Sive Morten
Special Consultant to the FPA
- Messages
- 18,564
Monthly
Trend is bearish, market is not at oversold. Actually there is not much to add here to previous analysis. Currently market is showing some pullback, that may be is a respect of our Agreement level. January’s candle forces me to search for some analogues in closest past, so, if you will take a look at recent bottoms on monthly chart you will find the same pattern as in January. This is type of hammer with small body and close slightly below top. Current price action is rather shallow and stands inside January’s one. So it does not add more information. One thing that we have to note still is that market has returned back above 0.618 support and January has closed above it also. That could be important. Next monthly target stands as AB=CD pattern at 1.1650. Since market has reached just 0.618 target, retracement should not be too deep. I suppose to 1.3505-1.3707 as max.
There are two significant levels of resistance at monthly chart that are mostly close to current price action – 1.3296 as 0.382 resistance from solid thrust bar down and 1.3505 – major 0.382 resistance level. From perspective of hammer pattern, we can say that downward move has continued only if price will take out its low 1.2627.
Conclusion from monthly chart is as follows – market has found some support and now under way to respect it by bullish hammer pattern. Breakout of 1.2627 can be as indicator of reestablishing downward trend, while to the upside nearest resistances are 1.3296 and 1.3505
Weekly
Although market has formed an inside week, still, even this fact could be significant on weekly time frame. Let’s start from the trend – it has turned on bullish side by MACD, but here I’ve used MACD Histogram, because it also shows reducing of downward momentum. You will not see this divergence with simple MACD. This is a confirmation sign of potential retracement on weekly time frame. During previous week market behaved absolutely in a row with this divergence and perfect Morning star candlestick pattern, but on past week price has taken a pause and formed, as we’ve said, inside week.
As we’ve discussed in previous research – we have nice context for DiNapoli B&B “Sell” trade, which suggests 1-3 closes above green line (that is 3x3 DMA). This inside week is the second one. Both two previous weeks stand right at 1.3244 Fib resistance. Hence, from perspective of B&B trade market has only single week before starting move down (if it will happen at all, of cause). Let’s can we estimate potential move with more precision by lower time frames analysis.
Daily
Among others scenarios on daily time frame – potential DRPO “Sell” has a significant interest of mine. Just to remind you a bit – market has reached daily K-resistance (although I’ve drawn only one level) at 1.3240 and formed excellent “Dark cloud cover” pattern. After that market has fallen in tight consolidation during the whole week. Take a look at these long shadows and inside days. This price action shows market indecision and energy building. The same was yesterday, despite positive NFP release – market has closed as it opened.
By number “1” I’ve marked first close below 3x3 DMA, while “2” is a close above. To confirm DRPO pattern we need second close below 3x3. This could become a triggering pattern for weekly B&B “Sell” with minimum target at 1.2860. Pivot point for coming week is 1.3135 – very close to current market. That is what we have to keep an eye on in the beginning of next week.
4-hour
On Friday we’ve discussed two butterflies and made a note, that market could complete downward AB=CD inside of right wing and cancel small butterfly on hourly chart. So, that has happened – market has shown downward AB=CD, but larger, 4-hour Butterfly “Sell” still holds. Why is it so important for us? Because we have potential DRPO “Sell” on daily and to get a confidence with it, we need either close below 3x3 and erasing of this butterfly by closing below 1.3027 or W&R of 1.3237 high. I suppose its all clear about first possibility, while second one has different variants. First one is a completion of Butterfly around 1.33 and move right down below 1.3237 – this will be W&R of 1.3237 high and will give us confidence that market is ready to go down and probably we will even try to anticipate DRPO using Butterfly pattern. Second is linked to inner AB=CD pattern with 1.3261 target. Market could not proceed right to butterfly target but show W&R by reaching just 1.3261 and turn right back. From bearish perspectives both scenarios are equally welcome.
If market will proceed above 1.33 to 1.618 extension this will cancel DRPO, since second top will be too far from the first one. In this case will be more probable that weekly B&B will start from 1.35+ level. I hope this explanation sounds not too confusing…
1-hour
Here we do not have much add-on, just bullish divergence, that gives some hope market could proceed a bit higher.
Conclusion:
Long-term bias still holds bearish, but market now turning to some pause with nice hammer pattern. Probably this is respect of the area that we’ve discussed previously. We can speak about downward continuation only if market will take low at 1.2627.
Weekly time frame is most important in current days, since it has context for directional pattern with excellent trading potential. Our major task is to catch triggering reversal pattern on daily or may be on 4-hour time frame for two reasons. First, estimate the starting point of B&B, second determine where to enter and where to place stop. One problem still is that if market will proceed higher – this will not cancel B&B, since theoretically there could be 1 weeks more before it will be triggered. This trade could be used by long-term traders to add short positions.
On daily time frame we have potential context for DRPO “Sell” that might become particular triggering point of weekly trade that we’re waiting. We will be satisfied with any scenario – as with new high (preferable) as without it if butterfly on 4 hour time frame will be cancelled.
One thing that bears do not want to see is proceeding and holding above 1.33.
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.
Trend is bearish, market is not at oversold. Actually there is not much to add here to previous analysis. Currently market is showing some pullback, that may be is a respect of our Agreement level. January’s candle forces me to search for some analogues in closest past, so, if you will take a look at recent bottoms on monthly chart you will find the same pattern as in January. This is type of hammer with small body and close slightly below top. Current price action is rather shallow and stands inside January’s one. So it does not add more information. One thing that we have to note still is that market has returned back above 0.618 support and January has closed above it also. That could be important. Next monthly target stands as AB=CD pattern at 1.1650. Since market has reached just 0.618 target, retracement should not be too deep. I suppose to 1.3505-1.3707 as max.
There are two significant levels of resistance at monthly chart that are mostly close to current price action – 1.3296 as 0.382 resistance from solid thrust bar down and 1.3505 – major 0.382 resistance level. From perspective of hammer pattern, we can say that downward move has continued only if price will take out its low 1.2627.
Conclusion from monthly chart is as follows – market has found some support and now under way to respect it by bullish hammer pattern. Breakout of 1.2627 can be as indicator of reestablishing downward trend, while to the upside nearest resistances are 1.3296 and 1.3505
Weekly
Although market has formed an inside week, still, even this fact could be significant on weekly time frame. Let’s start from the trend – it has turned on bullish side by MACD, but here I’ve used MACD Histogram, because it also shows reducing of downward momentum. You will not see this divergence with simple MACD. This is a confirmation sign of potential retracement on weekly time frame. During previous week market behaved absolutely in a row with this divergence and perfect Morning star candlestick pattern, but on past week price has taken a pause and formed, as we’ve said, inside week.
As we’ve discussed in previous research – we have nice context for DiNapoli B&B “Sell” trade, which suggests 1-3 closes above green line (that is 3x3 DMA). This inside week is the second one. Both two previous weeks stand right at 1.3244 Fib resistance. Hence, from perspective of B&B trade market has only single week before starting move down (if it will happen at all, of cause). Let’s can we estimate potential move with more precision by lower time frames analysis.
Daily
Among others scenarios on daily time frame – potential DRPO “Sell” has a significant interest of mine. Just to remind you a bit – market has reached daily K-resistance (although I’ve drawn only one level) at 1.3240 and formed excellent “Dark cloud cover” pattern. After that market has fallen in tight consolidation during the whole week. Take a look at these long shadows and inside days. This price action shows market indecision and energy building. The same was yesterday, despite positive NFP release – market has closed as it opened.
By number “1” I’ve marked first close below 3x3 DMA, while “2” is a close above. To confirm DRPO pattern we need second close below 3x3. This could become a triggering pattern for weekly B&B “Sell” with minimum target at 1.2860. Pivot point for coming week is 1.3135 – very close to current market. That is what we have to keep an eye on in the beginning of next week.
4-hour
On Friday we’ve discussed two butterflies and made a note, that market could complete downward AB=CD inside of right wing and cancel small butterfly on hourly chart. So, that has happened – market has shown downward AB=CD, but larger, 4-hour Butterfly “Sell” still holds. Why is it so important for us? Because we have potential DRPO “Sell” on daily and to get a confidence with it, we need either close below 3x3 and erasing of this butterfly by closing below 1.3027 or W&R of 1.3237 high. I suppose its all clear about first possibility, while second one has different variants. First one is a completion of Butterfly around 1.33 and move right down below 1.3237 – this will be W&R of 1.3237 high and will give us confidence that market is ready to go down and probably we will even try to anticipate DRPO using Butterfly pattern. Second is linked to inner AB=CD pattern with 1.3261 target. Market could not proceed right to butterfly target but show W&R by reaching just 1.3261 and turn right back. From bearish perspectives both scenarios are equally welcome.
If market will proceed above 1.33 to 1.618 extension this will cancel DRPO, since second top will be too far from the first one. In this case will be more probable that weekly B&B will start from 1.35+ level. I hope this explanation sounds not too confusing…
1-hour
Here we do not have much add-on, just bullish divergence, that gives some hope market could proceed a bit higher.
Conclusion:
Long-term bias still holds bearish, but market now turning to some pause with nice hammer pattern. Probably this is respect of the area that we’ve discussed previously. We can speak about downward continuation only if market will take low at 1.2627.
Weekly time frame is most important in current days, since it has context for directional pattern with excellent trading potential. Our major task is to catch triggering reversal pattern on daily or may be on 4-hour time frame for two reasons. First, estimate the starting point of B&B, second determine where to enter and where to place stop. One problem still is that if market will proceed higher – this will not cancel B&B, since theoretically there could be 1 weeks more before it will be triggered. This trade could be used by long-term traders to add short positions.
On daily time frame we have potential context for DRPO “Sell” that might become particular triggering point of weekly trade that we’re waiting. We will be satisfied with any scenario – as with new high (preferable) as without it if butterfly on 4 hour time frame will be cancelled.
One thing that bears do not want to see is proceeding and holding above 1.33.
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.