FOREX PRO Weekly April 09-13, 2012

[Sive Morten]

EUR/USD Daily Update, Thu 12, April, 2012

Good morning,
On daily time frame market continues to form bearish flag pattern, at least now I have no reasons to treat it other way. Trend holds bearish.

On 4-hour TF picture is the same as yesterday - upward sloped consolidation, trend holds bullish.

The most interesting situation on hourly chart.
First, market has reached 1.3155 1.618 extension of initial AB=CD pattern as we've assumed. From bearish point of view, price has no reasons to move higher except just one - testing of WPP at 1.3168. Market now is forming Butterfly "Sell" with 1.27 extension around 1.3173. If bears are really still in charge, we should see downward acceleration after reaching of this level.
Also, if you will measure extensions of downswing, you will see, that 1.618 extension from first downswing (BC leg of initial AB=CD pattern) and 1.27 extension of second retracement stand within this range - 1.3160-1.3170.
If market will complete this butterfly, I prefer to see W&R of 1.3155 highs and some kind of downward thrusting move.

If market will run through 1.3170 easily - do not enter short.

 

[BeeKay8]

Hey Sive,

Guess I wasn't fast enough to catch you before you posted daily update. I wanted to ask you if I can also trade M15 3 drive pattern and short it? Would this be reasonable? Hopefully you will see this before any price action develops! If not, I guess we will find out soon enough.

Cheers!

 

[BeeKay8]

Sive,

If I see a daily bearish pattern - say it was a bearish H&S and I wanted to short it but I entered my trade based on a lower TF because of a bearish butterfly pattern on m15... would I use TP for the butterfly pattern or would I hold and use the TP for bearish H&S if the trade started going my way?

In other words, if you are trading a pattern, would you always TP using the same pattern or are you able to TP using a different pattern because it was on a larger TF which means more pips?

The same goes for SL. Say the point of no return for H&S and 3 Drive is within 20 pips of each other. H&S failure being 20 pips higher than the m15 butterfly failure. Would it be wiser to just use the daily H&S SL even though it may cost me more pips if the pips does not go in my favour?

I hope you understand what I am trying to say. I think I am explaining it a bit weird.

Thanks a lot for your replies.

Best regards,
Brandon

 

[Sive Morten]

Hey Sive,

Guess I wasn't fast enough to catch you before you posted daily update. I wanted to ask you if I can also trade M15 3 drive pattern and short it? Would this be reasonable? Hopefully you will see this before any price action develops! If not, I guess we will find out soon enough.

Cheers!

View attachment 5242

Well, you probably can try if harmony will hold within it. Personally, I prefer 3-Drives as exhausting patterns, but not as counter trend. For example, I prefer to take 3-Drive that has appeared at the end of some trend and angled in the same direction as a trend. Here is a bit another tune. Current 3-Drive looks more like retracement. But it does not mean that it will not work.

Sive,

If I see a daily bearish pattern - say it was a bearish H&S and I wanted to short it but I entered my trade based on a lower TF because of a bearish butterfly pattern on m15... would I use TP for the butterfly pattern or would I hold and use the TP for bearish H&S if the trade started going my way?

In other words, if you are trading a pattern, would you always TP using the same pattern or are you able to TP using a different pattern because it was on a larger TF which means more pips?

The same goes for SL. Say the point of no return for H&S and 3 Drive is within 20 pips of each other. H&S failure being 20 pips higher than the m15 butterfly failure. Would it be wiser to just use the daily H&S SL even though it may cost me more pips if the pips does not go in my favour?

I hope you understand what I am trying to say. I think I am explaining it a bit weird.

Thanks a lot for your replies.

Best regards,
Brandon

S/L and T/P are linked by risk/reward ratio. If you will tight T/P then you will not get sufficient ratio.
From the other point of view, if you will tight S/L and it will be triggered - will it mean that your context was destroyed? Based on your example - will Butterfly false lead to H&S false? If yes, then answer is positive, you may apply the same stops. If not - then you have to apply wider stop, that is based on H&S pattern.

In fact, Butterfly is just a sign, that shows you possible moment to enter. You need it as per se, but you do not need it's quality from trading point of view. Butterfly just tells you - "it is a signal that might trigger H&S move". That's all, it's just a flash.
IF you've entered and butterfly has failed - take a look at your context - has it failed also? If it is still valid - look for another flash.

 

[Sive Morten]

EUR/USD Daily Video, Fri 13, April 2012

Good morning,
Short view on the market could be expressed by just single word - "wait".

Market has not realized, let's call it "perfect" bearish scenario and has not turned down, where it was logical to expect it 1.3165-1.3170. Now price stands above WPP and potential for Butterfly today looks not so impossible as yesterday.
Still, it's a bit early shift our expectation to appearing of Butterfly. Here is still possible to see false breakout of the flag. J. Schwager calls it as "Bullish trap".

On 4-hour chart we see the upper breakout and bullish trend.

On hourly time frame we see respect of our area during first touch - that was a possiblity to move stop to b/e if you have entered short (as I did) here. But later market has moved higher. At the same time, market has accomplished 1.618 extension of butterfly and now is showing retracement down. If price will return in the body of the flag, below 1.3150 then it will be still possible to rely on daily AB=CD.

So, what we have to wait for?

The reason is that we still have bear trend on daily and abscence of bullish patterns there, so we can't enter long yet.
At the same time, we stand above WPP after breakout of significant resistance at hourly chart. Also we have 4-hour bullish trend, so we can't enter short already.
So, probably better to wait some more clarification - either shifting daily trend to bullish side or returning back below 1.3150 and shifting 4-hour trend on bearish side.

 

[seedof]

hi Sive, assuming market closes above WPP this week should that signify possible upward movement next week. if yes whats the likely area of move? thank

 

[squidge42]

Thanks Sive, just wondering if the Dailly is showing a B&B opportunity as upmove hit 50% retracement?

 

[Joh]

re missing post ?

H Sive -i wonder why you removed the 13th April EU statement -you send us an email -it was here but now it is removed ? ?What a pity as i was going re read it - thank you Sive for all your reports.

 

[squidge42]

Thanks Sive, just wondering if the Dailly is showing a B&B opportunity as upmove hit 50% retracement?

ha - looks like I don't need an answer now

 

[Davidovic]

Wow, Sive... Always impressed by your analysis... It is a dream to be able to read and understand the markets as you do , so i will work hard and follow you to be a pro ... Thx