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Forex FOREX PRO WEEKLY #2, March 18 - 22, 2019

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Mar 17, 2019.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Fundamentals

    Situation on gold market shows slow progress, so we do not need big weekly update on it and covering by daily videos looks enough currently.

    At the same time we have long-term setup on CAD that shows solid dynamic. So, today guys we again take a look at Loonie dollar and provide some specific fundamental new for CAD directly.

    As Reuters reports - the Canadian dollar weakened against its U.S. counterpart on Friday, reducing its gains for the week as oil prices fell and domestic data showed a steep drop in home sales.

    Canadian homes sales tumbled 9.1 percent in February from the previous month to hit their lowest level since November 2012, the Canadian Real Estate Association said. The home sales decline offset separate data showing a stronger-than-expected rise in Canadian manufacturing sales.

    Factory sales were up by 1.0 percent in January from December, Statistics Canada said. Analysts surveyed by Reuters had forecast on average an increase of 0.4 percent.

    The price of oil, one of Canada's major exports, retreated as worries about the global economy and robust U.S. production put a brake on prices. U.S. crude oil futures were down 1.1 percent at $57.95 a barrel.

    The decline for the loonie on Friday came one day after Bank of Canada senior deputy governor Carolyn Wilkins said that rising global debt is slowing economic growth and making Canada, and the rest of the world, more vulnerable to another period of financial instability.

    "A lot of noise in the market but not a lot movement today," said Rahim Madhavji, president at Knightsbridge Foreign Exchange. "It still comes down to interest rates and jobs for the longer term."

    Data last Friday showed a second consecutive month of bumper job gains that quelled concerns that Canada's economy could be headed for a recession.

    The Bank of Canada is unlikely to cut interest rates to support a flagging economy as long as job growth continues at a robust pace, an analysis of the central bank's response to past divergences in economic data suggests.

    Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries after data showing U.S. manufacturing output fell for a second straight month in February.

    CFTC data shows that net short position this week mostly stands the same:
    СFTC.
    Source: cftc.gov
    Charting by Investing.com


    Although on Friday we saw pullback of crude oil prices, we think that this is temporal situation. Longer-term picture looks bullish and upside action on crude oil should last for some time more.

    This perfectly corresponds to our long-term trading plan on CAD. First and second parts are over - upside action and reversal. Now we're coming to final part of this trade - downside extension.

    Technicals
    Monthly


    Since we've talked on CAD just last weekend - monthly chart doesn't show big changes. After minor retracement back inside the engulfing pattern - loonie has turned down precisely where we've expected.

    Recall that our discussion has started with strong bearish engulfing pattern by the close of January candle. Pattern stands at major 5/8 resistance. January black candle has closed below the lows of December, which could be treated as Reversal month as well. On a way down market also has tested YPP.

    Strong support here stands at 1.2706 as YPS1 and 1.22-1.25 K-area.

    For the monthly chart, this is tactical setup, because it doesn't suggest too extended targets, as they should stand somewhere inside recent upside swing. But... this is for monthly time frame. For daily one this could be long-term direction which makes trading process easier.

    As usual, first step that we're waiting for is minor pullback inside the body of engulfing pattern - and it is completed as we've mentioned above. Now we have bearish position already. Or, if you do not have it - do not upset, it is a lot of room to get it still. Now is second step of trading plan - downside extension.

    cad_m_18_03_19.

    Weekly

    On the weekly chart market shows first week of downside action as soon as price has perfectly completed upside AB-CD at XOP target and formed "222" sell pattern.

    Result of this week is bearish grabber, which suggests drop below recent lows and break of K-support area.
    Grabber candle also could be used for short position taking if you want to.

    cad_w_18_03_19.

    Daily

    So, as soon as upside XOP and reverse H&S pattern has been completed (there was DRPO "Sell" at top as well, if you remember) - CAD starts dropping. Now price hits first support area of 3/8 Fib level and neckline of former H&S.

    Trend has turned bearish here. Since this action is weekly grabber, we could try to use it for bearish position against 1.3460 top.

    cad_d_18_03_19.

    Intraday

    Here our downside DRPO is completed perfectly precisely at 50% Fib level - minimum required target of DRPO. Now, as downside action was smooth as well, we have opposite pattern - DRPO "Buy". It suggests upside retracement that should be greater than just 3/8.
    cad_4h_18_03_19.

    It means that on 1H chart we could watch for upside XOP that agrees with 5/8 Fib level. It would be perfect if we get butterfly pattern as well.

    Strong action on Friday also suggests that market should go above OP and 3/8 level. Once XOP will be completed, we get "222" Sell pattern and short entry setup:
    cad_1h_18_03_19.

    Conclusion:

    Canadian dollar provides very interesting setup now. Since setup is forming on monthly chart - it could provide weeks and weeks of clear direction for trading on daily time frame.
    Next week our CAD journey continues. We should get second setup for short entry around 1.3385 area.


    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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  2. shahsavari

    shahsavari Private, 1st Class

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    Dear Sive
    Thank you very much for your endless efforts to prepare these precise analysis.
    I have a question, it seems that in the daily and werkly time frame is not XOP extension but it is 1.272, isn't it?
    Scincerely
     
  3. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Oh, yes. Now I remember. We've used 1.27 XOP instead of 1.618 on daily CAD, by some reasons that we've specified in last week report. This is also XOP "Extended OP", because its ratio above 1.0. But it is not typical for DiNapoli. I use it in some exceptional setups, like this one.
    On weekly chart this is 1.618 XOP right at 1.3620.
     
  4. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Greetings everybody,

    So, let's go back to gold this time. Now the major concern on daily chart - whether price will climb to 1320 before downside reversal or not. Strong bullish momentum supports idea of deeper retracement. Coversely, if still, no upside continuation will follow - we could get downside butterfly pattern:
    gold_d_19_03_19.

    At the same time, it is not everything simple with upside AB-CD. It is more probable that it develops as it is shown on the chart - with deeper AB-CD retracement first to 1290 area, as we have bearish engulfing on daily chart:
    gold_4h_19_03_19.

    On 1H chart we have wedge pattern that could help us a lot. Upside breakout suggests no deeper retracement and straight action to 1320 Fib level. Downside breakout means action at least to 1290:
    gold_1h_19_03_19.

    So, bulls should wait either upside wedge breakout or drop to 1290 area, while bears should be focused on downside wedge breakout.
     
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  5. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Greetings everybody,

    On Gold market yesterday we've discussed scenario that we follow this week. It is based on two suggestions. First is deep upside retracement due strong bullish momentum on daily chart second - a bit deeper retracement down first, because on engulfing pattern that we have.

    Approximately we picture it as follows on 4H chart - AB=CD down first to 1290 area and larger AB=CD up to 1320. As the top around OP target holds and gold has not taken it out, bearish scenario is still valid. As a result we've got "222" Sell pattern. Although it is minimum target is completed already, pattern suggests continuation because of daily engulfing.
    gold_4h_20_03_19.

    That could be AB-CD on 1H chart with OP around major 5/8 support area. Our wedge pattern has been broken down.
    gold_1h_20_03_19.

    Thus, bulls should wait either sudden reversal up and breakout of A top, or completion of AB-CD pattern around 1290 support, while bears could take part in downward action, or, wait for our major setup - "222" Sell on daily that should start around 1320 level.
     
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  6. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Greetings everybody,

    So, gold has hit our 1320 target. Despite that we had some concerns yesterday in the way, how market could reach it, but it mostly had relation to intraday tactical setup. As Fed has stepped in - gold rallied up to the target.

    Now price stands at major daily resistance and formed '222" Sell pattern and we need to wait for reaction. We expect downside reversal as situation on weeky chart suggests 2-leg retracement in a shape of AB-CD pattern. But, this is technical background. Political component could change this situation. If we will see that gold moves above 1320 and comes to the tops - it means that upside trend continues.
    gold_d_21_03_19.

    On 4H chart gold needs a little to touch as XOP target as AB=CD as they both stand around 1320 as well as butterfly "Sell" target. As soon as they will be hit, we will see what will happen next.
    gold_4h_21_03_19.
     
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  7. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Greetings everybody,

    So, on daily chart situation is relatively clear - that's the point with best risk/reward ratio for bears. Gold is forming H&S shape, and top of the right arm is best place for position taking despite the result. It provides as best potential profit as minimal risk. But on intraday charts we have some details:
    gold_d_22_03_19.

    Our upside targets are mostly completed and nuances mentioned below are not crucial for daily time frame. But, here on intraday charts they could be important. Take a look that as XOP as OP and butterfly were not completed totally. There is still some space till the targets, which were not been hit. Now add the grabber that has been formed yesterday and chances on another leg up right to 1322 increase significantly. Those of you who have taken trade yesterday - now have good position, just move stops to breakeven. But if you just plan to go short - wait a bit and see what will happen.
    gold_4h_22_03_19.

    Another way to act is to wait breaking of upside channel on 1H chart. As we have extended daily target, and you do not want to take part in sophisticated analysis around targets on 4H chart - wait when all these mess will be over and market starts action down.
    gold_1h_22_03_19.
     
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