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Euro Forex Pro Weekly 2010-04-28

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Apr 28, 2010.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUROPEAN FOREX PROFESSIONAL WEEKLY
    Analysis and Signals
    April 28, 2010

    Fundamentals

    The current week is well loaded with macro economic events and today we shall discuss the FOMC rate decision and the situation in Greece again. The more so that these events are mostly correlated and can make a huge influence on the global economy in the near term. We will start with Greece, because it will help us to make a conclusion about FOMC logic in its rate decision.
    As I’ve pointed out earlier and continue to point out - the Greek problems are much tougher than they seem. And that makes me think that the EUR will depreciate stronger than it was expected to. All market participants are waiting for details of the EU/IMF bailout plan for Greece. The S&P has downgraded Greece's credit rating to a junk level, The National Bank of Greece rating was downgraded to BB+. Also there is a rumor that Greece may enter into a debt restructuring program. What influences and consequences will all this stuff have? Very, very large:

    - First, Greek debt will be excluded from many Bond Indexes due to downgrading. Many Mutual, Pension and other funds will not be able invest in Grecian debt, because It has become junk. This will lead to a huge Greek bonds sell-off in an illiquid market, and possibly to selling EU currency on FOREX, if funds will not wish to reinvest it in other European debts;
    - Second, the rate hike in the EU will not happen in the foreseeable future. EUR can loose its status as a reserve currency in near term.
    - The growth in the USD can lead to contraction of Corporate profits in the US;
    - Hedge funds can switch attention to high-yield bonds from equities. This can limit demand for equities in near term and lead to some sell-of in equities;
    - The Greece crisis will lead to risk aversion, growing rates for corporate, that will make financing for corporate harder and can lead to reducing of the pace of recovery;
    - The higher rates will be a solid burden for Greece's economy. ​


    As you see, the consequences are very meaningful. Also worth noting here, that Spain and Italy also have issued their debts during the week and subscription was at a very low level. The process of risk reassessment is underway. And what is about the Fed?
    Taking into account the current situation, the Fed will not be likely to hasten much. I expect that they should notice some improvement in the economy, possibly they will even remove “extended period of time” extremely, although the probability of this step is low. The numbers tell us that inflation is anemic, the bank sector has many problems as solid provision reserves, that do not reduce much, the value of Industrial and commercial loans does not rise, the housing market shows low growth also. They definitely will not be hasty. Why should they? The only sign of improvement – is a labor market and some growth in retail sales.

    Résumé: Uncertainty in the EU will press on EUR in near term. Although we can see some problems in the US banking sector, low inflation and lack of pace in housing market recovery, I think that EU negatives are much stronger and this will push EUR/USD rate lower. The nearest level that I expect is 1.28-1.30.

    Technical

    Quarterly (EURO FX all sessions CME futures)

    Quarterly situation is still in place - we have a down trend. We can see that the H&S pattern continues to form. The blue line on the chart is a lower bound of Oscillator predictor that shows us an oversold level of the market. There is no oversold yet, but the market is close to this. Very important thing – Agreement support that includes COP target at 1.2881 and 0.382 major support level at 1.3030. If we add to this a quarterly oversold condition then we get a very strong support at 1.28-1.30 level. The neck line of H&S is precisely in the Agreement area also. All this stuff makes me expect that we shouldn’t break the neck line on the first attempt. I expect retracement higher from the 1.28-1.30 area. Taking into consideration that this is a quarterly chart, the market should stay above 1.28 till July 2010. Support of 25x5 MA is also in area between 1.28 and 1.30. All this information means that we have to look for possible signs of up move from 1.28-1.30 in lower time frames – weekly and monthly.

    Quarterly EUR/USD
    [​IMG]

    Monthly (EURO FX all sessions CME futures)

    Monthly #1 chart shows some additional detail to te quarterly graph – additional 0.618 support at 1.2756. So, we have monthly Confluence (although it’s a bit wide) and Agreement with COP=1.2881. Also we have an April Oversold level there (1.2782) and possible neck line of a H&S pattern. The result is the same - 1.28-1.30 is very strong support. We have all rights to expect pullback from this somewhere around May. The trend is bearish.
    Also I want to show market behavior around monthly Pivot points. This is Monthly Chart #2. Look, for 5 consecutive months the market has closed below Pivots. On Monday we can calculate Pivot support and resistance for May.

    Monthly #1 EUR/USD
    [​IMG]

    Monthly #2 EUR/USD
    [​IMG]

    Weekly (EURO FX all sessions CME futures)

    Our target of the previous week (market should reach 1.32 due to trend changing failure) was achieved. Moreover, the market has tried to change trend to bullish on every of the recent 3 weeks and failed every time. My target is still intact – XOP=1.3074. It’s almost in agreement with 0.382* monthly support. We have no oversold at weekly.
    Lets look at April Pivots support (weekly chart #2). Although we have just 3 days till the end of month, I want to to point on some movements. First – we can see how the market has tried to break through monthly pivots. Second, the market is below April Pivot support 1 and it is very bearish, the pivot support 2 is just below XOP=1.3074 and monthly 0.382 support at 1.3030. This is a very strong support area.

    Weekly #1 EUR/USD
    [​IMG]

    Weekly #2 EUR/USD
    [​IMG]

    Daily (EURO FX all sessions CME futures)

    As we said on previous week, all trends are turned bearish. Our target at 1.3200 was achieved and I’ve sold rallies short term (on my demo also) a couple of times. So, let’s look at the daily chart. It’s a bit complicated. First, we should expect a down move still, although today's reaction of FOMC statement can be unpredictable. If it will lead to upper retracement, I still will be watching for a moment to sell a rally. And I think that the 1.3365-1.3386 area is good enough for that – we have a weekly Pivot there, and Confluence resistance.
    If not – that’s fine. The market has just passed through weekly Pivot support 1. The support 2 at 1.3050 area as a daily Oversold and weekly XOP=1.3074 and monthly 0.382* support. What else do we need? This is the nearest daily target 1.3030-1.3074, regardless of possible short term pullback, that we should use for selling. The intermediate target is a daily COP=1.3111 and 1.31 level.

    Daily EUR/USD
    [​IMG]

    Trade possibilities (1):

    Monthly

    The nearest long-term target is COP=1.2880. I expect that we will see retracement higher from 1.28-1.30 area in IIQ. Look for possible signs of an up move on the weekly frame, when market will reach 1.28-1.30 area.

    Weekly

    We have failing trend changing for 3 consecutive weeks, so, I expect that market should reach XOP=1.3074 then.

    Daily

    Today the FOMC meeting and the results of their statement can be tricky for FOREX. If their comments will lead to a pullback, I think, that 1.3365-1.3386 area good enough to investigate a possibility to enter a short during the current week. If not – I expect 1.3030-1.3075 area should be reached sooner rather than later. Anyway, I will be looking for possibilities to sell the rallies.


    European Forex Professional Weekly Signal - Forex Peace Army Forum


    (1) “Trade possibilities” are not detailed trade signals with specific entries and exits. They are expectations about possible moves of the market during the week based on market analysis.


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    General Notice: Information has been obtained from sources believed to be reliable, but the author does not warrant its completeness or accuracy. Opinions and estimates constitute author’s judgment as of the date of this material and are subject to change without notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and are not intended as recommendations of particular securities, financial instruments or strategies to particular clients. The recipients of this report must make their own independent decisions regarding any securities or financial instruments mentioned herein.
     
    #1 Sive Morten, Apr 28, 2010
    Last edited: Apr 28, 2010
  2. Lucas Gremista

    Lucas Gremista Private, 1st Class

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    Hi Sive!

    I made 100 pips last week because of you, thank you so much. But even though, I don't completely understand the signals, the numbers on the charts are not the pair price, right? And what COP and XOP means?

    Thank you for all your help
     
  3. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi Lucas

    I'm glad that analysis was helpfull to you. This is what I'm working for.

    Concerning numbers - not exactly. This is a pair price, but times for 10 000.
    If you divide the numbers on the chart for 10 000, you will get precisely EUR/USD quotes. This is just as CQG is quoted...

    COP - Contraction objective point. This is a nearest Fibonacci expansion for 0.618
    OP = 1 Objective point
    XOP = 1.618 extended objective point.
     
  4. RAnjit

    RAnjit Recruit

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    Hi Steve,

    I have just started trading in a demo account. I have made a profit of 50 pips in that account, but i am unable to understand the graphs. Can u please suggest me some book from which i can learn about graphs


    Regards
    Ranjita
     
  5. Sive Morten

    Sive Morten Special Consultant to the FPA

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    G'day Ranjita

    Well, You can start from, for example, J.Shwager "Technical Analysis".
    If you are interested in Japanese candlesticks - Nisson "Japanese Candlesticks"
     
  6. enkay

    enkay Recruit

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    confused

    Hi Sive,i really appreciate ur effort in these analysis,but its unfortunte i dont understand this chart.Am a newbie in forex,i only understand japanese candle stick.i really wish to trade with ur analysis,in other to be successful like others.
    Thanks.:confused:
     
  7. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi, Enkay
    what do you particulary not understand?
    Usually, I do not use candlesticks, although have used them in the past (even Renko and Kagi charts) and remember the basic patterns.
    The bar is almost the same as a candlestick. the small horizontal bar from the left - is an open price, from the right - is a close price. The maximum and minimum is a high and low of the bar.
     
  8. Lucas Gremista

    Lucas Gremista Private, 1st Class

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    So then when you mention that you expect the pair to reach the 1.28 - 1.30 area, this numbers are about the real quote, right? Like now for example the chart is in the 1.32 area.

    Again, thank you so much Sive, I hope one day I can be maybe half the trader you are.
     
  9. Dori

    Dori Private

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    What if ?

    Hi Sive

    First of all congrats for your precise analysis. I've been reading them for some weeks and it is amazing your high degree of certainty. I've been making some pips following your advises... Thank you very much,

    Having said that there is my question:

    What is your opinion about what would happen if Greece really destroy the EUR currency ? what would happen to the pair eurusd ? suddenly disappear?
    Or it would happen gradually until the pair rate becomes 0.0001 ?

    If eurusd disappears, who would take its place ? GPBUSD ? or Deutsch mark/USD ? I mean in terms of strengh and liquidity

    Best regards
     
  10. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Absolutely
     

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