Sive Morten
Special Consultant to the FPA
- Messages
- 18,639
Monthly
Monthly trend is bearish. As you remember, during the last month we’ve discussed the possible level from which reversal can start. The main nuance here is a level of oversold. The blue line is a Detrended oscillator. When it reaches extreme low level - market is oversold. And now, if we compare the deep of a lows in 2008 and 2010 we can see that the oversold in 2008 was much stronger than in 2010. In 2008 market has shown 0.618 retracement. So, if in 2010 oversold is not much deep, then the retracement should be softer. The first level that I’ve mentioned was 1.3076-1.3223. This is a 0.382 Fibonacci retracement from last down swing. And market has passed through it. The next level is 1.3480-1.3540. This is a combination of 0.382 retracement from whole move down since 2008 and 50% retracement of previous swing down.
But why I think that this retracement should happened sooner rather than later? The point is that “V” shape of recovery is very unstable and happens relatively rare compares to
“W” shape. We can even say that “V” shape gravitates to “W”. Just look to previous up reversal in 2008. In the beginning it has seemed that up move has started and will hold forever – it was very strong move, right to 0.618. That’s why I expect that this reverse to downside should happen, although it’s impossible to say how strong in will be.
So, on the monthly chart market has passed our first potential reversal level at 1.31 and the next area of possible reversal roughly 1.35
Weekly
Weekly adds some details to the monthly. A lot of stuff on it - so let’s go step by step. First of all, I keep intact previous resistance that includes conjunction of two Fibonacci levels at 1.3076-1.3123. Market has passed through it and absolutely disrespected them – even not a bounce. It’s important and we will need this detail in further analysis. Second, there is the same monthly resistance area around 1.35 but now it also includes additional 0.618 Fibonacci resistance. So, 1.35 area includes three different Fibonacci levels of resistance that makes it even stronger than previous one. Also, look at the chart – 1.35 coincides with lows of consolidation that was formed during move down.
Another important moment for me is that current up move rather solid thrust. Market moves up for 8 consistence weeks without any retracement. This moment allows us to make an important conclusion – I’ll be a buyer of the first week retracement.
The red dash line just above the market is a monthly pivot resistance 1 at 1.3374. Market can feel some struggle around it.
That’s being said, weekly chart shows coincidence of three different levels around 1.35 area. Also, market absolutely disrespected previous resistance area and shows us solid thrust up. Just above the market 1.3374 – area of monthly Pivot resistance1.
Daily
So, we’ve just estimated that the next long-term strong resistance area and the target of up move is 1.35 area. The shorter-term time frame that is daily shows us that market is near another resistance area that is closer. 1.3350 – 0.786 retracement from the 1.3650 high that was in April, and 1.3374 is a monthly pivot resistance area. If market will continue move up – this will be the next resistance.
Daily trend is bullish, there is no oversold on the market, and market shows strength, it’s absolutely disrespected previous strong resistance. We can be buyers. At the same time I do not like very much an idea of long-term “Buy” trade. Because market is overextended and we’re at resistance level. Probably the scalp trade with 1.3350-1.3370 target. So, where and how to enter?
We will talk about it in 1-hour part, but here I just want to mention two levels. 1.3220 – weekly Pivot point and 1.31 area – previous disrespected resistance level.
1-Hour
As I’ve said on Friday, I’ve expected upper breakout during NFP release and then fast move down below 1.3150. That was my sell signal and it wasn’t realized. Market has moved up and holds there. So, it means that we can “Buy” on retracement lower.
Оk, probably this is a very short picture. Personally, I’ll be watching for two areas – 1.3220-1.3230 and 1.3120. Look at the chart, if point “C” is in place already, then the target of possible AB-CD correction is 1.3230 area. This is also a weekly pivot point, previous consolidation high and 50% retracement of a strong up bar. If market will flirting with this area and show some Buy signals there – I’ll take them. The one important moment that you should take care of – watch for the speed of CD leg. If it will be steeper and faster then AB leg, other words if market just fall down, do not enter long at D point. It’s possible further move down.
If it will happen, then 1.31-1.3120 area is the next area of support from which market can start up move. (Although I will not be very happy with the fact that the lows of strong NFP up bar will be taken out and market will fall below pivot point. I prefer if it holds). As you remember this is an area of previously disrespected weekly resistance that now will be a support. Also this is 0.382 support level from 1.2730 low in July.
So, in long term picture I suspect that market will go to 1.35 area. In short-term – we can make a “Buy” scalp trade with 1.3350-1.3375 target and enter at 1.3220 area or 1.31-1.3120 depends on where market will show strength. Personally, I prefer the first scenario, but market very often returns to disrespected strong resistance areas.
Important. When I tell that we may enter Long at 1.3220, for example, it does not mean that all that we have to do is just place a sleeping order. Absolutely not. We have to track price action around it and before it (remember what I’ve told about AB and CD legs). And enter Long only after the bullish signals around this levels.
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.
Monthly trend is bearish. As you remember, during the last month we’ve discussed the possible level from which reversal can start. The main nuance here is a level of oversold. The blue line is a Detrended oscillator. When it reaches extreme low level - market is oversold. And now, if we compare the deep of a lows in 2008 and 2010 we can see that the oversold in 2008 was much stronger than in 2010. In 2008 market has shown 0.618 retracement. So, if in 2010 oversold is not much deep, then the retracement should be softer. The first level that I’ve mentioned was 1.3076-1.3223. This is a 0.382 Fibonacci retracement from last down swing. And market has passed through it. The next level is 1.3480-1.3540. This is a combination of 0.382 retracement from whole move down since 2008 and 50% retracement of previous swing down.
But why I think that this retracement should happened sooner rather than later? The point is that “V” shape of recovery is very unstable and happens relatively rare compares to
“W” shape. We can even say that “V” shape gravitates to “W”. Just look to previous up reversal in 2008. In the beginning it has seemed that up move has started and will hold forever – it was very strong move, right to 0.618. That’s why I expect that this reverse to downside should happen, although it’s impossible to say how strong in will be.
So, on the monthly chart market has passed our first potential reversal level at 1.31 and the next area of possible reversal roughly 1.35
Weekly
Weekly adds some details to the monthly. A lot of stuff on it - so let’s go step by step. First of all, I keep intact previous resistance that includes conjunction of two Fibonacci levels at 1.3076-1.3123. Market has passed through it and absolutely disrespected them – even not a bounce. It’s important and we will need this detail in further analysis. Second, there is the same monthly resistance area around 1.35 but now it also includes additional 0.618 Fibonacci resistance. So, 1.35 area includes three different Fibonacci levels of resistance that makes it even stronger than previous one. Also, look at the chart – 1.35 coincides with lows of consolidation that was formed during move down.
Another important moment for me is that current up move rather solid thrust. Market moves up for 8 consistence weeks without any retracement. This moment allows us to make an important conclusion – I’ll be a buyer of the first week retracement.
The red dash line just above the market is a monthly pivot resistance 1 at 1.3374. Market can feel some struggle around it.
That’s being said, weekly chart shows coincidence of three different levels around 1.35 area. Also, market absolutely disrespected previous resistance area and shows us solid thrust up. Just above the market 1.3374 – area of monthly Pivot resistance1.
Daily
So, we’ve just estimated that the next long-term strong resistance area and the target of up move is 1.35 area. The shorter-term time frame that is daily shows us that market is near another resistance area that is closer. 1.3350 – 0.786 retracement from the 1.3650 high that was in April, and 1.3374 is a monthly pivot resistance area. If market will continue move up – this will be the next resistance.
Daily trend is bullish, there is no oversold on the market, and market shows strength, it’s absolutely disrespected previous strong resistance. We can be buyers. At the same time I do not like very much an idea of long-term “Buy” trade. Because market is overextended and we’re at resistance level. Probably the scalp trade with 1.3350-1.3370 target. So, where and how to enter?
We will talk about it in 1-hour part, but here I just want to mention two levels. 1.3220 – weekly Pivot point and 1.31 area – previous disrespected resistance level.
1-Hour
As I’ve said on Friday, I’ve expected upper breakout during NFP release and then fast move down below 1.3150. That was my sell signal and it wasn’t realized. Market has moved up and holds there. So, it means that we can “Buy” on retracement lower.
Оk, probably this is a very short picture. Personally, I’ll be watching for two areas – 1.3220-1.3230 and 1.3120. Look at the chart, if point “C” is in place already, then the target of possible AB-CD correction is 1.3230 area. This is also a weekly pivot point, previous consolidation high and 50% retracement of a strong up bar. If market will flirting with this area and show some Buy signals there – I’ll take them. The one important moment that you should take care of – watch for the speed of CD leg. If it will be steeper and faster then AB leg, other words if market just fall down, do not enter long at D point. It’s possible further move down.
If it will happen, then 1.31-1.3120 area is the next area of support from which market can start up move. (Although I will not be very happy with the fact that the lows of strong NFP up bar will be taken out and market will fall below pivot point. I prefer if it holds). As you remember this is an area of previously disrespected weekly resistance that now will be a support. Also this is 0.382 support level from 1.2730 low in July.
So, in long term picture I suspect that market will go to 1.35 area. In short-term – we can make a “Buy” scalp trade with 1.3350-1.3375 target and enter at 1.3220 area or 1.31-1.3120 depends on where market will show strength. Personally, I prefer the first scenario, but market very often returns to disrespected strong resistance areas.
Important. When I tell that we may enter Long at 1.3220, for example, it does not mean that all that we have to do is just place a sleeping order. Absolutely not. We have to track price action around it and before it (remember what I’ve told about AB and CD legs). And enter Long only after the bullish signals around this levels.
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.
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