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FOREX PRO Weekly December 27-31, 2010

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Dec 26, 2010.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Quarterly
    During last week of current year I’ve decided to talk a bit about cable. We’ve talked much about EUR in recent time, and if I’ll see any interesting occasion I’ll definitely return to it in daily videos. From the other side, we’ve talked about GBP month ago, so let’s refresh our view on this pair.
    Long term perspective now is very difficult for analysis. It has many possibilities to develop, and currently I do not see any definite signs, that could point us the decision. So, we will discuss it in all possibilities for the keeping in mind then. This is absolutely must, because we should understand where market is going in larger picture, when we will see some development on lower time frame.
    So, on quarterly chart we see, that trend is clearly bearish, although this is not a big deal, on such long term picture. I show you picture since GBP futures has started to trade at CME early 70s. During recent couple decades, we can clearly see that 1.35-1.40 area has held the market. This is 0.618 Fib support from all-time low. Despite the fact of multi penetrations of this level, you should understand that this is a quarterly chart, and even 500-700 pips of penetration here is not really outstanding move. Try to imagine that this is a 5-min. chart. In this case, I think, you might say that this level is still in play.
    Second, we see huge ABC-top pattern with 0.618 Fib target at 1.24. That is also deep 0.786 Fib support. So, couple of areas right here – 1.35-1.40 and 1.24-1.2650.
    #1
    [​IMG]

    Monthly
    Monthly trend is bullish. On the #1 chart we see levels of resistance. The major one is 1.7750-1.7780. This area I suppose the major target at nearest time. It includes 100% Fib expansion from Gartley AB-CD pattern at Agreement with Fib resistance. Also this is 1.27 expansion from previous swing down. I do not call it currently as a potential Butterfly “Sell”, because I’m not sure that current low at 1.54 area will hold. But it will happen, it could come true. Also market has almost hit 0.618 Fib expansion target at 1.6422 and turned to retracement.
    If you’re bullish and prefer to trade long term patterns, your tradable swing right know is the recent one - 1.4227 (the C-point) – 1.63. You can use retracement from this swing for attempting to possess yourself long, with stops below 1.4227, because, if market is really bull, it should not erase C-point of AB-CD pattern just after reaching 0.618 expansion target. If it will happen, then, market will show how weak it is. But I do not call you to enter blindly at any Fib support. If market will reach it, you need shift to lower time frame and watch for definite ‘Buy’ signals there that you have a confidence with. If you will not see any, just do not enter, despite the fact that this is monthly Fib support.
    #1
    [​IMG]

    On chat#2 let’s look at downside targets. First, we have nice AB-CD pattern with 0.618 target at 1.4555 and 100% target at 1.3479. You can see that these target coincide with two dash blue lines on the cart. This is the area of support that we’ve talked about in quarterly part of this research.
    Second, we have nice 1.27 butterfly “Buy” pattern at 1.2537. Now it’s time to remind, that this area is a quarterly 0.618 Fib target also and 0.786 Fib support. So, as I expect, this will be strong area of support, if market will really reach it.
    #2
    [​IMG]

    #3 chart shows another way of development on monthly time frame. Nice triangle pattern. The blue line on the chart is DiNapoli Oscillator Predictor that shows us levels of overbought (OB – upper line) and oversold (OS, lower line). So, the major question is – what will be the direction of the breakout? But currently, it’s very difficult to answer on it, because no definite signals just yet that could allow us find a solution. Nevertheless, the one important moment exists here. We can see, that 100% target to the downside coincides with monthly oversold area. At the same time, the similar target to the upside is beyond the level of overbought and market has turned to retracement even not quite reached 0.618 target at 1.6422. It means that attempt of upper breakout could lead to failure. Meantime, downside breakout seems logical, especially if we take into consideration previous thrust down.
    #3
    [​IMG]

    Weekly
    Weekly trend is clearly bearish. Price action is also bearish – look how movement develops – market just touched monthly pivot and collapsed. 1.5270 is monthly pivot support 1 (lime dash line). Also we have ABC-top pattern, and market has reached 0.618 target in Agreement with weekly Confluence support. Although I do not see any bullish signals right now, but the probability suggests that market can bounce a bit from this area. 100% target makes an Agreement with 0.618 Fib support. If market will continue its move down, then, this will be the next target. If you’re bearish, you can use retracement to the upside for enter short with 1.50-1.51 target.
    [​IMG]

    Daily
    #1 chart gives us more details about current point. As we’ve estimated, market has reached weekly confluence support and 0.618 Fib expansion target. From the daily point of view, we can see that this level is also 1.618 Fib target from smaller ABC-top and 1.27 expansion from previous retracement swing. By the way, this is also weekly pivot support 1 from the previous week. I do not have it on the chart. Although MACD has not turned bullish, we can see some signs of bullish divergence.
    #1
    [​IMG]

    If retracement will indeed take place, then, we may ask, where market retraces during bear trend? Usually it retraces to weekly pivot resistance 1, but this is not a rule of thumb. The colored dash lines on the chart are weekly pivot points. 1.5311 is a weekly pivot support 1, 1.5439 weekly pivot point and 1.5532 is a weekly resistance1.
    Now, let’s take a look at Fib work. The first Fib resistance is 1.5458 that is very close to pivot point. Also we have two Confluence resistances – 1.5527-1.5558 that coincides with pivot resistance 1 and 1.5688-1.5709. The last area is close to daily level of oversold. So, what’s the plan?
    1. Use first level of resistance + pivot point as a beacon. Watch how market will behave there. If it will fail, then we can count on continuation to the downside. If market will move above it – expect reaching the next area at 1.5527-1.5558
    2. If market will move and hold above pivot at 1.5439 – don’t be short. You can even try to scalp upside move to 1.5530. Then there will be nice opportunity to enter short from 1.5530-1.5560 with stop above 1.5760. In this case your stop will not be triggered occasionally, because it will above daily overbought. If market will still reach it – it will tell you that it’s stronger that it seems on the first view. #2
    [​IMG]

    Hourly
    Here I just want to show you nice AB-CD that is almost completed and makes an Agreement with first area of resistance. That’s why I pay much attention to this area. If there will be sell signals in this area, then possibly we can take them. Just be sure that market does not move above pivot.
    If market will break this area – we see that 1.27 expansion from recent swing down is precisely at area of daily confluence resistance and pivot resistance. This will be the next target to watch for sell signals.
    [​IMG]

    Conclusion: On longer term market has swings as upside as downside and stands in triangle consolidation. So currently we can work with one of these swings, depending on your view on the market. My long term thoughts, that market could reach 1.50-1.51 area. It means that if you’re bullish – wait for bullish signals around this area. If market will show them earlier, so that’s fine.
    If you’re bearish – you may use retracement to the upside from recent swing down.
    Meantime, I think that currently could be tradable only daily time frame. Because market is still far from any border of monthly triangle and there is enough of time till breakout.
    Currently market has reached some different support levels, so I will be watching for signs of retracements. Depending on the way, how this retracement will evaluate, we can use one of scenarios, that we’ve just discussed.


    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. King Midas

    King Midas Private

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    Sive:

    Thank you for the analysis and your efforts.

    I just got Joe DiNapoli's book and started reading it. I am about 1/3 of the way through and can see that it has to be read multiple times and studied.

    I am interested to know if you use and of the Coast Investment Software and if so which ones?

    Thanks again!
    :)
     
  3. Sive Morten

    Sive Morten Special Consultant to the FPA

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    I do not use particular CIS Software, but I use CQG and it has DiNapoli pack, that includes - D-Levels, expansions (COP, OP, XOP), OscP, MACDP. Other words full pack.
    CQG itself has MACD, pref Stochastic and DOSC.
    Joe tells that CQG is a best sofware to his mind.
     
  4. forexboom

    forexboom Private

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    Small question for the BIG Sive

    Hi Sive,

    What is the time your daily bars start? At NY close?

    The datafeed you use in CQG for forex is EBS?

    Thank you!

    ForexBOOM
     
  5. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi, Forexboom,
    this is futures, not spot FX.
    So, I use shedule of Chicago Exchange (CME).
    CQG does not require any additional datafeed. CQG includes as a pack for technical analysis as a data itself.
    CQG data is one of the most accurate among others best data providers.
     
  6. ochills

    ochills Master Sergeant

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    Good day Sive

    thanks for ur analysis.
    Best regard and
    Greetings to your love ones
     
  7. ochills

    ochills Master Sergeant

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    pls what is the full meaning of CQG and do u know of FX brokers that provide this service. I tried to search all I could get are Meta-trader brokers and those that provide CQG don't provide demo setup .
    pls do u know of any FX broker I can download their demo setup for CQG. thanks
     
  8. Sive Morten

    Sive Morten Special Consultant to the FPA

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    I suppose that it almost impossible. The point is that CQG is a very expensive software. For it costs about 1000$ per month, including DiNapoli pack.
    So, as Joe said, "when you will get your first $100 K, then it makes sense to shift to CQG". Before that moment it will be too expensive.
    CQG stands in a row with Reuters and Bloomberg, but specialized purely on technical analysis and news. It does not contain any fundamental data.
    So, in fact, you can't trade directly through CQG, except if some broker provides possibility with trading via CQG DOM trader. But these can do only huge brokers, such as MF Global for example.
     
  9. Jyotiprakash Pal

    Jyotiprakash Pal Sergeant

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    hik hik hik !!!! 1000$ per month!:eek:oh: :eek:oh:
     
  10. Sive Morten

    Sive Morten Special Consultant to the FPA

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    GBP/USD Daily Update, Tue 28, December 2010

    Good morning,
    let's see, how situation on cable pair has developed. First, market is very thin currently with lower than usual volatility, that's why I suppose that on NY eve better to trade intraday.
    Here is one of the issues for that pupose.
    On the daily chart we do not see anything really new. Just one important moment - market has moved above weekly pivot. It means that it could be a retracement and very often market retraces in bear trend at least to weekly pivot resitance 1 - 1.5522. This is the next target.
    On the first hourly chart we see, that market has reached Agreement with first Fib resistance, and shows acceleration from 0.618 to 1.0 target. hourly trend is clearly bullish. Usually this sort of price action leads to 1.618 expansion that coincides with daily Confluence resistance and weekly pivot resistance that's the target. Where to enter?
    On the second chart we see couple of Fib supports. I think that "Bushes" tactic could be applied here - entering from first Fib support with stops just below the second. Here is why - on the chart we can see, that trend will remain bullish only till first support. If market will break it to the downside, it will lead to shifting trend to bearish, moving below pivot and below previous highs that currently is support also. And you do not want to see it. At the same time risk will be about 50 pips and risk/reward is impressive. So, I think that it's a suitable tactic for current situation.
     

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