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FOREX PRO Weekly December 10-15, 2012

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Dec 8, 2012.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Monthly
    So, on Friday, we’ve got really discourage price action, that has given up weekly stop grabber pattern. Another unpleasant moment for bulls is that yesterday’s low erases a possibility for upward harmonic pattern. So, in such difficult environment we have a tough task – to decide what to do next.
    Although on monthly chart trend still holds bullish, for 3-4 consecutive months price is coiling inside of K-resistance area. Two weeks ago it seemed that probably market is ready for upward acceleration, an dynamic was really not bad, but yesterday it has appeared that not all things as good as they look. As a potential bullish scenario we’ve mentioned possible lightning bolt AB-CD right to 1.38 Agreement.
    Also we’ve asked – “but what are the risks?” Currently only one – if K-area will hold price action. In this case market should form solid black candle. If simultaneously trend will shift bearish again – this will be a kind of 2-period stop grabber and strong bearish signal. And it seems that we can’t denied this possibility totally yet.

    [​IMG]

    Also recall Yen’s chart that we’ve looked two weeks ago. On that moment it was not quite clear how they move together, but now it everything comes full circle possibly…Recall previous week monthly S&P 500 bullish stop grabber as well. Looks like some growing demand for USD is coming…
    [​IMG]
    Weekly

    Although Friday price action looks scaring, I suppose, that everything is possible, while price still stands inside of weekly range, marked by blue lines. This chart is a bit overloaded with details, since I’ve tried to put both scenarios on it.
    What we have on the bearish side:
    - Market was not able to complete weekly stop grabber pattern, and has not even challenged previous highs;
    - We have bearish engulfing week, that also looks like shooting star pattern;
    - Price action has stopped right at MPR1, and we know – when market retraces in long-term bear trend, it usually retraces to Pivot Resistance1;
    - As we said on monthly chart price has stuck in K-resistance area.
    On the bullish side we also have some ruffs:
    - Trend still bullish on weekly and monthly time frame, and there is still a possibility for another stop grabber will be formed here;
    - Nobody can cancel previous nice thrust up and just shallow 3/8 retracement, i.e. “222” pattern still could work;
    - Market already has shown failure downward breakout of the blue-lined range;
    - If market will hold above previous low, for example at MPS1 – it could be the chance for Butterfly pattern
    That’s why I think, that until market stands inside of weekly range – anything could happen. But to be absolutely honest, I suppose that bears have a bit better chances – JPY chart is riveted in my mind. So, what we can do when we have contradictive moments on both sides? Probably just one solution exists. Drastical changes will come only if market will break in one or another side. Until that will happen and until we stand inside of weekly range, we can be relatively calm in trading of lower time frame patterns that could appear inside of it.
    [​IMG]


    Daily
    Let’s see, what we can find on daily now… Well, probably two patterns could appear in nearest time. First one is B&B “Buy” LAL (Look-alike) – it could be perfect, if there was no 3/8 retracement during the thrust up (recall that we also have traded it as B&B). All other conditions are perfect – no close below 3x3 DMA within the thrust up, this is second day of close below it when market has reached significant support – 50% and MPP. New Pivot point stands around 1.2975 – above the market, that relatively suggests possible retracement to it. Trend has turned bearish with excellent angle.
    Second pattern that could be triggered by this B&B is Head& Shoulders, but it will better looking on lower time frame…
    [​IMG]
    4-hour
    Honestly, I’m looks sceptically on intraday H&S patterns, since my experience tells that they oftener fail rather than work. But here we have nice foundation with it in terms of B&B and solid move down, so, may be it will work.
    Currently it looks potentially perfect – top stands right at 1.618 of left shoulder, pattern could be easily identified, nice harmony. Also it gives a clue how to enter with daily B&B LAL. Look – previous move up has started from the same level by bullish engulfing pattern. Here we have it again. The advantage of this pattern is it’s invalidation point right below its lows – it gives us tight stop and nice risk/reward from possible B&B. That is for those who search possibility to enter long.
    Others, who indends to sell will have to deal with H&S, probably. Better moment to enter is around 1.3030 area. Drop your time frame and search for reversal or exhausting patterns around it, such as on left shoulder’s top – it was butterfly “Sell”. The target will be around 1.2680-1.27 – right around previous lows on daily. If, of cause, this H&S works. So, our plan is twofold – try to take pips from B&B “Buy” and later reverse position around it’s target – 1.3030 to try possess ourselves with H&S pattern.
    [​IMG]


    Conclusion:
    Looks like market challenges our patience. That’s fine. Until it stands in weekly’s range – we will trade daily and lower patterns. Fortunately we will not be bored, at least in the beginning of the week, since we already have 2 patterns to keep an eye on – B&B “Buy” and 4-hour H&S.

    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.
     
  2. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Tue 11, December 2012

    Good morning,
    market is doing well by far with our trading plan. If you're following it - you probably should have already long position with breakeven stop. Currently I do not see any unexpectable price action, so, all looks smooth.

    On daily time frame, looks like our B&B LAL in progress, market has bounced from 50% support area on 2nd daily of B&B. That's perfect even from theoretical B&B concept.

    On 4-hour chart trend has turned bullish. Englufling pattern has survived despite deep retracement - market has not taken its lows. So, if you will measure target based on engulfing pattern (which is length of the bars) you'll get approximately the same level around 1.30-1.3030

    Today BeeKay8 has remind me that 3/8 resistance +WPP area is a former disrespected K-support level. That could add some pepper in our trading process. B&B's as a rule hit 5/8 resistance levels, but not always. That's why, I suppose, we have to start keep an eye on potential reversal patterns a bit eariler - somewhere around 1.2985-1.3030 area.
    As soon as we get any - we can turn to the second stage of our plan and turn to trading of H&S pattern. (I hope it will be fine).
    Just do not forget to manage your positions and wait for clear patterns to stick with. I hope we will be busy with these B&B+H&S for another couple of days.
     

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    #2 Sive Morten, Dec 8, 2012
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  3. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Wed 12, December 2012

    Good morning,
    congratulation with 12-12-12 day. Here is a wedding boom, you know. ;)
    That's by the way the last year for a long period when this is possible. Just one such sort of day we will have in next year - 11-12-13. ;)

    So, half of our trading plan was completed - market has entered in area where we've decided to take profit from B&B. Now we're entering in second stage - catching reversal pattern around 1.30-1.3030 area to step in H&S trade on short side.

    Unfortunately I can't help you much currently, since market just has reached this area - no patterns have been formed yet, no hints yet on potential patterns. So, I can give now just small comment on hourly chart:
    Probably market could show one more splash up by two reasons. Despite it has reached 1.618 extension, currently it shows sideway consolidation with bearish trend. That is bullish dynamic pressure that suggests some upward continuation.
    Second moment is if we will treat price action on hourly chart as Double Bottom, then it's target stands around 1.3025-1.3030 - slightly higher that current market. The same area will be result, if you will measure 1.618 extension of current sideways price action to the upside. I do not know, but somehow I feel that market has not done yet with upward move, although I've closed B&B long already.
    I do not want to say that it has to happen, but there are some signs that tell about it possiblity. Besides, we have no reversal patterns yet.

    If market will break this flag to the downside strongly, and confirm bearish trend on hourly with bearish price action, then probably we can start to think about short entry.
    That's also possible that breaking to the downside will happen without any clear patterns.
     

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    #3 Sive Morten, Dec 8, 2012
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  4. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Thu 13, December 2012

    Good morning,
    well, every time I look at intraday H&S with the hope that it will work and every time my suspicion comfirms. Intraday H&S on EUR fails oftener rather than works. Market has eliminated our second trade, but - no pattern, no entry. Sad, but True...

    What we have now? On weekly chart bullish stop grabber is forming and it has strong chances that it will be confirmed by close price two days later. On daily trend has turned bullish again by strong dynamic pressure action, market is not at overbought but, has reached some resistance levels - WPR1, deep 0.88 resistance and stands not far from MPR1. We do not have any bearish directional patterns on daily, so I dare to suggest that our context is bullish.
    Hence, our major question how to join the party.

    Probably here we can get just two possiblity, depending on how market intends to clear the highs - either by butterfly "Sell" pattern or by just upward continuation. If it will be butterfly, then we probably see now the left wing of it, and should get reasonable retracement in nearest days.
    If it will be just upward continuaion, then we can count only on shallow retracement on intraday charts.
    With all these stuff 4-hour chart can be extremely useful. First of all - take a look at blue circle. That's our area of 5/8 resistance where we had to watch for sell patterns, but no one has appeared. So, H&S has left behind. But this is also bullish. H&S failure very often leads to significant bullish price action.
    Here we have excellent thrust. Probably we should expect either B&B - this will be entry pattern for "just upward continuation" scenario or DRPO "Sell" - and that will be pattern for deep retracement down and potential start of right wing of butterfly.
    B&B should reach 1.3016-1.3035 area, I suppose, while DRPO could lead at minimum to 1.2995 - 50% support, or even deeper.

    So, let's take care of it and will look closely.
     

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    #4 Sive Morten, Dec 8, 2012
    Last edited: Dec 13, 2012
  5. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Fri 14, December 2012

    Good morning,
    on daily time frame situation has not changed much - market has formed High Wave candle.
    So most our attention will be attracted to 4-hour chart.

    Here my thought is that we stay on the way to DRPO or DRPO Failure, because yesterday price action not quite in a row with B&B. Theoretically we have 2 closes below 3x3 and hit 50% support of most recent part of thrust, but my opinion, is that we can't treat it as "significant" fib level. Mostly because the reaction point, from which it has started, I mean second leg of thrust, is not even 3/8 retracement. Hence, we have to treat whole thrust as single one, and hence, we have only 1 nearest significant support - major 3/8 but it has not been hit.
    I'm not pretending on the absolute view - understand me correctly, this is just my opinion on it. So, I still hope to see either DRPO or it's failure. Consequences we have discussed yesterday.
    Also, I prefer to get higher second top of DRPO and houlry chart tells that this is possible. Here we have excellent example of bullish dynamic pressure. Minimum destination is a clearing of the tops around 1.31. If it will be W&R and market will return right back to inside of coil - then DRPO will significantly increase its chances to come alive and here we will get second higher top of it.
    Don't forget about possibility of DRPO "Failure". This is directional pattern as well.
    That's what I will be watching within trading session. Still, I'm not sure that market will be able to accomplish all this stuff right now - too few time left till the end of the week.
     

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    #5 Sive Morten, Dec 8, 2012
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  6. cosmos

    cosmos Sergeant

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    Daily time frame pattern

    Hi Sive, Thank you for this analysis. It looks like it could be a great week. I have a question. I have been trading a potential reverse H&S pattern on the daily time frame for some time now. Is there something wrong with this pattern that it hasn't been mentioned? (Or if it has, perhaps I missed it.) Chart is attached. Thank you.
     

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    #6 cosmos, Dec 8, 2012
    Last edited: Dec 8, 2012
  7. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi cosmos
    that's the same story as with butterflies. Since H&S is reversal pattern, I prefer to deal with reverse H&S at bottoms and with direct H&S on tops. That does not mean that reverse H&S on top will not work, but this is my choice.
     
  8. cosmos

    cosmos Sergeant

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    I understand. Thank you.
     
  9. FreddyFX

    FreddyFX Sergeant

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    With a thinning market ahead, going to be interesting.
     
  10. BeeKay8

    BeeKay8 Sergeant

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    Hey Sive

    Could this be another scenario where we can apply the "scale in" method? Take a look at my chart below.

    Market has broken through 4hr k-support with little respect. After this break, market is now gradually retracing back up to the 4hr k-support that was disrespected.

    Could we apply the scale in method here where we wait for price action to retrace back to the k-support and then enter short? This will be the 3/8 retracemenet of current swing down, and also WPP.

    I understand that we have possible B&B here on the daily TF with minimum target at 1.3031 so all SL will be above that level.

    I am just not quite sure if current market situation is applicable with the scaling in method.

    Thanks, Sive!

    sc.
     

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