FOREX PRO Weekly November 07-11, 2011

[rashidin5178]

As we are waiting by tonight the formation of the new government in Greece I would like to share with you some short comments useful to understand the importance of the period we are just passing and reflected by the indecision of the markets. Greece has and is creating turmoil in the markets its economic situation but Greece is only 1.8 of the EU GDP while Italy is at 17% whith current deficit of 1.9 Trillion EU's. This give you a measure of the impact of the developments in the neighboring country. There are similarities between the two such as the inability of the opposing parties to come to terms when disaster threatens and the fact that Italy has been borrowing heavily and now at over 6% lately! The markets will react favorably to Berlusconi's resignation although he seems to have the 316 votes of confidence he needs...we shall be watching the outcome. The point here is that Italy exports primarily within EU and the austerity measures everywhere is reducing exports. Combine this with the increasing spreads and interest rates and you get a scary avalanche. If Italy must be salvaged from EU as Greece this in my opinion cannot be done and we shall see the dissolving of the Eurozone with the healthy North forming probably a zone and the South left to its fate. That is why it is important for Italy while it is still possible, to take the steps necessary for both the country's and Eurozone's preservation.
Regards to All

Hi onenikos,

Nice info.

Talking about Berlusconi, I try to understand why market don't have a confidence to him that he can resolve the crisis. Is it due to his incompetency? Then who is able? Can you share with us if you have any idea?

Thanks and Best Regards.

 

[Venelin]

While you sit on your hands watch Italy`s lower house discussions here
http://webtv.camera.it/light/indexflash.php 14.30 GMT

 

[onenikos]

It all has to do with Berlusconi's attitude to a very real problem that of whether Italy will be able to pay its dept. As Italy's 10yr bond yield is 6.68 while the 5yr is 6.7 and higher, while "Cavaliere" (aka Berlusconi) refuses help from the IMF and publicly announces that "Italy is a great economy, I see the restaurants full, the airplanes full....we have no problem". This makes markets worry to say the lest and seek another person to firstly change the psychology, by taking now measures before it is too late.
Peace to all

 

[Sive Morten]

EUR/USD Daily Update, Wed 09, November 2011

Good morning,

As we've said yesterday, market could try to touch weekly pivot due to common price action. So, that has happened. Although situation on daily time frame has not changes, I want to attract your attention to couple of moments
First, take a look how market stands around monthly pivot point - highs and lows at the equal distance around it. It tells that market has no direction in sentiment currently. It is waiting.
Second, although is is very shallow relief for bulls, but market is forming higher lows in consolidation on daily time frame. This could lead to upward fake out of bearish pennant - some kind of W&R

Now, the most interesting:
On 4-hour chart, as we've suggested, market could form Butterfly "buy". I've drawn in to 1.618 target - 1.3434, since it is closer to target of pennant on daily, but market could finish it at 1.3530 - 1.27 level.
Theoretically, we should not anticipate harmonic patterns, but, now market stands very close to it's failure point - 1.3879. Placing stop above it - will give us outstanding risk/reward ratio and relatively small loss if we will become wrong.
Second, currently, this is the only pattern that exist on the market and that could be traded. At least we know - what is our risk where we will be wrong, and what will happen if we will right.
Also, right at pivot market has hit 0.618 target from greater AB-CD pattern. Its 1.0 extension stands at 1.3953 - that's why I've said that if butterfly will fail and market will continue move to upside - it could lead to fake out ot pennant and reaching this level.


On hourly trend has turned bearish. Market has hit also AB-CD target at 1.3856 from more recent AB-CD.

Finally, I have to say what I've told yesterday - market has no sentiment currently, it is very sensitive to any news or rumors from EU. Market is too uncertain. So, even we see some 100% pattern - it does not mean that we will not lost money, because market could be very choppy by news impact.

So, the choice is up to you.

 

[pckeys]

Butterfly sell?

Good morning,

As we've said yesterday, market could try to touch weekly pivot due to common price action. So, that has happened. Although situation on daily time frame has not changes, I want to attract your attention to couple of moments
First, take a look how market stands around monthly pivot point - highs and lows at the equal distance around it. It tells that market has no direction in sentiment currently. It is waiting.
Second, although is is very shallow relief for bulls, but market is forming higher lows in consolidation on daily time frame. This could lead to upward fake out of bearish pennant - some kind of W&R

Now, the most interesting:
On 4-hour chart, as we've suggested, market could form Butterfly "buy". I've drawn in to 1.618 target - 1.3434, since it is closer to target of pennant on daily, but market could finish it at 1.3530 - 1.27 level.
Theoretically, we should not anticipate harmonic patterns, but, now market stands very close to it's failure point - 1.3879. Placing stop above it - will give us outstanding risk/reward ratio and relatively small loss if we will become wrong.
Second, currently, this is the only pattern that exist on the market and that could be traded. At least we know - what is our risk where we will be wrong, and what will happen if we will right.
Also, right at pivot market has hit 0.618 target from greater AB-CD pattern. Its 1.0 extension stands at 1.3953 - that's why I've said that if butterfly will fail and market will continue move to upside - it could lead to fake out ot pennant and reaching this level.


On hourly trend has turned bearish. Market has hit also AB-CD target at 1.3856 from more recent AB-CD.

Finally, I have to say what I've told yesterday - market has no sentiment currently, it is very sensitive to any news or rumors from EU. Market is too uncertain. So, even we see some 100% pattern - it does not mean that we will not lost money, because market could be very choppy by news impact.

So, the choice is up to you.

Interested in your thoughts on the other butterfly on 4 hr.. any reason to think one is more valid than the other ?

Having tried 30 times , I am unable to upload chart...
Pattern starts from your point "b"

 

[Sive Morten]

Interested in your thoughts on the other butterfly on 4 hr.. any reason to think one is more valid than the other ?

Having tried 30 times , I am unable to upload chart...
Pattern starts from your point "b"

Yes, it is possible, why not? Our focus will be on "C" point also because this is AB=CD. IF market will move below it - it will erase as Butterfly, as AB-CD. So, downward probablity will become greater.

 

[Sive Morten]

EUR/USD Daily Update, Thu 10, November 2011

Good morning,
market has accomplished our butterfly assumption and shown a real plunge on daily chart. Usually, from technical perspective we might say, that down move should continue, since market has significant bearish momentum.
But as you probably know the reason of this collapse is retirement of Greece PM first, and second, that is more important - abscence of agreement about new person of PM.
Since market is mostly driven by news now, I will not dare to say that we will not see the same explode bar to the upside. Now anything is possible.
Still, I think that close look at intraday charts will help us to catch the first hints of this scenario.

Now market stands at significant support level - major 0.618 Fib support on daily, weekly pivot support 1, 1.618 AB=CD target at 4-hour and 1.27 target of butterfly.
Taking in consideration market mechanics, such thrusting bars as on 4-hour right at the target of Butterfly tells that market has good chances to continue bearish run. But as I say - now anything is possible.

The solution could come from hourly chart. What do we see here? Excellent thrust, market at 1.618 target and at other support levels. This could be excellent potential for DRPO "Buy" or B&B "Sell"/DRPO Failure. IF this will be the first case - then, probably it is make sense to try enter Long. At least market will show some significant retracement to the upside.
If it will be B&B "Sell", or DRPO Failure - we should be preapare for move to 1.34-1.3430 area - 1.618 target of Butterfly.

 

[Hadi_20]

hi there thank fore the analysis.
so you are saying this huge downtrend in eurusd is not because of italy debt crisis.

 

[rashidin5178]

Hi Sive,

Just to say thanks a lot for your assistance

 

[Sive Morten]

hi there thank fore the analysis.
so you are saying this huge downtrend in eurusd is not because of italy debt crisis.

Sure - Italy also
and split in opinion about EU future.