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FOREX PRO Weekly January 09-13, 2012

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

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Monthly
    On previous week many forum members have asked why we still have not entered with long positions, since market has hit our targets and reached significant support level. It seems logical to think that since market has accomplished all predefined issues – it is a time to enter long, right? Not quite, because there is such issue exists as “disrespect of significant level” and this issue happens quite often. Now we have tough task to do – find confirmation of disrespect or conversely that this respect should happen. Also I have to remind you that our long-term target, according to quarterly analysis of Dollar Index is 1.15-1.16 area. So, here we have expected just some retracement on monthly time frame, but not a reversal. Still this retracement if it could happen – could be significant on daily time frame. And I have to say that on Dollar Index chart situation is developing as it was expected.

    So, what do we see at monthly picture – trend is bearish, market is not at oversold. Our Agreement area of 0.618 major support and 0.618 Fib extension target is 1.2905-1.3039 was deeply penetrated by the market. Besides, here we do not see any respect of it. January bar currently shows just solid bearish momentum – opens at high and now stands at low. Next support is 0.786 at 1.2527 and our long term targets looks like is 1.1657 that corresponds with dollar index quarterly one. Although current price action looks extremely bearish, there is one bullish possibility still exists, at least pure theoretically – butterfly “Sell”, if market will turn to upward move from 1.2527 support. Although now it is not quite clear why it can happen and by which reason – here I just want to show you all possible issues and appearing of Butterfly “Sell” is just one of them. Still, at least now I also hardly believe that it will happen, especially by keeping in mind dollar index action.
    That’s being said on monthly chart we do not see any respect of predefined level. Next support is 1.25 area. So if we will not find any hints of retracement at lower time frames – probably market will proceed to 1.25.
    [​IMG]

    Weekly
    Trend holds bearish well. Market is not at oversold. On previous week we also have discussed MACD Histogram divergence that could point on some slow down in downward momentum. This divergence still exists, but becomes weaker. Besides, it has not been completed yet, since MACD has not shown line cross.
    On bearish side is the shape of CD leg in our AB-CD pattern. This is quite strong move down – no solid retracements, strong candles to the downside. Second fact is market passed through solid support at monthly chart and below AB-CD target.
    Still there is one detail here that probably is not so obvious. If you remember, we’ve discussed the possibility of some drawdown below 1.2870 low (in circle) if market will trigger stops that probably been placed there. We said that by this action market could move a bit lower and reach 1.618 extension at 1.2750. So market has done this and now stands around this support. Also this is monthly support 1. This fact gives us some chances finally to see some retracement. Although chances are not solid and facts that in favor of bears are much greater than bulls’ ones.
    [​IMG]

    Daily
    Daily trend holds bearish. Market is not at oversold. During three recent trading sessions market shows solid move down. As we’ve said higher – market has hit 1.618 extension of weekly time frame and monthly pivot support1. The single pattern that has not failed totally yet and that still could lead to upward retracement is 3-Drive “Buy”. Yes, market has passed slightly below 1.618 extension of 3rd Drive, but not miserably yet, I suppose. Also, take a look that daily action holds in some downward parallel channel. It is obvious that for retracement takes place – market should break this channel to upside. Also, before enter at any trade in opposite direction to long-term trend we have to get two things – first one is reversal pattern, second – trend in our favor. Until this will happen, it is better sit on the hands or at least do not enter in counter trend trades.
    [​IMG]

    4-hour
    Here trend is bearish. We just see two additional intraday targets – AB=CD pattern and 1.618 extension of previous swing up. Recent thrust down probably could be suitable for intraday directional pattern – as DRPO “Buy” as DRPO “Sell”, although it is not perfect.
    [​IMG]

    Conclusion:
    Long-term bias holds bearish. It makes sense to hold long-term bearish positions. Although market has not shown yet any signs of possible retracement that was suggested by normal price action, price has not passed too deep to totally destroy this possibility.
    Current price action tells that there are only two moments that we can monitor to catch possible upward retracement – breakout of daily parallel channel to upside and shifting daily trend to bullish.
    On intraday charts market shows nothing interesting, except achieving of some intraday targets and context for scalp directional trades – B&B or DRPO. But they do not have any determining value.
    As a result, we have to state the obvious that we do not see any reversal patterns, despite the fact that market has not passed too deep from targets that we’ve discussed and at least theoretically has chances on retracement still.
    I dare to suggest that if market will start some reversal, it has to start it from current levels – 1.27-1.2750. Otherwise, if it will proceed to 1.26, then probably chances on retracement disappear.

    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. forexboom

    forexboom Private

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    Pivot points

    Hi Sive,

    thank you for your educational classes!

    Using CQG platform, the pivots are displayed automatically by a CQG integrated indicator, or you have to calculate yourself and then insert in the chart?
    Are you using EUR/USD or EUR future contract?

    Thank you!

    Damiano
     
  3. Urum

    Urum Private

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    I've been reading your posts and watching your videos with success for quite some time Sive, but I never see you use Bolinger Bands... Do you think they are not very helpful in forex?
     
  4. cosmos

    cosmos Sergeant

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    Sive, If we do see a retracement, do you expect it to reach the upper channel? Or some retracement to 23.6 level of recent swing down or higher? How much of a retracement do you expect to see if one should begin at all?
     
  5. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi Damiano
    THis is pivot indicator - it shows and updates automatically when week/month closed.
    I use futures, and usually leading contract, but in current research I've used continuation chart, since we have some targets on weekly time frame, so that swings were formed during previous contract.

    Hi Urum,
    I prefer to use DiNapoli Oscillator Predictor for estimation of overbought/oversold conditions. I do not trade breakouts, so this application of Bollinger Bands is not very useful with my approach to markets.
    But BB indicator has solid logic, based on normal probability distribution and if you have enough skill - it might be quite useful. You may read about it in our Forex Military School.

    Hi Cosmos,
    I suppose if retracement will start, it should be at least 0.382 of whole move down on daily time frame.
     
  6. TraderBob

    TraderBob Private, 1st Class

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    Length of stay

    Hi Sive, we all really appreciate your work. A question I have is how long do you plan on staying? Do you have a contract with Felix for a set period of time? I need to plan my retirement ;-)
     
  7. forexjosa

    forexjosa Private, 1st Class

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    Lol. That is not of your business.

    Concerning our biz here: trade, Sive, the recent price action suggest that the retracement wont come? (price touch 1.2666 by now)
     
  8. BeeKay8

    BeeKay8 Sergeant

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    Sive,

    Last week you suggested that on the 4-hour time frame that a double repo buy MAY appear. I know that after the initial thrust, there should be a pierce above the 3x3 and then right back down below the 3x3 before going up.

    The link below is my chart. I entered long at 1.2785 in anticipation of the double repo buy and I know that if price action moves BELOW the bar up after the initial thrust down, then that means the double repo has showed a FAILED PATTERN, therefore a SL should be placed below the bar that pierced above the 3x3.

    Despite knowing that a SL should be set below the bar that pierced through the 3x3, I still did not set it because I figured 1.2750 was a very strong support and that I thought the odds of going below 1.2750 was very little.

    I just want to know WHEN should I make the decision to buy or sell when I see a double repo pattern forming? In this case, I made a buy after the second bar pierced back below the 3x3. Was this the right timing? The ORANGE CIRCLE below in my chart is where I entered my buy. Obviously this has not been a winning trade but did I make the right buy at that price level? I know I should have set a SL but I figured since my long at 1.2785 was so close to the strong support at 1.2750 that I figured I did not need to set a SL.

    At what bar should I be making the assumption that the double repo has succeeded? Is it after the second bar after the initial thrust down?

    Thanks a lot Sive!
     
  9. cosmos

    cosmos Sergeant

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    Thank you, Sir.
     
  10. Megh Balok

    Megh Balok Recruit

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    Thanks!!!!!!!!!!!!!!!
     

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