FOREX PRO WEEKLY August 19-23, 2013

Sive Morten

Special Consultant to the FPA
Messages
12,857
Monthly
August candle remains rather shy and small, although stands right under upper border of the flag. Thus, it is hard to add something valuable to former analysis here, since all that has been said still valid.
Previously we have discussed in details possible scenarios and why current price location is very important. At first glance it could be seen that here is nothing special and no big deal around, but in reality the oposite is true – it is a big deal around current level. Direction of real breakout of the flag pattern could set the direction of the market in long-term perspective. As you can see price action on passed week was not impressive, but market now stands slightly closer to previous highs. It is probably rather milestone sign that market is forming indecision pattern right around breakeven point of long-term sentiment, I mean yearly pivot point. It is very simbolical at current moment. Speaking about flag pattern itself, we already can find a lot of covert signs. For example, usually when price shows bullish trap action, i.e. fake upward breakout, in 90% of cases oposite real breakout follows. But what we see here? We see double failure. First it was bullish trap and then it was cancelled by bearish trap, since breakout down was also false and now is the question will real breakout up follow or not. We could think that as market has vanished bearish pattern – it must be strong bullish moment and may be this is true, especially because market still hold above yearly pivot. But we can ask – why this can’t happen again? Well may be it could, now we do not tell that we can estimate further direction from current messy action and do not even try to do this. we just want to indicate the current condition - action is really indecisive in big meaning of this word, since we see two fake breakouts around yearly pivot, that itself is a breakeven of yearly sentiment.
And market gradually becomes closer and closer to critical point – attempt to challenge previous highs and pretention on upward breakout. Probalby coming week will not become “that week”, but if market will continue as it stands – this is a question of 2-3 weeks probably, when price will reach the edge and we will undertsand whether we will get upward breakout or not.




Weekly
Well, trend holds bullish here, market not at overbought and price is tested 5/8 Fib resistance again. Market strongly stands above MPP and shows upward action 5 weeks in a row. Passed week does not care any drastical action. In fact it almost has become an inside week that could point on some indecision among investors. If we recall where market stands now on lower time frames, it becomes clear why market participants indecisive by far.
All stuff that we’ve said previously about unnatural action when you expect bearish development still valid. But this desrciption mostly relies on broader and farer in time picture. In nearest time however, based on lower time frame analysis, market could show some action to the downside. This will not destroy moderately bullish scenario on weekly by far but upward action could take place only after retracement will be over.
Here on weekly chart, is just the one more or less risk factor for bulls except 5/8 resistance – monthly pivot point. It has not been tested yet by market, and it stands slightly higher than 50% support level here. Thus, if market will fail to continue move up in nearest couple of weeks, MPP will become most probable downward target. At the same time, even retracement to MPP will not totally erase chances on upward continuation. It could be done only if market will take out 1.2730 lows.
As weekly and monthly time frames do not care new issues, we probably should start to find something valuable on lower time frames.

Daily
Well, it will be not a piece a cake to deal with EUR on next week. On short term charts we have two major tasks. First is find patterns, if any and second – invent how to minimize risk with possible position taking. Since we’ve discussed potential reversal pattern here, we will stick with it and will take a look at situation from bearish perspective. Since if this pattern will fail – it all will become clear.
As we’ve talked previously here we could get 1.27 H&S pattern, trend holds bearish and market now stands at point, that is absolutely perfect for enter short – top of potential right shoulder. This could help us to minimize possible risk. Our invalidation point will be high of most recent swing up, because if market will continue move higher it will destroy the harmony of H&S pattern make a challenge on its total destruction. Any move above current top in the beginning of the week will be unnatural from normal bearish development point of view. If price action will stand as we suggest, then nearest destination of downward move should be 1.3220-1.3240 neckline area.
Since market will open near WPP, special attention should be dedicated to its level – 1.3304. It will be excellent sign if price will move below WPP in the beginning of the week. Also take a look – WPS1 coincides with neckline on coming week. Since price will not have any barriers in between, action to the downside should be rather easy, without solid bounces. Is should be something like on left shoulder. By the way, harmonic swing of previous down retracements point on the same area.


4-hour
Although trend is bullish here, market has formed reversal candle that creates new high and closed below the low of previous candle. Simultaneously this is bearish engulfing pattern. As you can see market shows rather harmonic swings by far. Move up from neckline to the top of right shoulder equals the same distance on left shoulder, although a bit faster. All conditions for bearish development where made – equal harmonic swing, potential H&S on daily time frame, reversal candle and bearish engulfing here, on 4-hour chart. Thus, if market is really bearish and it intends to turn down in short term it should do this from current level. Any other development will be treated as denying of bearish context.
If market will erase this pattern and just continue move up, then daily H&S probably will fail. Currently we should stick with this engulfing pattern and try to take position with minimum risk. Special attention should be paid to WPP. We need to see that market will pass through it to the downside. That will increase confidence with our plan.

30-min
On Friday we’ve said – “we at the point, guys”. Thus if you want to take short position – watch for reversal patterns at the top of right shoulder, because there will not be any other chances around – market either will start move down, or H&S will fail. As you can see here, reversal has happened by Butterfly “sell” pattern. I do not see much here, but I just draw one of the possible scenarios. Since upward action was strong, I suppose that some bullish momentum has remained on market. It lets us pretend on some deeper retracement, may be even in shape of AB=CD. If this will happen, then the level to watch for - 1.3350 area, Agreement at 5/8 Fib resistance. Also do not forget about 50% level, EUR likes it.
Thus, if our entry point will be aproximately around 1.3350, stop point slightly higher 1.3380, then – this will be 40-45 pips risk. Currently it’s difficult to find something else. As usual – we do not want thrusting up action with solid candle, but development as we have now – gradual action with small candles.





Conclusion:
In long term perspective, market mostly still stands indecision, because is coiling around long-term sentiment breakeven point – yearly pivot. To point on direction price has to show break – out from current range. Until this will happen we can’t take sequence of trades in any direction. All that we can do in such environment is to search short-term clear setups and trade them fast. Although we can’t miss existence of slow but gradual move to the upside.
In short-term perspective market is forming potentially reversal setup on daily time frame. Whether this pattern will work of fail – we don’t know. But currently we do not have setup for long entry. Thus, our task is to try to take short position with minimum risk, based on patterns that we have on lower time frames.


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.
 

Sive Morten

Special Consultant to the FPA
Messages
12,857
EUR/USD Daily Update Tue 20, August 2013

Good morning,
As we've said in weekly research, situation on EUR is rather tricky and it's not a simple task to deal with it now. I will tell in you in advance, that I have some feeling that market probably still will show downward action, although, this is just my sense, and it has no strict foundation and explanation. Thus, I do not call you to take shorts right now.
As you will see, signs on EUR are rather contradictive.

On daily time frame, market shows pennant consolidation right at top of right shoulder. This is not a good sign from bearish point of view. Price forms side-by-side 2 inside trading sessions. It means that market stands indecision or building an energy. Very often such consolidations right under significant resistance levels lead to upward breakouts. But it is not as simple as seems on first glance:


Take a look at 4-hour chart. At one point of view, market is forming some kind of bullish dynamic pressure - trend has turned bearish, but price is creeping with MACDP line up.
From the other point of view - price still stands inside our engulfing pattern and its still valid. It means that bearish context has not been vanished yet. Another bearish moment - stop grabbers. One is already in place, while second is under way. Current candle has not been closed yet, but it could lead to grabber as well.
Another moment - Gold market is forming H&S pattern on 4-hour chart. If you've read our weekly research on gold - you probably know that. Surely EUR and Gold are not identical markets, but since they both have relation to USD, very often they show similar action.


Finally - hourly chart. Here we could get diamond pattern. I know that this pattern oftener fails rather than works, especially on intraday charts and especially on EUR, but I just share with you what I see.


Thus, what we could do here? From the tactical point of view we're interested only with current extremes of engulfing pattern. Moving above - will destroy bearish setup and probably will lead to further appreciation, moving below the low - will trigger engulfing pattern.
1. Safest way - wait breakout and take position on retracement;
2. 2 hare run - place stop entry orders (OCO) from both extremes of engulfing (diamond pattern)
3. Stick with particular pattern - either engulfing or diamond and trade it, as we usually do.
 
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Sive Morten

Special Consultant to the FPA
Messages
12,857
EUR/USD Daily Update Wed 21, August 2013

Good morning,
as you can see, our suspicions about consolidation right at top of potential H&S pattern on daily were not empty. Such consolidations very often lead to breakout. Still, if you remember yesterday we didn't call for taking position before breakout, or, at least use stop entry orders.
Now is major question, whether this breakout is real or fake. If all will remain as it is, then it has chances to appear to be real - price stands above WPR1 and above previous highs. We do not see fast return back below broken highs. This is bullish sign. If thruth of breakout will be confirmed, then according to our analysis medium term target stands around 1.38. Now trend is bullish on all time frames.


On 4-hour chart trend is bullish as well, market has achieved some targets here. First is 1.27 extension of previous swing down. You probably could treat it as butterfly, but it's a bit ugly. Second - target of rectangle upward breakout and vanishing of our bearish patterns.


As we've said yesterday, safest way is to wait a breakout and then search oportunity to take long position on retracement. On hourly chart we see that nearest level that is suitable for that purpose stands around 1.3380-1.34. This is broken previous highs, Fib support and potential Agreement with AB=CD pattern. If you will draw smaller Fib levels, you probably will get K-support area here.
Thus, if price will show the same gradual action down, this level is worthy of our attention.
As usual we do not want to see fast acceleration to the downside. If market will reach this level, then drop your time frame to 5-15 min chart and search for upward reversal patterns. That will let you to place relatively time stop if you will decide to enter long. Significant move below broken highs will be a worrying sign and in this case it will be better to take pause and watch what will happen, to understand what is going on.
 
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Sive Morten

Special Consultant to the FPA
Messages
12,857
EUR/USD Daily Update Thu 22, August 2013

Good morning,
as on the morning yesterday market has held above broken highs, we said that we need gradual retracement but we do not want to see plunge down. But precisely this has happened.
Market by single action has drastically changed daily context to bearish. Now we can speak about upward continuation and bullish sentiment only if market will move above current highs. Until that will not happen - context holds bearish.
Yesterday market has formed 2 bearish patterns - 2-days bearish stop grabber and it has become simultaneously W&R of previous highs. Also it looks like dark cloud cover pattern.
Also, guys, I recall descussion of 3-Drive pattern and thought that we may be was not as wrong as we thought with it. Yes, this pattern has a bit non ordinary shape - its widening, instead of narrowing, but in terms of extensions it's perfect. So, may be this pattern is working now, we'll see. At the same time it is not as important now, because in fact, whether this will be 3-Drive or stop grabber - they have the same target around 1.3175 lows.


On 4-hour chart we see that this reversal could take shape of H&S pattern. Butterfly pattern very often becomes the inital part of H&S. As market now stands at neckline, it probably could start bounce up and this retracement should be solid 50% or even 5/8 to keep harmony of H&S pattern:


On hourly chart I just draw some levels to watch for. Here I do not see any reversal patterns just yet. May be it could be DRPO "Buy" LAL, but thrust is too choppy and not perfect. Anyway, let's see what will happen. Actually we do not care much by which pattern retracement up will be triggered. Our major object here is to get this retracement and watch - whether we get the chance to enter short around 1.34 area
 
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Sive Morten

Special Consultant to the FPA
Messages
12,857
EUR/USD Daily Update Fri 23, August 2013

Good morning,
on daily time frame we do not see drastical changes. Short term context is still bearish. As we've said, we will be able to speak about bullish development only if market will retrun back above current highs. Until that will happen - bearish stop grabber will be valid and keep chances for bearish continuation.




On 4-hour chart our H&S pattern is still in progress and market is continuing to form right shoulder of it. Lower time frames shows that retracement could be slightly higher than market stands now and in general it agrees with the shape and harmony of H&S pattern.



Hourly chart shows market's plunge on data release and fast move back up. By this upward return market has broken short-term downward tendency and has formed a kind of reversal swing up. This very often leads to deeper upward action and probably could take a shape of AB=CD pattern or something of this kind.



Thus, currently market shows logical and reasonable action. Although I have some worrying thoughts on H&S, since on EUR intraday H&S's fail rather often, but currently it looks nice.
Our major task here is wait when market will reach 5/8 resistance and end upward retracement, then search for potential downward reversal patterns at the top of right shoulder for potential short entry.
 
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funnyfarmer

Recruit
Messages
3
Buttefly Buy pattern on 1H time frame possibly underway to continue the move down?, Would just like to see it break the WPP downSvUTwHux.png
 
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dkami

Sergeant
Messages
746
And again talk from the banksters destroy the technical's :rolleyes:

Possible rate hike LOL
 

minimax

2nd Lieutenant
Messages
1,291
2 possible PRZs, I am for the first one

Good trading!

201308191250.png

ps: theoretically we can go down and waves are hidden, but I am sceptical and think we make one push up

ps2: more&more for 3400, PRZ2

ps3: no more, except in case of ED on 15m but think even W&R on 15 not possible
 
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dkami

Sergeant
Messages
746
yea I think you may be right about another push up possibly even breaking D1 high, but unfortunately for me I dough now I will get the setup as I'm still bearish and my SL would be just above Fri H1 high
 
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