Sive Morten
Special Consultant to the FPA
- Messages
- 18,637
Monthly
August candle remains rather shy and small, although stands right under upper border of the flag. Thus, it is hard to add something valuable to former analysis here, since all that has been said still valid.
Previously we have discussed in details possible scenarios and why current price location is very important. At first glance it could be seen that here is nothing special and no big deal around, but in reality the oposite is true – it is a big deal around current level. Direction of real breakout of the flag pattern could set the direction of the market in long-term perspective. As you can see price action on passed week was not impressive, but market now stands slightly closer to previous highs. It is probably rather milestone sign that market is forming indecision pattern right around breakeven point of long-term sentiment, I mean yearly pivot point. It is very simbolical at current moment. Speaking about flag pattern itself, we already can find a lot of covert signs. For example, usually when price shows bullish trap action, i.e. fake upward breakout, in 90% of cases oposite real breakout follows. But what we see here? We see double failure. First it was bullish trap and then it was cancelled by bearish trap, since breakout down was also false and now is the question will real breakout up follow or not. We could think that as market has vanished bearish pattern – it must be strong bullish moment and may be this is true, especially because market still hold above yearly pivot. But we can ask – why this can’t happen again? Well may be it could, now we do not tell that we can estimate further direction from current messy action and do not even try to do this. we just want to indicate the current condition - action is really indecisive in big meaning of this word, since we see two fake breakouts around yearly pivot, that itself is a breakeven of yearly sentiment.
And market gradually becomes closer and closer to critical point – attempt to challenge previous highs and pretention on upward breakout. Probalby coming week will not become “that week”, but if market will continue as it stands – this is a question of 2-3 weeks probably, when price will reach the edge and we will undertsand whether we will get upward breakout or not.
Weekly
Well, trend holds bullish here, market not at overbought and price is tested 5/8 Fib resistance again. Market strongly stands above MPP and shows upward action 5 weeks in a row. Passed week does not care any drastical action. In fact it almost has become an inside week that could point on some indecision among investors. If we recall where market stands now on lower time frames, it becomes clear why market participants indecisive by far.
All stuff that we’ve said previously about unnatural action when you expect bearish development still valid. But this desrciption mostly relies on broader and farer in time picture. In nearest time however, based on lower time frame analysis, market could show some action to the downside. This will not destroy moderately bullish scenario on weekly by far but upward action could take place only after retracement will be over.
Here on weekly chart, is just the one more or less risk factor for bulls except 5/8 resistance – monthly pivot point. It has not been tested yet by market, and it stands slightly higher than 50% support level here. Thus, if market will fail to continue move up in nearest couple of weeks, MPP will become most probable downward target. At the same time, even retracement to MPP will not totally erase chances on upward continuation. It could be done only if market will take out 1.2730 lows.
As weekly and monthly time frames do not care new issues, we probably should start to find something valuable on lower time frames.
Daily
Well, it will be not a piece a cake to deal with EUR on next week. On short term charts we have two major tasks. First is find patterns, if any and second – invent how to minimize risk with possible position taking. Since we’ve discussed potential reversal pattern here, we will stick with it and will take a look at situation from bearish perspective. Since if this pattern will fail – it all will become clear.
As we’ve talked previously here we could get 1.27 H&S pattern, trend holds bearish and market now stands at point, that is absolutely perfect for enter short – top of potential right shoulder. This could help us to minimize possible risk. Our invalidation point will be high of most recent swing up, because if market will continue move higher it will destroy the harmony of H&S pattern make a challenge on its total destruction. Any move above current top in the beginning of the week will be unnatural from normal bearish development point of view. If price action will stand as we suggest, then nearest destination of downward move should be 1.3220-1.3240 neckline area.
Since market will open near WPP, special attention should be dedicated to its level – 1.3304. It will be excellent sign if price will move below WPP in the beginning of the week. Also take a look – WPS1 coincides with neckline on coming week. Since price will not have any barriers in between, action to the downside should be rather easy, without solid bounces. Is should be something like on left shoulder. By the way, harmonic swing of previous down retracements point on the same area.
4-hour
Although trend is bullish here, market has formed reversal candle that creates new high and closed below the low of previous candle. Simultaneously this is bearish engulfing pattern. As you can see market shows rather harmonic swings by far. Move up from neckline to the top of right shoulder equals the same distance on left shoulder, although a bit faster. All conditions for bearish development where made – equal harmonic swing, potential H&S on daily time frame, reversal candle and bearish engulfing here, on 4-hour chart. Thus, if market is really bearish and it intends to turn down in short term it should do this from current level. Any other development will be treated as denying of bearish context.
If market will erase this pattern and just continue move up, then daily H&S probably will fail. Currently we should stick with this engulfing pattern and try to take position with minimum risk. Special attention should be paid to WPP. We need to see that market will pass through it to the downside. That will increase confidence with our plan.
30-min
On Friday we’ve said – “we at the point, guys”. Thus if you want to take short position – watch for reversal patterns at the top of right shoulder, because there will not be any other chances around – market either will start move down, or H&S will fail. As you can see here, reversal has happened by Butterfly “sell” pattern. I do not see much here, but I just draw one of the possible scenarios. Since upward action was strong, I suppose that some bullish momentum has remained on market. It lets us pretend on some deeper retracement, may be even in shape of AB=CD. If this will happen, then the level to watch for - 1.3350 area, Agreement at 5/8 Fib resistance. Also do not forget about 50% level, EUR likes it.
Thus, if our entry point will be aproximately around 1.3350, stop point slightly higher 1.3380, then – this will be 40-45 pips risk. Currently it’s difficult to find something else. As usual – we do not want thrusting up action with solid candle, but development as we have now – gradual action with small candles.
Conclusion:
In long term perspective, market mostly still stands indecision, because is coiling around long-term sentiment breakeven point – yearly pivot. To point on direction price has to show break – out from current range. Until this will happen we can’t take sequence of trades in any direction. All that we can do in such environment is to search short-term clear setups and trade them fast. Although we can’t miss existence of slow but gradual move to the upside.
In short-term perspective market is forming potentially reversal setup on daily time frame. Whether this pattern will work of fail – we don’t know. But currently we do not have setup for long entry. Thus, our task is to try to take short position with minimum risk, based on patterns that we have on lower time frames.
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.
August candle remains rather shy and small, although stands right under upper border of the flag. Thus, it is hard to add something valuable to former analysis here, since all that has been said still valid.
Previously we have discussed in details possible scenarios and why current price location is very important. At first glance it could be seen that here is nothing special and no big deal around, but in reality the oposite is true – it is a big deal around current level. Direction of real breakout of the flag pattern could set the direction of the market in long-term perspective. As you can see price action on passed week was not impressive, but market now stands slightly closer to previous highs. It is probably rather milestone sign that market is forming indecision pattern right around breakeven point of long-term sentiment, I mean yearly pivot point. It is very simbolical at current moment. Speaking about flag pattern itself, we already can find a lot of covert signs. For example, usually when price shows bullish trap action, i.e. fake upward breakout, in 90% of cases oposite real breakout follows. But what we see here? We see double failure. First it was bullish trap and then it was cancelled by bearish trap, since breakout down was also false and now is the question will real breakout up follow or not. We could think that as market has vanished bearish pattern – it must be strong bullish moment and may be this is true, especially because market still hold above yearly pivot. But we can ask – why this can’t happen again? Well may be it could, now we do not tell that we can estimate further direction from current messy action and do not even try to do this. we just want to indicate the current condition - action is really indecisive in big meaning of this word, since we see two fake breakouts around yearly pivot, that itself is a breakeven of yearly sentiment.
And market gradually becomes closer and closer to critical point – attempt to challenge previous highs and pretention on upward breakout. Probalby coming week will not become “that week”, but if market will continue as it stands – this is a question of 2-3 weeks probably, when price will reach the edge and we will undertsand whether we will get upward breakout or not.
Weekly
Well, trend holds bullish here, market not at overbought and price is tested 5/8 Fib resistance again. Market strongly stands above MPP and shows upward action 5 weeks in a row. Passed week does not care any drastical action. In fact it almost has become an inside week that could point on some indecision among investors. If we recall where market stands now on lower time frames, it becomes clear why market participants indecisive by far.
All stuff that we’ve said previously about unnatural action when you expect bearish development still valid. But this desrciption mostly relies on broader and farer in time picture. In nearest time however, based on lower time frame analysis, market could show some action to the downside. This will not destroy moderately bullish scenario on weekly by far but upward action could take place only after retracement will be over.
Here on weekly chart, is just the one more or less risk factor for bulls except 5/8 resistance – monthly pivot point. It has not been tested yet by market, and it stands slightly higher than 50% support level here. Thus, if market will fail to continue move up in nearest couple of weeks, MPP will become most probable downward target. At the same time, even retracement to MPP will not totally erase chances on upward continuation. It could be done only if market will take out 1.2730 lows.
As weekly and monthly time frames do not care new issues, we probably should start to find something valuable on lower time frames.
Daily
Well, it will be not a piece a cake to deal with EUR on next week. On short term charts we have two major tasks. First is find patterns, if any and second – invent how to minimize risk with possible position taking. Since we’ve discussed potential reversal pattern here, we will stick with it and will take a look at situation from bearish perspective. Since if this pattern will fail – it all will become clear.
As we’ve talked previously here we could get 1.27 H&S pattern, trend holds bearish and market now stands at point, that is absolutely perfect for enter short – top of potential right shoulder. This could help us to minimize possible risk. Our invalidation point will be high of most recent swing up, because if market will continue move higher it will destroy the harmony of H&S pattern make a challenge on its total destruction. Any move above current top in the beginning of the week will be unnatural from normal bearish development point of view. If price action will stand as we suggest, then nearest destination of downward move should be 1.3220-1.3240 neckline area.
Since market will open near WPP, special attention should be dedicated to its level – 1.3304. It will be excellent sign if price will move below WPP in the beginning of the week. Also take a look – WPS1 coincides with neckline on coming week. Since price will not have any barriers in between, action to the downside should be rather easy, without solid bounces. Is should be something like on left shoulder. By the way, harmonic swing of previous down retracements point on the same area.
4-hour
Although trend is bullish here, market has formed reversal candle that creates new high and closed below the low of previous candle. Simultaneously this is bearish engulfing pattern. As you can see market shows rather harmonic swings by far. Move up from neckline to the top of right shoulder equals the same distance on left shoulder, although a bit faster. All conditions for bearish development where made – equal harmonic swing, potential H&S on daily time frame, reversal candle and bearish engulfing here, on 4-hour chart. Thus, if market is really bearish and it intends to turn down in short term it should do this from current level. Any other development will be treated as denying of bearish context.
If market will erase this pattern and just continue move up, then daily H&S probably will fail. Currently we should stick with this engulfing pattern and try to take position with minimum risk. Special attention should be paid to WPP. We need to see that market will pass through it to the downside. That will increase confidence with our plan.
30-min
On Friday we’ve said – “we at the point, guys”. Thus if you want to take short position – watch for reversal patterns at the top of right shoulder, because there will not be any other chances around – market either will start move down, or H&S will fail. As you can see here, reversal has happened by Butterfly “sell” pattern. I do not see much here, but I just draw one of the possible scenarios. Since upward action was strong, I suppose that some bullish momentum has remained on market. It lets us pretend on some deeper retracement, may be even in shape of AB=CD. If this will happen, then the level to watch for - 1.3350 area, Agreement at 5/8 Fib resistance. Also do not forget about 50% level, EUR likes it.
Thus, if our entry point will be aproximately around 1.3350, stop point slightly higher 1.3380, then – this will be 40-45 pips risk. Currently it’s difficult to find something else. As usual – we do not want thrusting up action with solid candle, but development as we have now – gradual action with small candles.
Conclusion:
In long term perspective, market mostly still stands indecision, because is coiling around long-term sentiment breakeven point – yearly pivot. To point on direction price has to show break – out from current range. Until this will happen we can’t take sequence of trades in any direction. All that we can do in such environment is to search short-term clear setups and trade them fast. Although we can’t miss existence of slow but gradual move to the upside.
In short-term perspective market is forming potentially reversal setup on daily time frame. Whether this pattern will work of fail – we don’t know. But currently we do not have setup for long entry. Thus, our task is to try to take short position with minimum risk, based on patterns that we have on lower time frames.
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.