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FOREX PRO Weekly February 13-17, 2012

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Feb 11, 2012.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Monthly
    Trend is bearish, market is not at oversold. In fact I leave previous analysis of monthly time frame intact. One thing that I would like to add is that market has touched first Fib resistance level at 1.3296.
    Currently market is showing some pullback that may be 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 a bit shallow for now. 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
    [​IMG]

    Weekly
    Here I do not see anything but potential for B&B “Sell” pattern. Trend is not so important for us here, despite the fact that it holds bullish. According to DiNapoli framework - Direction overrules Trend, and B&B is Directional bearish pattern. So our direction on weekly time frame is bearish.
    Second moment is that market has accomplished theoretical conditions for B&B “Sell” pattern – shown thrust, reached significant resistance within 3 periods by close after penetration of 3x3 DMA. That is conditions noted by DiNapoli for B&B. From that perspective market should start move to B&B target – 0.618 support at 1.2894 at minimum. I just want to make some light note here. We have to be rather flexible to strict conditions, since market is a not precise mechanism or engine – this is more living substance, since it is driven by human beings. That’s why real start or failure of B&B sometimes could be a bit different and skew either one side or another. I mean that if you will ask me why B&B has started after 4 bars but not 3 – I can’t answer on it. In fact to catch the starting point of B&B is a real task that is based on continuing analysis and monitoring of lower time frames. DiNapoli gives just general conditions, based on probability – in most cases B&B starts to work within 1-3 periods after penetration of DMA, but this is not mean that it always happens like that.
    Third moment is reaching of monthly pivot resistance 1 at 1.3340. When market stands at long-term bear trend upward retracements usually holds by pivot resistance. So, that has happened.
    What conclusion could be made here? Market has not bad chances to show downward move in the beginning of the week. It stands at resistance and shows context for B&B “Sell”. Hope we will be lucky to get some more confirmation on lower time frames…
    [​IMG]

    Daily
    On daily time frame we see some bearish signs. Although trend is bullish, market has returned right below previous high at 1.3237 and was not able to reach next resistance at 1.3360 area. Could we treat recent price action as W&R – is an open question, but solid move down right from that area is a bearish sign. Here we tough task to do.
    DRPO SCENARIO
    On the first view – all clear, we have DRPO “Sell” pattern. I’ve marked bars of penetration 3x3 DMA by circles and numbers. Still, situation a bit trickier than it seems. Why? First of all I see this DRPO but I do not like it very much – difference between tops significant, consolidation between first penetration of 3x3 DMA and second one is almost equal to thrust length. So, it will be honest to qualify it as DRPO LAL probably. Let’s suppose that it will work, since in general it stands in a row with B&B “Sell” on weekly and although it is LAL, nevertheless could work as pure DRPO. How we will play it?
    The failure point of DRPO is 0.618 resistance at 1.3261 at close. So, to treat it as failure pattern market has to close above this level. Some weight is added by the fact that this level stands above 1.3237. Since market has already returned below it – moving back again is unnatural for bearish development. From that perspective I like this level. IF you want to trade purely DRPO you have to place stop somewhere above 1.3261. Your target is 1.2894 – B&B “Sell” minimum target. How you can enter? There are two possible ways – just by market in the beginning of the week, second - wait some pullback to nearest Fib resistance on intraday charts or combine both of them.
    [​IMG]
    And now I will show you why I a bit worry about it…
    3-DRIVE SCENARIO
    Such a bit extended action of DRPO makes room open for shifting to 3-Drive “Sell” pattern. As we know already – current top has appeared right at 1.27 extension of 4-hour butterfly “Sell” that we’ve discussed through the week. Very often Butterfly becomes a part of 3-Drive pattern. Take a look that 1.618 extension stands right at 1.3363 resistance level and very close to monthly pivot resistance. If market will turn to upside right from current level – then 1.27 extension from potential 2nd drive will stand at the same area – so this could become perfect 1.618/1.27 3-Drive “Sell” pattern. Also pay attention how drives harmonic are. Retracements during 1st and 2nd drives are almost both at 200 pips.
    Even more, if this move to 1.3360 and fast reverse will happen within next week – it will not erase B&B “Sell” pattern, since move down will start.
    [​IMG]

    So, what we’re going to do?
    Conservative approach is to wait both downward continuation and breaking of harmony with 3-Drive or reaching of 1.3360 area and trade 3-Drive pattern.
    Aggressive path is to enter by DRPO “Sell”. Then if market will take your stop and form failure DRPO – this will simultaneously mean that 3-Drive is under way. So you will have two patterns – DRPO failure and 3-Drive in progress. Reverse your position with target at 1.3360-1.3370. This will let you return your loss from DRPO trade and then be prepared to trade purely 3-Drive.
    May be you will find other wise solutions and can share with them on forum. This will be greatly appreciated.


    8-hour
    Here I’ve used 8-hour chart to reduce noise and better show you overall situation. We have really significant support levels: around pivot 1.3141-1.3155 and with major 0.382 support – 1.3050-1.3059. Also we see nice bearish divergence with MACD. This chart could help us catch hint on potential move to 1.3360 area. Now market stands at first K-support and will open right around pivot point. If it will return above 1.3240 high again – keep close look to 1.3261 level, since this is DRPO Failure point. As you can see – they are close to each other. Also here you can see nice bearish wedge if you will add corresponding trend lines. Wedge is often company for 3-Drive, as divergence.
    [​IMG]

    1-hour
    This is contracted hourly chart. Let’s get some freedom to imagination. This is 3-Drive pattern as it very often happens – like compounding of side-by-side two butterflies, classical wedge and divergence. Hourly trend is now bullish and market stands at solid K-support area. If market will break this level down – this will be huge advantage for bears and very probable that DRPO will prevail over 3-Drive. In this case harmony of 3 Drive pattern will be broken. Market will move below pivot and all trends will be bearish. Second scenario, if market will jump out from this border to upside, then it will turn us to difficult period of expectation. I’ve drawn just one possible scenario – as smaller Butterfly “sell”. What will happen in reality – who knows…
    [​IMG]


    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. At the same time this task looks not so simple, since there are could be two different patterns here. We have to apply such trading plan that will allow us to deal with both and to not skip entry in B&B trade. They could be either DRPO “Sell” LAL or 3-Drive “Sell”.
    Since we’ve announced as aggressive as conservative tactics – you may choose what you personally like or even find some better solution to trade and share with others on forum.
    Firs level to watch for on Monday is 1.3150-1.3175. If market will break it down, then DRPO “Sell” will get an advantage over 3-Drive.


    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 14, February 2012

    Ok, guys,
    let's dive back in our sophisticated situation on EUR. Yesterday market has not closed above 1.3261 - failure point of DRPO "Sell" LAL. It means that this scenario is still valid and we have to trade based on it. Other words - search possibilities to enter short. On daily time frame unconfirmed trend has turned bearish. Target of this potential move is 1.2894.

    Our major focus today is on intraday charts.

    8-hour chart shows bear trend, market stands at confluence support 1.3141-1.3155. Trend is bearish. We see that AB=CD pattern now is in progress with target at 1.3135.
    Also, I posted 8-hour chart just to show you that current price action could turn to 1.27 H&S pattern. Now head is forming. Then market could move to 1.3030 - previous lows and then turn to form right shoulder.

    4-hour time frames adds nothing, except trend - it's bearish.

    Hourly chart now is particularly important. First, because here we can better estimate A point of AB=CD pattern - it gives us 1.3135 as a target but not 1.3117. Second, we have perfect context for DRPO "Buy" pattern, since we have great thrust and market now at K-support and AB=CD target. Be aware of new low and hitting of 1.3135 target before any retracement will start.

    So, we need to use this potential retracement to enter short. I suppose that 1.3215 or 1.3232 are suitable enough for that purpose. Crucial level today is 1.3257 by daily close.

    If you're scalper - you may try to trade DRPO or B&B separately (depending what it will be) as well.
     

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    #2 Sive Morten, Feb 11, 2012
    Last edited: Feb 14, 2012
  3. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Wed 15, February 2012

    Good morning,
    we might say that our yesterday trading plan was filled at 100%. That was a nice B&B on hourly chart (not a DRPO) right till the area that we've mentioned and after market has reached it - it has moved down. Ok, what's next?

    On daily time frame bearish trend has confirmed. This is important. So, our context for trading is down. Also, take a look - it could be H&S pattern on daily chart. After market will hit major 0.382 support at 1.3058 it could show 0.618 retracement up. That is probable.

    On 4 hour TF trend holds bearish but market now stands at its breakeven point. You can see how market is moving down - 1.0 extension of AB=CD - retracement, now it has hit 1.27 extension and in retracement. 1.618 extension stands right in Agreement with daily major 0.382 support. And I suppose that market will reach it.
    Now it stands at 4-hour K-resistance area, pivot point and previous lows (marked with circle). It could reverse down here... Keep an eye on potential Stop grabber that could appear here. If it will happen - market probably start move down to 1.3058 right from this area.

    On hourly chart we see that trend is bullish and that current area is also and Agreement of AB=CD pattern. We have "222" sell here. Still, here is just one unwelcome moment for bears - CD leg is too fast. That's why I can't exclude that market could proceed to next Agreement 1.3205-1.3207 before reversal. This is risk issue for current situation. So, what can we do?
    Probably we can enter short right from that area with part of position and place stop above next Agreement. If market will proceed to it - add more shorts there. This is agressive tactics. We may apply greater volume if we will see SG at 4-hour TF.

    Conservative tactics is to wait starting move down from the area whatever it will be. When hourly trend will turn bearish - enter on nearest Fib resistance level short.
     

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    #3 Sive Morten, Feb 11, 2012
    Last edited: Feb 15, 2012
  4. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Thu 16, February 2012

    Good morning,

    Yesterday market has formed SG at 4-hour chart, so move has started right from the area of K-resistance and Agreement that we've discussed. By this moment you can understand why is better to apply partial and gradual entry technique. Yes - that's all of probability. Because, as we can see, if even shape of AB=CD pattern suggests upward continuation - this happens not every time. If we've waited this continuation - we will miss solid move down, but entered even with 30% of our normal position - we've made some profit. Ok, let's take a look where we're now?

    On daily TF trend is strongly bearish, market has broken 0.382 support level (our yesterday nearest target) and now stands below pivot support 1. Slightly below the market stands 1.2975-1.2980 support area - 50% support and monthly pivot point. I do not know - will market find some support there or not, but if it will - use this retracement to enter short, since our nearest target is 1.29. Speaking about H&S pattern - now I do not have a clear answer. It has chances to form but taking into consideration resent solid move down, I probably will look at this possibility with doubt. More probable that market will form just 0.382 retracement but not 0.618.
    Anyway, personally - I do not much care about it, since that is just a details of the move to 1.29.

    On 4 hour chart we see nice area to watch for "Sell" possibilities if suddenly retracement still will happen - 1.3114-1.3138. 4-hour trend also will remain bearish till that area.

    On hourly chart be careful with thrust, since it has some lack - deep retracement in the middle of it. If market will form DRPO - treat it as LAL at best and probably will be better either to skip it, or trade with reduce volume.

    Still, currently I do not see any patterns, that could point on some retracement. All trends are bearish. IF some pullback will happen - we can use it to add for shorts, or re-enter with 1.29 target.
     

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    #4 Sive Morten, Feb 11, 2012
    Last edited: Feb 16, 2012
  5. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Fri 17, February 2012

    Hi there,
    Although we've expected pullback from 50% support+Monthly pivot, to be absolutely hornest - I've looked at move to 0.618 resistance with doubt. But, this is another time confirms that market is always right.

    So, speaking about overall picture, retracement on daily chart to 0.618 resistance at 1.3191 will not break overall bearish bias. Trend holds bearish and 5/8 retracements is absolutely natural and normal. This means that I still expect move to 1.29. BTW, I do not have 3x3 on daily chart, but if you will draw it - you'll see that it holds this retracement. That is what DiNapoli shows in his book.

    From that perspectives our major focus is on hourly chart. On 4-hour chart we see that trend is bullish. We can't treat this action as B&B because we do not have suitable thrust for this. My particular attention is on 1.3175-1.3191 area. This is pivot point and 0.618 resistance.

    Finally, hourly chart. Here we have double possibility for reversal patterns. First one is DRPO "Sell", second is Butterfly "Sell". Besides, they are not opposite to each other. IT will be perfect if they will happen simulteniously. Butterfly in this case will let us to anticipate DRPO.

    That is what I particularly will be watching over today's trading session.
     

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    #5 Sive Morten, Feb 11, 2012
    Last edited: Feb 17, 2012
  6. rashidin5178

    rashidin5178 Sergeant

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    Hi Sive,

    Thanks a lot for your analysis.
    BTW, I think it is possible DRPO LAL Buy on M30. Can you confirm it, please?
    Have a good weekend, Sir.
    Thanks and Best Regards.
     
  7. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi Rashidin, yes, probably it could be, as on hourly chart. Thrust is nice but there is single penetration of 3x3 in the middle of it.
     
  8. rashidin5178

    rashidin5178 Sergeant

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    Ok, Sir. Roger that. Let see.
    Thanks a lot.
    Thanks and Best Regards.
     
  9. Venelin

    Venelin Master Sergeant

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    Sive you are genius! Thank you!
     
  10. DJG

    DJG Corporal

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    wonderful analysis , thanks sir
     

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