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European Forex Professional Weekly 2010-01-21

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Jan 21, 2010.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUROPEAN FOREX PROFESSIONAL WEEKLY
    Analysis and Signals
    January 21, 2010

    Fundamentals

    The overall tendency did change during the recent week. All data and official rhetoric was in a row with current situation and just added some fuel to the market move. First, the expected real estate sector data was a bit anemic and has signaled on a slow pace of recovery – housing starts didn’t reach expectations for about 15K units. In general, the real estate market stands in place. In some previous research we’ve already discussed the reasons for that – large existing home inventories, growth absence in employment and credit loans. The last indicator that will be tracked till the end of the week is a Philly Fed Outlook. The most interesting components are work week, labor component and manufacturing. Very possibly, that indicator will be worse than expectation by about 2 points - around 16 (market looking for 18.8). Taking into consideration technical circumstances (see below), worse than expected data can trigger a short-term retracement higher on EUR/USD.
    Second, the situation in EU remains complicated. The main surprise has come from the Fitch rating agency statement. Fitch stated that Spain, the UK and France need credible fiscal plans in 2010 otherwise there will be rising pressure on their credit rating. While comments concerning the UK and Spain were not a surprise, this is the first the market has heard about a potential crisis festering on the French government’s balance sheet. Macro data also was not optimistic – a solid decline in the ZEW surveys for both Germany and Europe. Germany’s economic sentiment variable fell to 47.2, its lowest print since July 2009. Euro-Zone Construction numbers were also a disappointment. The metric is back down -8% Y/Y. The figure has been choppy lately but combined with the -1.1% M/M drop, the result is disconcerting.
    The situation in Greece stays tight. Over the weekend, the ECB published a legal paper discussing the ramifications and possibilities of a member country’s expulsion from the EMU. The paper was entitled, “Withdrawal and expulsion from the EU and EMU: some reflections.” The paper stated that expulsion or secession would not be legally impossible. The publication of this document should be interpreted as a warning shot to Greece and the rest of the second wave countries. Nevertheless, rhetoric from EU officials was supportive and requests for stronger steps in reducing deficit.

    Résumé: Fundamentals have not changed much. The basis risk for US is a stability of macro data. Problems in EU are long-term and can’t be resolved fast; Japan's economy depends much on the exports mostly to USA and Europe, so it is unlikely that it will become gain momentum in front of the US economy. So, circumstances adjust probability in favor of USD. Besides, USD will get additional favor from a lack of stability in the world economy recovery.

    Technical

    Monthly (EURO FX all sessions CME futures)

    We have an uptrend, no overbought/oversold on monthly. The market has reached support at 1.3950-1.4050 that has a solid strength, generally because it’s a 0,382 support from a major reaction point and almost a confluence with another 0,618 Fib support (Monthly#1 chart). Probably we should expect some retracement higher, but for signs of this possible retracement better look on a lower time frames.

    Monthly
    [​IMG]

    Weekly (EURO FX all sessions CME futures)

    Prices have reached a 1.4079-1.4068 Confluence support level. Weekly trend is bearish, we have no oversold still. Also worthy to point out, that target COP= 1.4004 is not reached yet. So, it is possible that market will show some wash and rinse of a support area, trying to reach COP.

    Weekly
    [​IMG]

    Daily (EURO FX all sessions CME futures)

    On daily frame we have a combination of Oversold condition and strong weekly Confluence support. Although it’s a bit complicated to make a forecast concerning possible retracement but we should expect at least some consolidation with high probability. The market is in oversold condition and has no power for now to break through strong weekly confluence support. Besides, I expect that Philly Fed will be worse than expected and this is may start aretracement higher. Maybe market will try to reach COP=1.40 and show Wash & Rinse of weekly support before retracement.
    If retracement will start, I think that mostly suitable nearest target level is 1.4300-1.4335. Moving to 1.440-1.4450 will surge probability of a further up move.

    Daily
    [​IMG]

    Trade EUR/USD possibilities (1):

    Weekly

    No oversold, trend is bearish. Market has reached strong weekly Confluence support.

    Daily

    Combination of strong weekly support level and oversold condition seriously surge the probability of a retracement higher. To my mind the nearest target for this possible retracement is 1.43-1.4335. I do not see any signals that the retracement has started already, but expect that they will appear in the near term (may be tomorrow during data release). Before a retracement starts, the market may try to penetrate weekly support level to reach COP. We will discuss current situation daily (including possible signals and trade opportunities) in this folder of the forum:

    Current 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.
     
  2. beadelta

    beadelta Private

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    Hello Morten Silve. first congratulations on your work. I wonder if you have a website, or any paid service, or any account Pamm you manage accounts. I would love to be able to follow their signals, even for that cover some percentage of monthly profits.
    I thank
     
  3. SquareRoot

    SquareRoot Recruit

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    Eurchf

    Any opinion on the direction of EURCHF and market intervention by the Swiss bank?
     
  4. foreman01

    foreman01 Recruit

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    Hey SquareRoot, I'm no Sive, but my plan is a buy stop at about 4900. May even bring it down to 1.4800 this evening. If they do intervene it could be one of those 500 point movers
     
  5. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi, beadelta,
    Unfortunately not. For now my page on FPA cite is for educational purposes basically.
    Concerning future plans - will be better if you ask FPA directly.

    Sive
     
  6. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi everyone,
    Looks like retracement has started, I'm long now, you can track my trades on my FPA demo account.
    So, what's the context:
    market has reached weekly confluence and hourly XOP 1.4052.
    Then it has shown price rejection pattern and bullish convergence. For now it looks like weekly W&R.
    My target is 1.4230 area - there will be relief of daily OS condition and agreement XOP target and 0.382 retracement level. Also 4-hour OB level
    See attachement.
     

    Attached Files:

  7. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi,
    I'm not tracking this pair, but primary thoughts - watch for rhetoric, Swiss macro data (like yesterday's ZEW Confidence) and money supply. In general,
    SNB has make it clear that they will continue to intervene.
     
  8. Sentinel

    Sentinel Sergeant

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    Dear Sive,

    I am a little bit confused with your Daily chart's Focus and Reaction points. I was thinking the scenario was as follows, and I was consantrating on Fr2 only thinking this is the only valid focus point. Could you please tell me what I am doing wrong?
     

    Attached Files:

  9. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Well, you should have only one focus number in EUR/USD down move, because Fr2 lower than Fr1 and 3(btw, why it marked as Fr1 and3?)
    All levels from reaction points of Fs1 and 2 are terminated by the price.
    So, There is only one focus for now on daily.
    You can have 2 or 3 focuses, if, for example FR2 is higher than Fr1 3 i.e. market does not make new low.

    Besides, I use Chicago merchantile exchange (CME) FX Euro futures, not FOREX directly, because each FOREX broker has each own data that does not equal CME. Bars of each broker do not adjusted at time - hourly chart of UK broker is different from Japan broker, because the starting bar in different time and the graph, as a result also different.
    I use CQG and CQG's data is very accurate...


    And what particular is strange with my daily graph to you?
     
    #9 Sive Morten, Jan 23, 2010
    Last edited: Jan 23, 2010
  10. Sentinel

    Sentinel Sergeant

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    It seems that I couldn't express myself clearly.

    Exactly, and I thought Fs2 is the only Focus to analyse and all others (Fs1 and Fr1) should not be taken into care since these are outdated by a new support focus, Fs2.

    What I mean is : Can a focus own reaction points that are older and also newer than another focus's reaction points (which is the upmove between 21 Dec and 17 Jan)?

    Fr1 & 3 (3th reaction point of Fs1)
    Fs1 & 2 (2nd reaction point of Fr2)

    The difference between the graphs was strange and it seems that depends on the broker. I got it. Thanks.
     

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