourly earnings fell 3 cents in February, data from the Labor Department showed. Analysts said traders were fixated on that drop even as nonfarm payrolls increased by 242,000 jobs last month.

The dollar was set to post its first weekly decline against the euro in three weeks.

"The weak wage numbers are clearly an indication that maybe the Fed will ultimately be okay waiting a little bit longer," said Axel Merk, president and chief investment officer of Palo Alto, California-based Merk Investments.

The drop in U.S. wages suggested that inflation remained muted, analysts said. Fed policymakers are watching inflation closely in their assessment of when to continue hiking rates.

While the dollar initially gained after the report given the monthly jobs growth, it soon reversed course, with the euro rising to a session high of $1.1042, its highest level in a week.

The dollar index, which measures the greenback against a basket of six major rivals, hit a nearly two-week low of 97.019. The dollar reversed losses against the safe-haven yen in afternoon trading and hit a session high of 114.25 yen, however, a move analysts attributed to greater risk appetite.

The euro, which had already hit one-week highs before the release of the jobs data on the perception that euro rates already factor in more easing by European Central Bank policymakers next week, resumed gains on that view.

Traders who were forced to rapidly repurchase the euro on Dec. 3 after the ECB disappointed expectations with a smaller-than-expected stimulus move were also reversing short bets ahead of the ECB meeting on March 10, analysts said.

"People were terribly burned in early December," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York. "That’s encouraging people to cover their shorts."

The euro was last up 0.37 percent against the dollar at $1.0995 . The dollar was last up 0.32 percent against the yen at 114.03 yen .

The dollar, which hit a one-week low against the Swiss franc of 0.9881 franc in the wake of the U.S. jobs data, rebounded and was last up 0.24 percent at 0.9944 franc. The dollar index was down 0.24 percent at 97.361.

CFTC data, guys, right now shows very interesting tendency. Take a look that 5-6 weeks ago EUR showed drop in net short position and open interest was rising. Right now, in recent 3 weeks - net short position is growing while open interest is decreasing. It means that right now net short position grows due closing of longs. If EUR indeed is turning bearish right now - next step we should see increasing of net short position accompanied by increasing in open interest. Let's see what will happen:

Techicals
Monthly

Last time we've taken a look at EUR in mid January. Major conclusion that we've made - market could show upside action to 1.11 area and test Yearly Pivot, but later, fundamentals should prevail and USD should gradually take the lead, as anticipated Fed action suggests 0.25% rate hike on every quarter of 2016.
Besides, fundamental picture also stands not in favor of EUR right now. Yes, US data also is not cloudless and volatile but it mostly stands positive and supportive for further rate hike, even it will happen just twice instead of 4 times.
So as you remember this was not a question "what trend is right now" but "when this trend will continue" and first thought was - after testing YPP.

Right now guys we have two very important bearish signs on monthly chart. First one is Butterfly "Buy" with 1.618 target right at parity. The slope of right wing was very fast. This was tremendous monthly bearish acceleration that has brought market to 1.27 target. Minor 3/8 retracement already has happened. When price shows such acceleration to 1.27 target, it means that market has good chances on proceeding lower right to 1.618.

Second - we have clear sign of bearish dynamic pressure. Trend has turned bullish 4 months ago but price stands flat. Any attempt to move higher has failed. Most recent one is not an exception. EUR has formed spike up, tested YPP and dropped down.

So, it makes us think that hardly any solid upside action will happen until EUR will hit parity. Next level is very strong support, not just because of parity. This also will be Yearly Pivot Support 1, butterfly target.

Weekly

This chart also is important for long term picture. Currentlmisteryy there are less and less signs of possible upside continuation and any action to 1.18. If 1-2 months ago situation looked promising and didn't exclude chances of deep retracement up (recall patterns that we've discussed - DRPO "Buy", Double bottom, grabbers etc.)

Right now price behavior does not show sufficient power to prove us its ability of upside action. On last swing up EUR barely has hit resistance around 1.15 area - neckline of possible Double Bottom pattern. Overall price behavior is not typical for second bottom of the pattern. Here market should speed up on a way up, but we see long-term flag in the middle of upside swing. Last week market has failed to move above YPP and dropped below MPP.

All this stuff lets us turn to discussion of bearish potential on weekly chart. And mostly it stands in relation to Butterfly pattern. We've given the hint on it to you in one of our daily videos. The mistery of this butterfly stands around its target - 1.27 extension coincides with parity level, monthly butterfly 1.618 extension and YPS1. In a company of monthly bearish dynamic pressure this pattern could be important.

Also pay attention to inner AB=CD pattern of butterfly that has the same destination.

Daily

Now we're coming to most interest time frame. Tactically on EUR we would like to go short but perspective of possible upside continuation warn us a bit, since upside AB=CD has not been cancelled absolutely. As proverb tells - "honey is sweet, but the bee stings". That's being said our task is to find a way go short but with minimum risk.

Let's first take a look at broader picture.

Actually guys, we have "222" Sell pattern with minor 0.618 target around 1.06 area. Right now market stands at 5/8 Fib support of our AB=CD pattern. This is last Fib level that could keep this AB-CD valid. Usually if market drops below major 5/8 level on AB=CD up - later it has no power to return back and reach higher extensions, say 1.618. That's why dropping below 1.08 Fib support will mean that AB-CD 90% has failed and "222" Sell has started, although only "C" point breakout will mean total destruction of AB-CD pattern.

That's why we have to find a way to take a position with some downside potential. If market will unexpectedly turn up again - we could leave our position with no loss.
For that purpose we will try to use B&B "Sell" pattern that has been confirmed on Friday. Here how it looks on daily chart - all features are stand in place. Thrust, down, close above 3x3 DMA within 3 sessions, market has reached major Fib resistance level:

Our major idea is to take position on B&B "Sell", when it will hit minimal target - move stops to breakeven on half of position and take profit on the rest. And then watch the movie - if EUR will break 1.08 and collapse - that's great. If not - no problem, we have profit on half of position and no risk on the second one. This plan significantly reduce overall risk of taking short position here.

Hourly

So everything was clear and great till hourly time frame. Here finally we have met some troubles. Right now we do not have bearish reversal pattern on top that could become rock hard confirmation of B&B "Sell" starting.
B&B itself still has 1 more session when it could reach, say, 50% Fib level (EUR likes it most of all). Personally guys, I think that B&B has more chances to start right from 1.1050 area, rather than it will come to 1.11 and 50% Fib resistance. Mostly because we have Agreement - AB-CD (blue lines) and Fib level. Also don't forget that 1.1050 is disrespected former K-support that has been retested and MPP.

Still, as CD leg is rather fast, risk of additional leg up exists. Say, on Monday EUR could form butterfly "Sell", complete full AB-CD (red add-on to blue one AB=CD) and touch 50% level. This is the risk.

You will have to choose your own solution. As usual there 3 possible ways to act. First is - take full position right now but place stops above 1.11, second - take 50% (or any % that you like) now and 50% on 1.11 if upside action will happen. And finally, 3rd - do nothing and wait for 1.11.

Conclusion
We think that overall situation right now is mostly supportive for long term bear trend on EUR/USD.
In short-term charts we will try to take painless 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.

 

[Sive Morten]

Good morning,

(Reuters) - The safe-haven yen rose while the low-yielding euro gained against the dollar on Tuesday as downbeat Chinese trade data fuelled concerns about the state of global demand, weighing on appetite for riskier assets and currencies.

China's February exports slumped 25.4 percent from a year earlier while imports dropped 13.8 percent.

Both currencies tend to outperform during times of financial market volatility and economic uncertainty as investors in both regions unwind investments abroad and bring their savings home.

"The disappointing data from China is weighing on risk sentiment and pushing the dollar lower against the yen," said Yujiro Goto, currency strategist at Nomura.

The euro, however, underperformed the yen, falling 0.2 percent to 124.65 , with the euro generally clouded by Thursday's policy review by the European Central Bank.

The ECB is expected to ease policy, but investors are uncertain about how far it will go. Euro bears are cautious about positioning for bold action, having been badly burnt before when the ECB disappointed by choosing to take more modest easing steps.

"We think the central bank will once again struggle to beat high expectations, with the euro not likely to suffer significantly after the announcement," BNP Paribas analysts wrote in a note to clients.

In the UK, the focus will be on testimony from Bank of England Governor Carney and Deputy Governor Jon Cunliffe at the Treasury Select Committee and where they will be asked about the economic and financial consequences of a potential exit by the UK from the European Union.

Late on Monday, the BoE announced it offer three additional liquidity operations around the referendum time in June.

The Australian and Canadian dollars pulled away from multi-month highs touched on a rally in commodity prices. Commodity prices, including oil were lower on Tuesday.

The Aussie fell 0.5 percent to $0.7430 after reaching a high not seen since July, of $0.7486 on Monday. The Canadian dollar climbed as far as C$1.3262 per USD , scaling a peak last seen in November, but the greenback was last up 0.3 percent at C$1.332.

So, today we will take a look at tactic issue on AUD. Actually guys, nothing new I can say right now on EUR - market is forming something, B&B stands in place but we still haven't got yet any patterns. So, may be tomorrow we will return back to this sub.

Now on AUD. As you can see it has hit our AB=CD target on daily chart and now stands at overbought. As we know AUD is gold currency and currently gold also has met short-term ceil around 1285 weekly resistance. Thus, some bounce becomes real.

As a result, on 4-hour chart we've got confirmed DRPO "Sell" pattern. It's minimal target stands around 0.73 area. Appearing of DRPO pattern gives us 2 patterns, in fact. Thus, initially we could trade direct DRPO, but if suddenly we will get DRPO "Failure" - we could trade it long, because "Failure" is not just cancelling of direct trade but this is another separate directional pattern and we need just turn our position in opposite direction. That's why, DRPO every time brings opportunity:

On hourly chart the top of DRPO could take shape of H&S pattern. So, here you have a choice - trade it as DiNapoli pattern, or as classical pattern, say, with taking position at the top of right shoulder.

 

[Sive Morten]

Good morning,

(Reuters) - The yen was broadly firmer early on Wednesday as demand for the safe-haven currency picked up after disappointing Chinese trade data took the wind out of a global rally rooted in stronger risk appetites.

European and U.S. stocks fell overnight while many commodities came under pressure after China's exports tumbled by the most in over six years last month.

Tokyo's Nikkei followed suit on Wednesday, shedding 1.6 percent and sustaining demand for the yen.

The soft China data highlighted risks facing the global economy, bolstering expectations for dovish outcomes at central bank policy reviews in Europe and New Zealand on Thursday.

The European Central Bank is considered almost certain to ease, which in theory would be negative for the euro, but no one quite dared to position for bold action given the ECB has disappointed before.

"The focal point is how long the market will attempt to price in the risk of the ECB meeting ending in disappointment. The euro could rise towards the $1.11 handle if attempts to pre-empt such risk continue," said Masafumi Yamamoto, chief FX strategist at Mizuho Securities in Tokyo.

The common currency was down 0.3 percent at $1.0976. It slumped to a one-month low of $1.0825 last week but has pulled back since then.

Also on the defensive, the New Zealand dollar traded at $0.6744 , retreating further from Friday's peak of $0.6820.

While markets only imply a small chance of a rate cut by the Reserve Bank of New Zealand, investors suspect it is only time before the central bank delivers another cut to the 2.5 percent cash rate.

"The RBNZ did signal a bias to ease in January and the risk is that it decides to move earlier to prevent further strengthening in the exchange rate," analysts at BNP Paribas wrote in a note to clients.

In contrast, the Bank of Canada is expected to keep rates on hold as it waits to gauge what impact the government's anticipated spending measures might have on the economy.

But a retreat in oil prices took a toll on the Canadian dollar, which slid to C$1.3440 per USD , from a 3-1/2 month peak of C$1.3262 set on Monday.

The Canadian dollar will look to the Bank of Canada's policy decision due later in the session for incentive.

While the BOC is expected to stand pat on monetary policy and refrain from cutting rates further, any show of confidence towards the local economy - which has experienced expansion with oil prices having risen since the last meeting - is expected to bode well for the loonie.

The Australian dollar fared better among its commodity peers thanks to further gains in iron ore, Australia's single biggest export earner. It stood at $0.7418 , still within reach of an eight-month high of $0.7486.

Today guys, we return back to discussion of our B&B "Sell" setup on EUR. On daily chart - nothing has changed significantly. As you can see B&B setup stands in place - thrust down, close above 3x3 DMA and reaching of major 3/8 Fib level within 3 closes above 3x3:

On 4-hour chart we see that EUR has challenged this area twice already. First - on NFP release, second - on Monday. This area is also accompanied by MPP and former consolidation that reminds us existing of broken but disrespected K-support area. Both times market has failed to break it up:

On hourly chart stituation is most difficult for analysis. Mostly because we do not have clear patterns that could tell us where to place stop and is it really B&B has started. I've found only 2 of them. First one is W&R, second - broadening top pattern. Lower border already has been broken. I've come to conclusion that it would be better to take small risk here, and try to re-enter again if this setup will fail, rather than place far stop. You see, EUR still keeps chances to touch 50% daily resistance level and this significantly increases risk of taking position at current levels. At the same time, if we will place stop above 50% Fib level - this will be too far and risk/reward ratio will be approx. 1:1. That's why I think that it would be better to try take short based on patterns that we already have and if we will fail - try to enter later again. This will cost just 25 pips.
On hourly chart we see K-resistance @1.10 area. So, if B&B really has started - EUR should not break this level up. Initial stop could be placed just above 5/8 Fib resistance 1.1025. As soon as market will turn down from 1.10 and pass ~20 pips, stop could be moved to breakeven. This is the plan.
May be you will find better solution. Do not hesitate to place it in this thread:

 

[Sive Morten]

Good morning,

(Reuters) - The euro came under bearish pressure in Asian trade on Thursday ahead of a European Central Bank meeting that is expected to result in further easing steps, while the kiwi skidded after the Reserve Bank of New Zealand surprised with an interest rate cut.

The New Zealand dollar nursed losses after tumbling more than a cent after the RBNZ's decision to cut its official cash rate by 25 basis points to 2.25 percent, citing a material decline in a range of inflation expectation measures. The central bank also signalled at least one more rate cut to come.

The ECB is expected to cut the deposit rate by 10 basis points to -0.40 percent, announce more asset purchases and possibly introduce tiered interest rates like the Bank of Japan in a bid to boost inflation, according to a Reuters poll published on Monday.

"This is probably not a consensus view, but the market is almost pricing in the entire kitchen sink from the ECB, and I think it's setting itself up for disappointment," said Jennifer Vail, head of fixed-income research at U.S. Bank Wealth Management in Portland, Oregon.

While tighter financial conditions a month ago may have warranted more drastic easing steps, some of those conditions have showed signs of improvement, she said, and therefore she expects only a further cut in interest rates into negative territory and a modest increase in purchases under the quantitative easing programme.

"The size of their response has to be directly related to stress in the market," Vail said, adding that the euro could get a bump higher after the policy meeting outcome.

The common currency was down 0.2 percent at $1.0977 though it clawed back ground against the yen, rising 0.2 percent to 124.86 .

The dollar gained 0.4 percent to 113.26 yen , benefiting from waning risk aversion after data showed inflation in China stronger than forecast.

But the dollar remained well within the range it has traded so far this month.

"The market seems to be very cautious today, ahead of the ECB meeting, and next week, we have the BOJ," said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo.

In other central bank action, the Canadian dollar gave up some gains made overnight after the Bank of Canada left policy rates unchanged and said its economic outlook was largely the same as in January as recent market volatility "appears to be abating."

While the Canadian currency has firmed since hitting a 12-year low of C$1.4474 in January, it is still significantly weaker than it was a year ago. The greenback was last up about 0.2 percent at C$1.3275.

So today we will continue our journey with B&B "Sell" o EUR. Yesterday was a bit dramatic action, but you should done well, since market has made downward respect of our K-resistance area so, you could move stop to breakeven. Upside action also was to 5/8 Fib resistance...

On daily chart nothing has changed - B&B still in place and we could use it for our posession on short side:

On 4-hour chart we see that market has tried to break 1.1050 area for 3rd time but failed again:

This gives us clear pattern finally - it's H&S on hourly chart.

It's target makes an Agreement with B&B target - 1.09-1.0915 area. So, today ECB meeting that also could shake markets a bit. Thus, let's see what will happen. Recall that our major thought is to use B&B for longer-term possession on bearish side, since there are not bad chances that market could drop further, to 1.05 area.
Still, B&B could be used as isolated setup and traded accordingly.

 

[Sive Morten]

Good morning,

(Reuters) - The euro on Friday hovered near the three-week high it hit overnight after the European Central Bank roiled markets by suggesting that it was done cutting interest rates for now.

The ECB on Thursday rolled out a series of bold easing measures, including an expansion in asset buying and a deeper cut to already negative deposit rates.

The euro rallied hard, however, after ECB President Mario Draghi undid the very stimulus he hoped to achieve by signalling there would be no further rate cuts.

The common currency was near the three-week peak of $1.1218 scaled overnight, when it jumped 1.6 percent against the greenback. German two-year bund yields posted their biggest daily rise in three months overnight, helping shore up the euro.

Following mixed messages from the ECB, focus shifted to the March 14-15 Bank of Japan policy meeting. The BOJ is widely expected to stand pat on monetary policy after adopting negative rates in January, but some speculate the central bank could lower rates further.

"I don't think the BOJ will ease next week. That said, the ECB's easing was a full spectrum one, and the market will approach the BOJ meeting thinking anything could be possible," said Koji Fukaya, president of FPG Securities in Tokyo.

"As for the ECB's easing, it is after all a 'risk on' factor. Its effects could be felt gradually and curb yen strength."

The equity as well as commodity markets, which saw U.S. crude oil rise to a three-month peak Friday, were expected to continue providing currencies with leads in the coming sessions.

"The ECB's latest stance comes at a time when commodities and oil appeared ready for a corrective fall after their late gains," said Junichi Ishikawa, FX analyst at IG Securities in Tokyo.

"Risk aversion could be next week's theme, potentially pushing dollar/yen back towards 111.00 yen."

The Australian dollar gained 0.5 percent to $0.7489 after slipping 0.4 percent on Thursday. The Aussie hit an eight-month high of $0.7528 on Wednesday thanks to a rally in the price of iron ore, Australia's key export, and it was poised to gain 0.7 percent on the week.

The New Zealand dollar, which took a beating after the Reserve Bank of New Zealand unexpectedly cut interest rates on Thursday, managed to crawl off a one-week low of $0.6618 and last traded at $0.6692.

Guys, today we will talk on EUR, since yesterday was a bit drammatic action and I've heard bears' screaming - Everything is lost and we're doomed. I think it's a bit too early to this conlcusion.

On daily chart rally indeed looks impressive, even more impressive that former one on poor NFP data that was erased very soon. I mean that we need to see how stable this upward action will be. Right now I only see that EUR stands at YPP, Fib resistance, daily overbought - just 5/8 retracement up.
Yes we have bullish grabber here that suggests taking out of former top, but we are not there yet... So, my thought we should treat differently short-term reaction and big strategical shifts on the market. Reaction is, doubtless, in place, but I'm not sure on strategical shift. Difference between ECB and Fed policies are still exist, EU problems were not eliminated.
That's why actually, nothing awful has happened yet. Just watch for important levels - 1.1376 top. Market will have to move above it to confirm it's bullishness. Only this action could confirm that it stands on a way to 1.618 of our AB-CD pattern. And only move above this level will destroy butterfly that I've drawn here.

The opposite is true for bearish scenario - watch for 1.08. Drop below will erase as grabber as daily AB-CD.

On 4-hour chart we also see that current level is MPR1 and 1.618 AB-CD target:

And now few words on our B&B "Sell" trade. Despite that it was more sophisticated than usual, it has worked perfect. Those who has followed it right till the end should done well. Take a look our H&S pattern - has been completed, i.e. B&B has reached not just minimal target but 2 times greater. H&S has completed as 1.618 extension as classical target.
Now, as market stands at strong resistance, today hardly we will see continuation. Most probable is retracement down to 1.1020-1.1050 area - 50% support and MPP:

Thus, despite all drama - B&B has proved again its reliability.

 

[Major_Tom]

Thank you Sive

 

[Lolly Tripathy]

Thank you very much site sir..
Great job..
What do you think about natural gas NG is it a good area to buy.. Because of butterfly harmonic pattern...on daily tf.
Thanks...

 

[Joh]

Fundamentals

Reuters) - The U.S. dollar fell, hitting one-week lows against the euro on Friday after a drop in U.S. wages in February overshadowed strong jobs growth and supported views that the Federal Reserve was in no hurry to hike interest rates.

Average hourly earnings fell 3 cents in February, data from the Labor Department showed. Analysts said traders were fixated on that drop even as nonfarm payrolls increased by 242,000 jobs last month.

The dollar was set to post its first weekly decline against the euro in three weeks.

"The weak wage numbers are clearly an indication that maybe the Fed will ultimately be okay waiting a little bit longer," said Axel Merk, president and chief investment officer of Palo Alto, California-based Merk Investments.

The drop in U.S. wages suggested that inflation remained muted, analysts said. Fed policymakers are watching inflation closely in their assessment of when to continue hiking rates.

While the dollar initially gained after the report given the monthly jobs growth, it soon reversed course, with the euro rising to a session high of $1.1042, its highest level in a week.

The dollar index, which measures the greenback against a basket of six major rivals, hit a nearly two-week low of 97.019. The dollar reversed losses against the safe-haven yen in afternoon trading and hit a session high of 114.25 yen, however, a move analysts attributed to greater risk appetite.

The euro, which had already hit one-week highs before the release of the jobs data on the perception that euro rates already factor in more easing by European Central Bank policymakers next week, resumed gains on that view.

Traders who were forced to rapidly repurchase the euro on Dec. 3 after the ECB disappointed expectations with a smaller-than-expected stimulus move were also reversing short bets ahead of the ECB meeting on March 10, analysts said.

"People were terribly burned in early December," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York. "That’s encouraging people to cover their shorts."

The euro was last up 0.37 percent against the dollar at $1.0995 . The dollar was last up 0.32 percent against the yen at 114.03 yen .

The dollar, which hit a one-week low against the Swiss franc of 0.9881 franc in the wake of the U.S. jobs data, rebounded and was last up 0.24 percent at 0.9944 franc. The dollar index was down 0.24 percent at 97.361.

CFTC data, guys, right now shows very interesting tendency. Take a look that 5-6 weeks ago EUR showed drop in net short position and open interest was rising. Right now, in recent 3 weeks - net short position is growing while open interest is decreasing. It means that right now net short position grows due closing of longs. If EUR indeed is turning bearish right now - next step we should see increasing of net short position accompanied by increasing in open interest. Let's see what will happen:
View attachment 24067

Techicals
Monthly

Last time we've taken a look at EUR in mid January. Major conclusion that we've made - market could show upside action to 1.11 area and test Yearly Pivot, but later, fundamentals should prevail and USD should gradually take the lead, as anticipated Fed action suggests 0.25% rate hike on every quarter of 2016.
Besides, fundamental picture also stands not in favor of EUR right now. Yes, US data also is not cloudless and volatile but it mostly stands positive and supportive for further rate hike, even it will happen just twice instead of 4 times.
So as you remember this was not a question "what trend is right now" but "when this trend will continue" and first thought was - after testing YPP.

Right now guys we have two very important bearish signs on monthly chart. First one is Butterfly "Buy" with 1.618 target right at parity. The slope of right wing was very fast. This was tremendous monthly bearish acceleration that has brought market to 1.27 target. Minor 3/8 retracement already has happened. When price shows such acceleration to 1.27 target, it means that market has good chances on proceeding lower right to 1.618.

Second - we have clear sign of bearish dynamic pressure. Trend has turned bullish 4 months ago but price stands flat. Any attempt to move higher has failed. Most recent one is not an exception. EUR has formed spike up, tested YPP and dropped down.

So, it makes us think that hardly any solid upside action will happen until EUR will hit parity. Next level is very strong support, not just because of parity. This also will be Yearly Pivot Support 1, butterfly target.
View attachment 24068

Weekly

This chart also is important for long term picture. Currentlmisteryy there are less and less signs of possible upside continuation and any action to 1.18. If 1-2 months ago situation looked promising and didn't exclude chances of deep retracement up (recall patterns that we've discussed - DRPO "Buy", Double bottom, grabbers etc.)

Right now price behavior does not show sufficient power to prove us its ability of upside action. On last swing up EUR barely has hit resistance around 1.15 area - neckline of possible Double Bottom pattern. Overall price behavior is not typical for second bottom of the pattern. Here market should speed up on a way up, but we see long-term flag in the middle of upside swing. Last week market has failed to move above YPP and dropped below MPP.

All this stuff lets us turn to discussion of bearish potential on weekly chart. And mostly it stands in relation to Butterfly pattern. We've given the hint on it to you in one of our daily videos. The mistery of this butterfly stands around its target - 1.27 extension coincides with parity level, monthly butterfly 1.618 extension and YPS1. In a company of monthly bearish dynamic pressure this pattern could be important.

Also pay attention to inner AB=CD pattern of butterfly that has the same destination.
View attachment 24071

Daily

Now we're coming to most interest time frame. Tactically on EUR we would like to go short but perspective of possible upside continuation warn us a bit, since upside AB=CD has not been cancelled absolutely. As proverb tells - "honey is sweet, but the bee stings". That's being said our task is to find a way go short but with minimum risk.

Let's first take a look at broader picture.
View attachment 24072

Actually guys, we have "222" Sell pattern with minor 0.618 target around 1.06 area. Right now market stands at 5/8 Fib support of our AB=CD pattern. This is last Fib level that could keep this AB-CD valid. Usually if market drops below major 5/8 level on AB=CD up - later it has no power to return back and reach higher extensions, say 1.618. That's why dropping below 1.08 Fib support will mean that AB-CD 90% has failed and "222" Sell has started, although only "C" point breakout will mean total destruction of AB-CD pattern.

That's why we have to find a way to take a position with some downside potential. If market will unexpectedly turn up again - we could leave our position with no loss.
For that purpose we will try to use B&B "Sell" pattern that has been confirmed on Friday. Here how it looks on daily chart - all features are stand in place. Thrust, down, close above 3x3 DMA within 3 sessions, market has reached major Fib resistance level:
View attachment 24076

Our major idea is to take position on B&B "Sell", when it will hit minimal target - move stops to breakeven on half of position and take profit on the rest. And then watch the movie - if EUR will break 1.08 and collapse - that's great. If not - no problem, we have profit on half of position and no risk on the second one. This plan significantly reduce overall risk of taking short position here.

Hourly

So everything was clear and great till hourly time frame. Here finally we have met some troubles. Right now we do not have bearish reversal pattern on top that could become rock hard confirmation of B&B "Sell" starting.
B&B itself still has 1 more session when it could reach, say, 50% Fib level (EUR likes it most of all). Personally guys, I think that B&B has more chances to start right from 1.1050 area, rather than it will come to 1.11 and 50% Fib resistance. Mostly because we have Agreement - AB-CD (blue lines) and Fib level. Also don't forget that 1.1050 is disrespected former K-support that has been retested and MPP.

Still, as CD leg is rather fast, risk of additional leg up exists. Say, on Monday EUR could form butterfly "Sell", complete full AB-CD (red add-on to blue one AB=CD) and touch 50% level. This is the risk.

You will have to choose your own solution. As usual there 3 possible ways to act. First is - take full position right now but place stops above 1.11, second - take 50% (or any % that you like) now and 50% on 1.11 if upside action will happen. And finally, 3rd - do nothing and wait for 1.11.
View attachment 24077

Conclusion
We think that overall situation right now is mostly supportive for long term bear trend on EUR/USD.
In short-term charts we will try to take painless 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.

Thank you Sir Sive.
Wow! 4 Huge reports to start the new week with, Gosh you are amazing Sive and thank you FPA or giving us this Gem of a person who comes up day after day -week after week with these sensational analytical reports to help us all make a dollar, just .Brilliant!

 

[docrott]

Thanks you Sive for the detailed forecast.
What did you think about the cable? Will it now first close the gap and then start to go to the targets?

 

[ochills]

My View On GBP/USD. sell 1 to 5 are possible areas to short, but I prefer the cluster area with Gap.