FOREX PRO Weekly February 13-17, 2012

Hi Sive, I do not see from what level you are starting the 3-drive pattern. It does not look like it is from any major support or resistance level. If we begin it from 1.2865 area, then the 1.618 level comes at 1.3458. If we begin at 1.2657, then 1.27 comes at 1.3390 and 1.618 at 1.3598. If 3-drive pattern does not work, then we are left with a possible larger A-B-C-D up to the same 1.3598-1.36 area. Can you clarify the beginning point of your 3-drive pattern scenario for me?


Hi
Initially I disagree with the 3 drive patterns but later I careful check the daily TF and count the number of bar corresponding to where sive drew his 1st leg(5candlestics),2nd and potential 3rd leg I discovered the only problem is that there is only about 9-20pips different to form a perfect retracement(1st retracement is 3 candlesticks & 2nd Retracement is 1 long bar bearish candlestick) for the 2legs(6 Candlesticks) and the total candlesticks is 15. but for U to see what Sive have seen U must magnify your chart and count the candlestick. U will then agree that Sive eyes are sharp to see market patterns.
 
Sorry, guys, for delay (just rush hours with my job). I'll try to answer on your questions

Hello everyone!
I want to share an interesting situation on GBP and maybe get an expert opinion from Mr. Morten:

GBP is at Weekly confluence resistance and price returned to close below it. I expect a respect of this area so I am looking for sell signals.

DRPO is one option but, as it was already noticed, I could get it wrong because of my broker OHLC.
Other option is H&S but I might miss the train and not get such retracement up.

Trend turned bearish but not very convincing.
Also, Monthly pivot point is at 50% retracement and it has not been touched this month.

Hourly K area is at Weekly pivot. So, what action to take for entering on short side?

Hi Georgeta,
Very good analysis. In fact, there was perfect DRPO "Sell" on daily TF on GBP right at weekly K-area as you suggested. Even more ther was excellent weekly W&R that was also the second higher top of DRPO pattern. So, you may try to enter short on nearest Fib resistance and trade it as DiNapoli tells - hold position down until market will close above 3x3 on daily or until it will close above 0.618 resistance from the top of DPRPO. BTW, this is some kind of relative confirmation for EUR action...

Sive,

I'm looking your analysis for a long time and would like to thank your efforts.

If you don't mind I would like to add an other potential scenatio for next week.

If you look the chart I attached you'll see a triangle was formed on the way down when market tested 1.32 support. Finally the breakout was down with which left
a fresh daily supply zone @ 1.3380-1.3485. And we shouldn't foget that this zone is also a weekly supply zone.
In this supply we have also the 50% FIBO level of the big move from 1.4245->1.2623.
Also if you look the current upmove from 1.26 we have the FIBO extension of the corrective pullback (1.32->1.30) @ 1.3402, in the same zone.
And finally the target of the current breakout is 1.34 = 1.32+(1.32-1.30).

So, in my view the reversal should happen in the range of 1.3400-1.3434.

What's your view about this scenario?
View attachment 4814

Hi Fx Shark. Well, why not? Although I do not familiar with your terminology, but 1.3360 level is significant from DiNapoli framework as well. I see only single problem, that there is another case exists (that we're now trading) that market already has started down move and will not reach it. Our second scenario is precisely that market could reach it (1.3360) by 3-Drive pattern, and then will start retracement.

Great work Sive.
Pls Kindly help me with the following questions.
1. what is the low & high of the 1st leg of the 3-drive pattern u showed on daily TF and why do you consider that low. My low is 1.2879 &H=1.3232 while the retracement is less than 9-20pips to touch 0.618 retracement.
2. Pls is there a way I can draw 3-drive & butterflies Patterns exactly the way u drew it in the charts using MT4.
3. Can I include additional trading hour like 10M & 8H on my trading platform apart from the default trading hours& minutes provided if YES pls how can I do that. I have tried several times to customize it but all effort prove abortive.
Thanks Sive as usual.

Hi Ochills
1. There is no such level as "starting point of 3-Drive" - to build it - you need just pullbacks of the current swing - read chapter, dedicated to harmonic patterns in our Forex Military School. It will become much clearer for you. In fact your building process starts from the first drive - first pullback. YOu apply extension (as with butterfly) to estimate potential high where second drive (i.e. pullback could start) and so on.
2. I do it manually just by trend lines. There is no software for that, at least I do not have it.
3. No, MT 4 does not have other TF. But, in fact we do not need them for trading. I have to use it sometimes, just to show overall picture and safe the room in the posts - only for education purpose, not practical.

Dear Sive,
thanks a lot for your analysis, it always helpful for newbies like my humble self. pls sir can i know the type of moving average you always use? secondly whats is the meaning of DRPO

Hi Samuelken
MT 4 allows to do that - choose simple 3-period MA and add Shift option for 3 periods.
I've described DRPO many times here - use the search on the site, you'll get it. Or, since this is DiNapoli pattern - read the book. There he describes it in details.

Hello Sive,

As always I thank you for your hard work.

I needed to verify my copy of DJ's book. It states that a double repo failure is marked as soon as the high (or low) is broken on the following wave. Typically resulting in a double top (or bottom) confirmation and position of entry. I have no doubt that you have a closer finger on the pulse of how his research has changed since his book. So I would greatly appreciate you opinion on this. Also I have noticed we are back to the neckline of the weekly head and shoulders pattern. Would a three drive sell with the third drive breaking the neckline, count as a directional pattern or a possible trend retracement? Meaning a head and shoulders failure and the direction is now up?

Thanks

Hi, Rfking2
Well, I didn't hear about changing rules of trading DRPO's. Where have you got this info?
Sometimes appears such things as triplpe repos, but mostly on highly momentum markets, such as US Treasuries and some commodities. They should be missed or traded as LAL's.
DRPO failure point is 0.618 level from the farest point of the trhust till the extreme of confirmation bar.
Concerning H&S pattern, well I also thought about it, but I do not like it very much, since it is too shallow price action to call it as left shoulder. Probably to my mind we do not have any H&S.

Hi Sive!
I dont rely much on my predictor but nevertheless it shows a SG on Friday (my broker has a Sunday bar so the last two bars are for today). If we take in consideration that the Daily trend was bulish, than the SG was on retracement so it has good chances to work. I think this is the time to enter long not short. Thank you!

Hi Pragmatic. You're right if it was SG. But, according to my charts we do not have it. I also tracked this possibility just to catch more confidence for 3-Drive, but there was no SG...

Hi Sive, I do not see from what level you are starting the 3-drive pattern. It does not look like it is from any major support or resistance level. If we begin it from 1.2865 area, then the 1.618 level comes at 1.3458. If we begin at 1.2657, then 1.27 comes at 1.3390 and 1.618 at 1.3598. If 3-drive pattern does not work, then we are left with a possible larger A-B-C-D up to the same 1.3598-1.36 area. Can you clarify the beginning point of your 3-drive pattern scenario for me?

Hi Cosmos,
You're right about potential AB-CD if 3-Drive will fail. Please read my answer slightly higher in this post to Ochills. He is also interested in 3-Drive starting point. I suggest you to read chapter dedicated to Harmonic patterns in our Forex Military School.
The point is that there is no such issue as 3-Drive starting point. This pattern is based on retracements from the swing but not on the swing itself.
 
Thanks Sive my great Mentor COMMANDER.
I appreciate ur time,devotion and commitment.
Thanks commander
 
just paper trading so far
. If I understand correctly. Should be short from around 1.3215 and continue to 1.3117, then 1.3050? thanks sive!!
 
Hi Sive sorry to bother you with this i just want to make sure of the double repo pattern currently on the map,on your charts i can see that we had a close on the bottom side of the 3x3 but on my Meta 4 platform i never had a close there,just for interest sake how do i treat the close busy happening now,on my charts it is the first close since the up thrust started within the 3x3,do i see that as my first penetration,thanks for all your time.
 
I've been trying to include these types of studies in my trading lately and it does seem to help especially with trying to understand the market and indecisive moves like we've seen recently with the EUR/USD. Maybe it will help some of you as well.

In the first chart we have the S&P 500 on 4H time frame. As you can see it has been in a nice strong uptrend since December. The 50 MA has contained the move nicely for the most part. Come the end of January though the channel dropped, the move up has slowed and now it seems to be struggling to set new highs. If you looked at the 1 Hour S&P on the weekend you would have seen a very nice DRPO Buy that completed quite nicely. (I'll include that chart too) Which is one of the reasons I expected the EUR/USD to go up when the market opened assuring me I should be able to find a quite comfortable position to get "short" :)

Since completed the DRPO Buy it has formed a second top and now appears to be in the start of a downward channel. In case your wondering why this may be important, market behaviour appears to be in the early stages of reversing from a "risk appetite" theme to a "risk adversion" theme. Or at least starting a market correction. This could be really good sign if your bearish EUR/USD and hoping to see the down trend continuation, or at least a really deep pull back. At the time of writing this today seen the S&P 4H slip out of the bottom of the up channel and is now testing it below. Its also flirting with the 50 MA as well.

sp500-4h_2-14-2012.gifsp500-drpo_2-14-2012.gif

My second case is the AUD/USD which confirms this sentiment to the letter. As a commodities based currency the Aussie is a "risk appetite" currency. It has also been in a very nice up channel since December. Friday seen it slip down a bit below the 50 MA to the channel bottom. And now today what I had hoped to see seems to be materializing. Now it has tested the 50 MA from below and dropped down below this long running channel. Currently at the time of writing it is now testing this channel from below. Hopefully it fails and that 1.30 and 1.29 marker will seem pretty close and very realistic for the EUR/USD. Also there was a DRPO Buy, just like the S&P, on the 1 Hour AUD/USD at Fridays close.

aud-usd-4h_2-14-2012.gif

My final check up here is with the Dollar Index. This had a DRPO Sell on the 1 Hour TF after Fridays close. This was my other reason I thought the EUR/USD would take a run up again before we seen any more of a push to the downside. The dollar index seems to be bouncing off the floor set back in December now. You can see it has been channeling down since mid-January but now, at the time of writing this, all intraday trends (H4 H1 M30 etc, MACD) are bullish. Also Daily trend has turned bullish. We've also set new highs that we haven't seen since around Jan.25. Possible that it could just be a wash and rinse. Also note we are now above the 50 MA (4 hour) as well as the 200 MA (4 hour)

usd-index-4h_2-14-2012.gif

The possibility exists with all these other factors that we are in the early stage of a market shift?? I don't know but the market will show us the way if we let it. I'll be keeping an eye on these items and see how this story unfolds.

I hope this helps some of you out there and I hope you have a very pip filled day. Take care, Happy Valentines Day to you All!

~Markus
 
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