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Euro Forex Pro weekly 14-18 June, 2010

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Jun 13, 2010.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Fundamentals
    There were some interesting events during the week - as macro data such as a important statements from officials. First of all, let’s start with domestic events. In general, I have to say that nothing is changed much. The economy still shows growth but the pace of recovery is not very strong. As it has happened during recent months, data was mixed. Consumer credit shows some improvement and was released at 1Bln growth (-2 Bln expected) while in the previous time it was negative with -5.4 Bln. From the other side, retail sales had shown contraction -1.2% with expectations of growth 0.2%. There are some fears around retail sales and market worries that US consumers may not have the ability to pick up the slack in purchasing power from European consumers. Everybody anticipates a reduction in EU consumer power, but for now it is difficult to say how it may impact on US consuming and retail sales. In general, the moderate pace of recovery is an optimal situation for the Fed – inflation does not hit much, and the Fed can keep rates low and as a result more effectively stimulate economic growth in the long term.
    Investors continue to keep an eye on China, which perspective of growth does not absolutely clear. The main concern there – the pace of recovery of the economy and it seems to be overheating. This is just two sides of a coin. If signs of overheating start to prevail and China will start to tighten policies to chill it – this leads to a reduced pace of growing not only in China's economy, but for the world economy also. Although retail sales increased by 18.7% (18.5 expected), Industrial production fell to 16.5% from 17.8%.
    In the EU officials finally pushed the stone of uncertainty. On Thursday, President Trichet said that the ECB will continue unlimited funding operations and carry on with its bond purchases. At the same time, he has pointed concerns about the high level of deposits in ECB. The statement and support from officials can lead to short- term support of currency, but definitely, the EUR is in the woods still. In the previous week there was a rumor about Spain that it can call for funding and follow to the Greece. When Spain’s officials had strongly denied these statements, I thought that I have a deja-vu because the same was with Greece that refuted all rumors and made opposing statements. We all know what finish they had have…
    So, that’s being said – the situation from doom and gloom has passed to a gradual development phase. But major components still in place – gradual but slow development in US and the EU crisis. I will not be surprised much if in the nearest future, investors begin to watch on EU macro data again. And when it will happen, they start to push EUR lower due to macro data at this time. Other words – we’ve done mostly with political factors, now we will return to economic ones and they will start drive EUR mostly. And I do not expect see them impressive in the near term.

    Technical
    Monthly

    The monthly picture has not changed much, we see excellent thrust down, the trend is bearish. In the long term we would like to be sellers, but the market now at monthly overbought and at monthly Fib support. So, current time is not for any “Sell and hold” position – we need a pullback for that, definitely for scalp short, but not for “Sell and hold” (chart 1). At the same time we see small bouncing on monthly chart. For now I do not know if will the pull back be strong or market just starting to coil around Fib support. Sometimes I saw when the market reached oversold, reach Fib support and didn’t budge at all. But ok, this is a very long picture and it has a bullish bias for form’s sake – it is called a “Stretch” market oversold at Fib support. But this signal is very tricky because if you take it – you will start to trade against a major trend. Anyway this is just a context. To get a particular signal to enter long, we have to look at weekly and daily charts.
    What else can the monthly chart tell us? Look at monthly #2 picture – see the ellipse that I’ve marked – this was a very strong support area – monthly confluence support and also an Agreement with COP target. What do we see? Market passed through it like a hot knife through butter and absolutely disrespected this level. Very often it happens – when market starts a retracement, it returns to disrespected confluence levels.
    So keep in mind this 1.3030 area. 1.2600 level - is a monthly Pivot point that also was not traded by market still.
    Now, look at monthly #3 chart – there are two expansions from the whole up swing – 1.27 and 1.618. This is a reverse formation (“butterfly” if somebody knows). Usually it reached 1.27 that is 1.0471 area or 1.61 (0.8960) expansion where market can make a major reversal. I can’t paint the wings for them (CQG does not allow me to do that). Taking into account acceleration from COP directly to OP without any meaningful retracement, I expect that we will reach at least 1.27 expansion.
    Well, much information comes from the monthly chart today – if reversal starts two major levels – 1.26 (Pivot) and 1.30 area – disrespected strong support. If we see some ABC-bottom pattern on weekly that ends near 1.30 area - this will be excellent possibility for enter short.
    Second – “Stretch” Buy directional pattern, but we need a confirmation on lower time frames.
    Targets – OP=1.1480 and butterfly’s reversal pattern 1.27 expansion at 1.0471


    Weekly

    The weekly chart does not give us a particular signal, but it will be interesting to position traders. The trend is bearish still; market has reached monthly Pivot support 1 and bounced a bit. There are 3 major areas one the weekly chart. First of all, if market will continue to fall – 1.14-1.1480 area is what to watch for. Market should bounce from there. There are monthly Pivot support 2, weekly and monthly oversold, monthly OP target (see monthly chart).
    But monthly “Stretch” pattern is in my mind still and I expect some bounce up. There are 2 interesting areas with strong resistance that are suitable for opening long term short positions. First- 1.2600-1.2612 area – combination of Fib resistance and monthly Pivot point. I think that it should be reached during the June. Second, perfect from my mind – 1.3081-1.3118 – Weekly Confluence resistance and Monthly Pivot resistance 1. Where definitely an up move should finish – I do not know. From one side – we are in a very strong bearish trend, and the market should not make a deep retracement up. From the other side – we are extremely oversold on monthly and the 1.31 area is a normal 0.382 retracement, nothing wrong with that. Besides, in 2009 there was a very deep retracement in similar circumstances. So, my #1 is 1.31 area. Anyway, we should look to any daily ABC-bottom patterns. And if they will point on one or another area – this will be it.

    Daily
    This is the daily chart, trend turns bullish, and we have a bullish convergence, by the way. 1.2035 is a Weekly pivot point, 1.1914 weekly pivot support 1 and 1.2195 – weekly pivot resistance 1 for the next week. First of all, I want to note here that market has closed below weekly pivot. What is a strategy for the next week… We know that we are at monthly oversold and Fib support and at monthly Pivot support 1. So, I think that we can count on some bounce. Where it can be possible enter long – we will estimate on the hourly chart, but as a target I like 1.2190-1.2210 area, at least for the next 2 days. This area is a combination of daily overbought at Fib resistance and weekly pivot resistance 1 also. I think that market will retrace lower from there.

    Hourly

    As we’ve just pointed, we would like to find an area to enter long. The hourly trend is bearish. As I’ve said on Friday, retracement should not start until we reach an OP=1.2265, so, market has reached it and start a retracement. But let’s look where we are now.
    Look at ABC-top pattern. It just an approximation, because market can go up futher a bit, so point B can be displaced higher, but this is just an example. When the down move will start, and “B” point will be estimated, we can calculate targets. If OP will coincide with 1.2042-1.2057 area, that is weekly Pivot and hourly confluence support, then, probably we can go long from there. But I think somehow, that the market should make a deeper retracement, because this is just a first swing up on daily chart. If my OP at 1.2015 will not change then, I probably will enter at 1.1990-1.2015 area. But this is just an assumption – watch for any bullish signals around the important levels. If I’ll see them around 1.2030 area - I’ll enter from there. If the market will fall like a stone – there is another area to watch for – weekly pivot support 1 that coincides with 0.88 retracement.

    Good luck.
     

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    #1 Sive Morten, Jun 13, 2010
    Last edited: Jun 13, 2010
  2. Sive Morten

    Sive Morten Special Consultant to the FPA

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    And this is the hourly chart

    Hourly

    As we’ve just pointed out, we would like to find an area to enter long. The hourly trend is bearish. As I’ve said on Friday, retracement should not start, until we reach an OP=1.2265, so, market has reached it and started a retracement. But let’s look when we are now.
    Look at ABC-top pattern. It is just an approximation, because the market can go up futher a bit, so point B can displace higher, but this is just an example. When the down move will start, and the “B” point will be estimated, we can calculate targets. If OP will coincide with 1.2042-1.2057 area, that is weekly Pivot and hourly confluence support, then, probably we can go long from there. But I think somehow, that if the market should make a deeper retracement, because this is just a first swing up on daily chart. If my OP at 1.2015 will not change then, I probably will enter at 1.1990-1.2015 area. But this is just an assumption – watch for any bullish signals around the important levels. If I’ll see them around 1.2030 area - I’ll enter from there. If market will fall like a stone – there is another area to watch for – weekly pivot support 1 that coincides with 0.88 retracement.

    Good luck.
     

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    #2 Sive Morten, Jun 13, 2010
    Last edited: Jun 13, 2010
  3. jim deblasio

    jim deblasio Recruit

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    ABC

    Hi Sive,

    OP = B-A+C in our current situation,

    B=1.2054, A=1.2164, C=1.2125

    Are the formulas different between an uptrend and downtrend?

    downtrend = A - B + C, uptrend = B - A + C

    Thanks,
    Jim
     
  4. Denman62

    Denman62 Recruit

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    Would someone be kind enough to define for me the below abbreviations used by Sive Morten? .

    CQG

    COP

    OP

    I'm a new reader of his weekly analysis

    Thanks.
     
  5. an2

    an2 Recruit

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    would someone shed me some light here? I don't know what ABC that Sive mentioned above is? is it the entrance based on breakout at B? is it the same as 123 concept? if yes, how about the objective target calculation?
     
  6. deanz

    deanz Private

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  7. ChiefDM

    ChiefDM Recruit

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    Hi Sive,

    Thanks again for the excellent updates. I have a question on the above. You mention that retracement should not start until the OP is reached at 1.2265 but the OP is down at 1.2165 on the chart? Is that a simple typo or am I missing something?

    Thanks,

    Chief
     
  8. Azhar

    Azhar Recruit

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    :embarrassed:
     
  9. personalme

    personalme Recruit

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    Morten sir, doesnt it better to put those XOP, OP, ABC and some others abbv. (plus reference links about Dinapolli if any) on your every posts? Thus it will reduce new comers asking same questions over and over which in the end annoy you. I'm not blamming new comers here. They're keep coming since your posts gave them very good insight about the market. It's just I dont want you to stop posting because you answer the same questions over and over :)
     
  10. kamuta

    kamuta MQL45 Representative

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    I see very important "wind of change" - debt crisis start spreads across the world, not only Europe - just see Japan's new prime minister speach about 200% GDP debt... This can lead to fast yen falling to 110 first target and more important - rising power of yen crosses, which can change most pairs technical...
    What do you think about?...
     

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