Sive Morten
Special Consultant to the FPA
- Messages
- 18,760
Monthly
On big picture since April bar has closed we have some changes, althgough they are not drastical. Market stands now in some kind of equilibrium or indecision. Two months earlier we’ve got bearish engulfing pattern right at 50% resistance, and theoretically it has target around 1.2450 area and it is still valid. But now we’ve got another one – oposite to the previous one. This pattern coincides with two other rather significant bullish moments. First is trend – it is bullish now, and Yearly Pivot point – market has tested it and now holds above it. This is long-term bullish sign. If we suggest even minor upward extension to 0.618 of current AB-CD pattern we will get 1.3775 level – and that is Yearly Pivot Resistance 1.
On previous week we’ve decided to deal with bullish engulfing pattern, since it has a smaller scale and more suitable for day-by-day trading. On past week there were some significant changes on lower time frame, that increase probability of bullish engulfing failure. Theoretically it has not happened yet, since invalidation point of this pattern is low at 1.2746, but moves that we see on lower time frames make this pattern not very attractive for trading. Thus, we should keep an eye on its low, but mostly for getting final confirmation of bulls’ capitulation, rather than signal for short entry, because foundation for downward action already was put on probably on lower time frames.
Weekly
Weekly time frame guys is most significant for us, since it carries major foundation for our analysis in medium-term perspective. We have clearest patterns right here. First of all – take a look how H&S holds the overall harmony. Right shoulder development looks natural and simmetric compares to left shoulder as in terms of time as in terms of Fib levels. And now there are two most important patterns for us. First is we see W&R and bearish engulfing pattern precisely at top of right shoulder. Simultaneously this is bearish stop grabber that suggests move right to the neck line and taking out lows around 1.2750. Potentially this move should trigger medium term bearish continuation and erase monthly bullish engulfing pattern. Trend has turned bearish here.
Stop grabber itself is very significant for us, since it gives us the swing to work with on lower time frames, and it gives direction. What else do we need? We do not need to pay attention to other more extended swings and extreme points – this most recent swing down is all that we need for trading. This is really significant advantage and asistance.
We all know that any setup, despite how rock hard it is could fail, but when you have definite and clear patterns you have 100% understanding what conditions of failure.
Thus, weekly time frame gives us major information – we have bearish context that is based on weekly trend, bearish engulfing pattern and W&R and bearish weekly stop grabber. All what we need now is to study daily and intraday charts to understand – where will be better to take short position.
Daily
As we’ve said above – our trading field is limited by swing of weekly stop grabber or bearish engulfing at maximum. Trend is bearish here and I’ve marked their invalidation points by red circles. On coming week MPP and WPP coincide at 1.3040. Now market stands at 5/8 support, but slightly lower solid support cluster stands – WPS1, MPS1 and daily oversold. Upward retracement should start from either current Fib support or PS1 area. As usual first we will have to get upward reversal pattern on intraday charts and second – estimate its target, where we will enter short.
4-hour
This time frame does not give us the answer when upward bounce will happen, but it tells us how it could happen. Here we have nice thrust down that is suitable for DiNapoli either DRPO “Buy” or B&B “Sell”. If we take into consideration how downward AB-CD action has developed then we can see that market has almost hit 1.27 extension by single move down without any notable retracement. This tells about solid downward short-term momentum and as a rule market continues move to 1.618 but after bounce up. Again, as a rule, but not always this is 0.5-0.618 retracement. Since we know that EUR likes 50% retracements – we will focus on this level, but will correct it as soon as will get some clear short-term reversal patterns. This potential pullback could be used as for possessing for medium term perspective with our weekly patterns or just for trading of potential DiNapoli directional patterns if any of them will appear of cause.
60-min
Here I think we should keep an eye on 1.3040-1.3055 level, since this is combination of K-resistance, WPP, previous swing lows and 50% resistance level. It will be natural and logical if market will re-test this area before downward continuation.
Now couple of words about 1.2875-1.2880 area. Take a look at daily time frame – that is WPS1+MPS1. If you will draw 1.618 extension of our AB-CD pattern – you’ll see that it stands very close to it. And finally, the daily butterfly that was offered by Lolly on daily time frame has 1.27 extension at the same area. Other words – this will be nearest downward target and some bounce up is probable from it either. Although, as I said, retracement that we are expecting now could be used for longer time possessing as well.
Conclusion:
On coming week our major context maker is weekly time frame that contains a lot of bearish moments. Thus it makes possible to narrow our working range for coming week just by previous week candle range, because it is bearish stop grabber pattern.
Based on this context we need to get rally to sell into on lower time frames. It is probable that first bounce could start right on Monday and take a shape of some DiNapoli directional pattern – here we have to watch for 1.3040-1.3055 area (around new WPP) for selling opportunities, while second one could start from 1.2875-1.2880 area. Second area at the same time will be your minimum target if you will take short from 1.3040-1.3055, since this will be rather strong support, containing WPS1, MPS1, daily Oversold and different extension targets.
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.
On big picture since April bar has closed we have some changes, althgough they are not drastical. Market stands now in some kind of equilibrium or indecision. Two months earlier we’ve got bearish engulfing pattern right at 50% resistance, and theoretically it has target around 1.2450 area and it is still valid. But now we’ve got another one – oposite to the previous one. This pattern coincides with two other rather significant bullish moments. First is trend – it is bullish now, and Yearly Pivot point – market has tested it and now holds above it. This is long-term bullish sign. If we suggest even minor upward extension to 0.618 of current AB-CD pattern we will get 1.3775 level – and that is Yearly Pivot Resistance 1.
On previous week we’ve decided to deal with bullish engulfing pattern, since it has a smaller scale and more suitable for day-by-day trading. On past week there were some significant changes on lower time frame, that increase probability of bullish engulfing failure. Theoretically it has not happened yet, since invalidation point of this pattern is low at 1.2746, but moves that we see on lower time frames make this pattern not very attractive for trading. Thus, we should keep an eye on its low, but mostly for getting final confirmation of bulls’ capitulation, rather than signal for short entry, because foundation for downward action already was put on probably on lower time frames.
Weekly
Weekly time frame guys is most significant for us, since it carries major foundation for our analysis in medium-term perspective. We have clearest patterns right here. First of all – take a look how H&S holds the overall harmony. Right shoulder development looks natural and simmetric compares to left shoulder as in terms of time as in terms of Fib levels. And now there are two most important patterns for us. First is we see W&R and bearish engulfing pattern precisely at top of right shoulder. Simultaneously this is bearish stop grabber that suggests move right to the neck line and taking out lows around 1.2750. Potentially this move should trigger medium term bearish continuation and erase monthly bullish engulfing pattern. Trend has turned bearish here.
Stop grabber itself is very significant for us, since it gives us the swing to work with on lower time frames, and it gives direction. What else do we need? We do not need to pay attention to other more extended swings and extreme points – this most recent swing down is all that we need for trading. This is really significant advantage and asistance.
We all know that any setup, despite how rock hard it is could fail, but when you have definite and clear patterns you have 100% understanding what conditions of failure.
Thus, weekly time frame gives us major information – we have bearish context that is based on weekly trend, bearish engulfing pattern and W&R and bearish weekly stop grabber. All what we need now is to study daily and intraday charts to understand – where will be better to take short position.
Daily
As we’ve said above – our trading field is limited by swing of weekly stop grabber or bearish engulfing at maximum. Trend is bearish here and I’ve marked their invalidation points by red circles. On coming week MPP and WPP coincide at 1.3040. Now market stands at 5/8 support, but slightly lower solid support cluster stands – WPS1, MPS1 and daily oversold. Upward retracement should start from either current Fib support or PS1 area. As usual first we will have to get upward reversal pattern on intraday charts and second – estimate its target, where we will enter short.
4-hour
This time frame does not give us the answer when upward bounce will happen, but it tells us how it could happen. Here we have nice thrust down that is suitable for DiNapoli either DRPO “Buy” or B&B “Sell”. If we take into consideration how downward AB-CD action has developed then we can see that market has almost hit 1.27 extension by single move down without any notable retracement. This tells about solid downward short-term momentum and as a rule market continues move to 1.618 but after bounce up. Again, as a rule, but not always this is 0.5-0.618 retracement. Since we know that EUR likes 50% retracements – we will focus on this level, but will correct it as soon as will get some clear short-term reversal patterns. This potential pullback could be used as for possessing for medium term perspective with our weekly patterns or just for trading of potential DiNapoli directional patterns if any of them will appear of cause.
60-min
Here I think we should keep an eye on 1.3040-1.3055 level, since this is combination of K-resistance, WPP, previous swing lows and 50% resistance level. It will be natural and logical if market will re-test this area before downward continuation.
Now couple of words about 1.2875-1.2880 area. Take a look at daily time frame – that is WPS1+MPS1. If you will draw 1.618 extension of our AB-CD pattern – you’ll see that it stands very close to it. And finally, the daily butterfly that was offered by Lolly on daily time frame has 1.27 extension at the same area. Other words – this will be nearest downward target and some bounce up is probable from it either. Although, as I said, retracement that we are expecting now could be used for longer time possessing as well.
Conclusion:
On coming week our major context maker is weekly time frame that contains a lot of bearish moments. Thus it makes possible to narrow our working range for coming week just by previous week candle range, because it is bearish stop grabber pattern.
Based on this context we need to get rally to sell into on lower time frames. It is probable that first bounce could start right on Monday and take a shape of some DiNapoli directional pattern – here we have to watch for 1.3040-1.3055 area (around new WPP) for selling opportunities, while second one could start from 1.2875-1.2880 area. Second area at the same time will be your minimum target if you will take short from 1.3040-1.3055, since this will be rather strong support, containing WPS1, MPS1, daily Oversold and different extension targets.
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.
