Sive Morten
Special Consultant to the FPA
- Messages
- 18,743
Fundamentals
Changes in the world become brighter and come on a surface. Things that we've discussed year ago start to materialize. Previously we've said that EU will start building of his own army and join Russia defense space. EU occupation by US forces comes to an end.
Recently France president E. Macron said that European states to work with Russia and construct new security architecture, in a bid to strengthen defence capabilities within the European Union. Year ago it was unbelievable to hear, especially from the leader of France. As we've said - NATO will be re-organized and lose most power that it has right now. I will not be surprised, if there will be just US, GB, Canada, Australia and may be some Latin America countries, such as Argentina, Peru etc. Turkey is second largest military force in NATO is already one step out, about EU we've said above. Some puppets as Poland and Baltic countries could stay as well.
On the oversea continent, in US, it was proclaimed the same thing. General Terrence O’Shaughnessy said that US no longer safe from advanced Russian and Chinese weapon.When truth comes on surface, it finds the road to public. This is strongly contrasted with previous opinion of US total invincibility and absolute domination in any potential war conflict. This is totally corresponds to our view on long-term global situation. With 3-5 years role of different countries will change drastically and US is not an exception. From time to time, when we will see such issues - we will point on them, because they are important. Now let's go back to economy...
As Reuters reports - The dollar climbed for a second straight session on Friday as investors sought the safety of the U.S. currency after reports that the United States and Canada ended trade negotiations without any deal.
“The trade-positive news in the beginning of the week with the U.S.-Mexico deal has turned, and has become trade-negative,” said Alfonso Esparza, currency strategist at OANDA in Toronto.
“Now we’re seeing resistance on the Canada front with respect to NAFTA. Negotiations have concluded, but nothing has been decided so there’s a little bit of uncertainty. That has created a risk-averse environment, which has benefited the dollar.”
U.S. and Canadian officials on Friday concluded a round of talks on the North American Free Trade Agreement, a Canadian official said. The Canadian government will later in the afternoon announce the results of the talks.
The Wall Street Journal reported that U.S. President Donald Trump will tell Congress of plans to proceed with just the U.S.-Mexico trade deal.
Trump said on Friday that Canada had taken advantage of the United States on trade, as talks between the two countries, which are seeking to revamp the North American Free Trade Agreement, soured sharply.
“I love Canada, but they’ve taken advantage of our country for many years,” Trump said during a speech in North Carolina.
Concerns about a NAFTA deal with Canada grew after Canadian Foreign Minister Chrystia Freeland said earlier on Friday that Canada is looking for a “good deal, not just any deal.”
But Trump said any trade deal with Canada would be “totally on our terms,” confirming an earlier report from the Toronto Star.
Trump’s remarks ignited more dollar buying.
The greenback had rallied late on Thursday in a safe-haven move after Bloomberg News reported that Trump wanted to move ahead on a plan to impose tariffs on Chinese imports worth $200 billion next week.
The euro was also hit by Trump’s comments saying that the European Union’s proposal to eliminate auto tariffs was “not good enough.” Investors were fearful about Europe’s outlook as Trump has threatened to impose tariffs on cars assembled by German automakers.
Fathom tells about decreasing of July economy sentiment in US but at the same acknowledge that overall situation stands positive and they still on the trend to 3.5-4.0% GDP growth in 2018:
We have argued for some time that GDP growth and our ESI readings would converge, with the former picking up and the latter slowing, and that happened in the second quarter. We expect further convergence this year, with the US economy expanding by 3.5%-4.0% annualised in both 2018 Q3 and 2018 Q4.
COT Report
CFTC changes this week are not significant. Net speculative position has dropped a bit more, to -7.2K contracts, but, at the same time, Open interest has decreased for small amount of 5.2K contracts as well.
Technicals
Monthly
So price still stands at yearly Pivot and we said that this is more the range rather than precise number. Now we see that price feels some gravitation around it and it will be particular interesting and important what reaction price will show on it. This is major 50% Support area as well.
This week reaction was not bad and it seems that our expectations are started to realize by price action. This level is important not just because of YPP. Take a look - this is upper border of former 1.05-1.14 consolidation. If price will drop back inside it - it will open road to the bottom of 1.05 area. Price has problems with breaking borders of any consolidation, but it has no barriers inside and could freely move from up to bottom.
Another important moment here - our pennant. In fact, EUR shows right now failure breakout, "bearish trap". Usually it least to opposite breakout, which corresponds to our view on weekly chart.
Weekly
As we've mentioned previously once bearish reversal swing has been formed - market turned to reasonable upside bounce from major 50% Fib support, weekly Oversold. Last week we recognized here morning star pattern, which suggests upside continuation in a shape of AB-CD pattern on lower time frames. Our approximate target of this action is at least to 1.18-1.19 area.
our basic scenario and anticipated 1.20-1.21 area is 5/8 Fib resistance level.
Last week we were gambling on major resistance, whether it is started or not. Now, it seems that it is:
Daily
Retracement action has accelerated on Friday and now it is clear that this is probably the bounce that we are waiting for. According to our weekly/daily analysis - H&S pattern stands in center of scenario and we're watching for long entry somewhere around 1.15-1.1550 area. This area corresponds to the bottom of left shoulder. Hence, dealing with harmonic pattern we suggest that right arm should be also somewhere in this area.
Since drop already stands for 130 pips, its a bit too large for intraday retracement and this makes us think that this is particularly the action that we're waiting for:
Intraday
So, it seems COP target has become the one that triggered downside action. Actually, it is not COP alone, but in combination with Daily K-resistance, which creates strong resistance level. Now, as EUR likes 50% levels, it seems that we should keep an eye on it. It also corresponds to 1.15 idea.
Here I draw "222" Buy pattern just as one of possible scenarios. Having "222" could make our like easier, because we will get bullish pattern as a back of possible long entry:
On hourly chart we will watch for this scenario. As EUR has completed XOP target here - upside harmonic bounce to K-resistance and re-establishing of downside action. Large AB-CD should lead us to 1.15 and "222" Buy pattern on 4H:
Conclusion:
Signs that we see on weekly and daily charts suggest that retracement to 1.15 area that we were waiting for is started. Thus, on coming week we are focused on its final destination around 1.15 and possible bullish reversal patterns that will be formed there.
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.
Changes in the world become brighter and come on a surface. Things that we've discussed year ago start to materialize. Previously we've said that EU will start building of his own army and join Russia defense space. EU occupation by US forces comes to an end.
Recently France president E. Macron said that European states to work with Russia and construct new security architecture, in a bid to strengthen defence capabilities within the European Union. Year ago it was unbelievable to hear, especially from the leader of France. As we've said - NATO will be re-organized and lose most power that it has right now. I will not be surprised, if there will be just US, GB, Canada, Australia and may be some Latin America countries, such as Argentina, Peru etc. Turkey is second largest military force in NATO is already one step out, about EU we've said above. Some puppets as Poland and Baltic countries could stay as well.
On the oversea continent, in US, it was proclaimed the same thing. General Terrence O’Shaughnessy said that US no longer safe from advanced Russian and Chinese weapon.When truth comes on surface, it finds the road to public. This is strongly contrasted with previous opinion of US total invincibility and absolute domination in any potential war conflict. This is totally corresponds to our view on long-term global situation. With 3-5 years role of different countries will change drastically and US is not an exception. From time to time, when we will see such issues - we will point on them, because they are important. Now let's go back to economy...
As Reuters reports - The dollar climbed for a second straight session on Friday as investors sought the safety of the U.S. currency after reports that the United States and Canada ended trade negotiations without any deal.
“The trade-positive news in the beginning of the week with the U.S.-Mexico deal has turned, and has become trade-negative,” said Alfonso Esparza, currency strategist at OANDA in Toronto.
“Now we’re seeing resistance on the Canada front with respect to NAFTA. Negotiations have concluded, but nothing has been decided so there’s a little bit of uncertainty. That has created a risk-averse environment, which has benefited the dollar.”
U.S. and Canadian officials on Friday concluded a round of talks on the North American Free Trade Agreement, a Canadian official said. The Canadian government will later in the afternoon announce the results of the talks.
The Wall Street Journal reported that U.S. President Donald Trump will tell Congress of plans to proceed with just the U.S.-Mexico trade deal.
Trump said on Friday that Canada had taken advantage of the United States on trade, as talks between the two countries, which are seeking to revamp the North American Free Trade Agreement, soured sharply.
“I love Canada, but they’ve taken advantage of our country for many years,” Trump said during a speech in North Carolina.
Concerns about a NAFTA deal with Canada grew after Canadian Foreign Minister Chrystia Freeland said earlier on Friday that Canada is looking for a “good deal, not just any deal.”
But Trump said any trade deal with Canada would be “totally on our terms,” confirming an earlier report from the Toronto Star.
Trump’s remarks ignited more dollar buying.
The greenback had rallied late on Thursday in a safe-haven move after Bloomberg News reported that Trump wanted to move ahead on a plan to impose tariffs on Chinese imports worth $200 billion next week.
The euro was also hit by Trump’s comments saying that the European Union’s proposal to eliminate auto tariffs was “not good enough.” Investors were fearful about Europe’s outlook as Trump has threatened to impose tariffs on cars assembled by German automakers.
Fathom tells about decreasing of July economy sentiment in US but at the same acknowledge that overall situation stands positive and they still on the trend to 3.5-4.0% GDP growth in 2018:
We have argued for some time that GDP growth and our ESI readings would converge, with the former picking up and the latter slowing, and that happened in the second quarter. We expect further convergence this year, with the US economy expanding by 3.5%-4.0% annualised in both 2018 Q3 and 2018 Q4.
COT Report
CFTC changes this week are not significant. Net speculative position has dropped a bit more, to -7.2K contracts, but, at the same time, Open interest has decreased for small amount of 5.2K contracts as well.
Technicals
Monthly
So price still stands at yearly Pivot and we said that this is more the range rather than precise number. Now we see that price feels some gravitation around it and it will be particular interesting and important what reaction price will show on it. This is major 50% Support area as well.
This week reaction was not bad and it seems that our expectations are started to realize by price action. This level is important not just because of YPP. Take a look - this is upper border of former 1.05-1.14 consolidation. If price will drop back inside it - it will open road to the bottom of 1.05 area. Price has problems with breaking borders of any consolidation, but it has no barriers inside and could freely move from up to bottom.
Another important moment here - our pennant. In fact, EUR shows right now failure breakout, "bearish trap". Usually it least to opposite breakout, which corresponds to our view on weekly chart.
Weekly
As we've mentioned previously once bearish reversal swing has been formed - market turned to reasonable upside bounce from major 50% Fib support, weekly Oversold. Last week we recognized here morning star pattern, which suggests upside continuation in a shape of AB-CD pattern on lower time frames. Our approximate target of this action is at least to 1.18-1.19 area.
our basic scenario and anticipated 1.20-1.21 area is 5/8 Fib resistance level.
Last week we were gambling on major resistance, whether it is started or not. Now, it seems that it is:
Daily
Retracement action has accelerated on Friday and now it is clear that this is probably the bounce that we are waiting for. According to our weekly/daily analysis - H&S pattern stands in center of scenario and we're watching for long entry somewhere around 1.15-1.1550 area. This area corresponds to the bottom of left shoulder. Hence, dealing with harmonic pattern we suggest that right arm should be also somewhere in this area.
Since drop already stands for 130 pips, its a bit too large for intraday retracement and this makes us think that this is particularly the action that we're waiting for:
Intraday
So, it seems COP target has become the one that triggered downside action. Actually, it is not COP alone, but in combination with Daily K-resistance, which creates strong resistance level. Now, as EUR likes 50% levels, it seems that we should keep an eye on it. It also corresponds to 1.15 idea.
Here I draw "222" Buy pattern just as one of possible scenarios. Having "222" could make our like easier, because we will get bullish pattern as a back of possible long entry:
On hourly chart we will watch for this scenario. As EUR has completed XOP target here - upside harmonic bounce to K-resistance and re-establishing of downside action. Large AB-CD should lead us to 1.15 and "222" Buy pattern on 4H:
Conclusion:
Signs that we see on weekly and daily charts suggest that retracement to 1.15 area that we were waiting for is started. Thus, on coming week we are focused on its final destination around 1.15 and possible bullish reversal patterns that will be formed there.
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.
