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FOREX PRO Weekly, January 17-21, 2011

Discussion in 'Sive Morten- Currencies, Gold, Bitcoin Daily Video' started by Sive Morten, Jan 16, 2011.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Today we will speak about GBP/USD pair. Situation on EUR/USD is almost the same as on Friday morning, so, we shift to cable meantime. But I suppose that we definitely will return to EUR FX again during the coming week.

    Annual
    As with other pairs that we’ve discussed since the beginning of 2011 we do not trade annual chart, but it’s useful to take a look at it in the beginning of the year at least with single purpose – calculate annual pivot point. Here we can see that 1.5421 is an annual pivot point for Cable. Today we use the same method for calculation of annual pivot - simple MA that is based on (High+ Low + Close)/3 shifted forward for 1 period. This is nothing else than a pivot point calculation. MT4, buy the way, allows to draw such MA, so you can use it, if you do not have a pivot indicator or too lazy to calculate it manually.
    In the left bottom corner you can see the numbers for current year – see, market has already tested yearly pivot. Also, rather interesting that 1.4468 - all time 5/8 Fib support holds the market since early 90’s.
    #1
    [​IMG]

    Monthly
    Monthly trend is bullish. I show you just a simple triangle pattern that is forming on the market. Previously, when we’ve talked about GBP, we discussed Buy and Sell Butterflies that are possible in the case of different breakouts, Fib expansions etc. All these stuff you can do by yourself now, besides, these targets are not so important for us, because we do not trade monthly time frame directly.
    Today I do not draw these patterns and indicators, because there are no particular signs of breakout yet. Instead of that I would like to show you one thing that is not very obvious. Look at grey dash line at 1.5421. This is annual pivot point. Now we can see, that in January market has already tested annual pivot and move above it. This is bullish sign for the market. Second, market has formed bearish engulfing pattern, but, in fact, it has not been triggered yet – market didn’t close below the low of this pattern. Furthermore, you can see that market almost stands in the range of the black candle. Price just insignificantly breaks its range and now returns back. Also, as you know this pattern (engulfing) will be canceled if market will close above its high. So, currently this pattern neither triggered nor canceled. This fact adds some delicacy to current situation. And I suspect that this is more bullish sign, then bearish. That’s being said, non-triggered bearish engulfing pattern and move above annual pivot add sense that possibly, we will see upper breakout. But again, this is just initial thoughts and some suspicions, no particular signals.
    [​IMG]

    Weekly
    Weekly trend is bearish. We can see that obvious H&S pattern is forming currently on the market. The one problem with it, however, that it’s obvious… Also, as you remember that the high in the circle is a top of monthly bearish engulfing. Market should not take this high and cancel monthly pattern, if it’s really bearish. This is the first beacon. Second, we can see that weekly Confluence support and annual pivot has held the market. Price shows excellent thrust, moving above monthly pivot point and reaching pivot resistance 1.
    Now let’s talk about H&S pattern. You can see that head is 1.27 from left shoulder. That’s OK, although more common ratio is 1.618. Since H&S pattern should be as harmonic as possible, not only in terms of ratios but in time also, we should take a particular look at 1.60 area. Because if H&S will really come to life, then somewhere around 1.60 should be the top of right shoulder.
    But again, due to evidence of H&S I can’t exclude possible mutation to Butterfly or something else. Weekly time frame also contains no definite trade patterns and signals, so the daily and intraday frames will be particular important for coming week.
    [​IMG]

    Daily
    Daily trend is bullish. There are a lot of indicators here… Here we can see, that weekly Confluence support and annual pivot coincides with 0.618 Fib target at 1.5414, so this is an Agreement also. Anyway couple of things. First of all, market stands just below Agreement at 1.5909-1.5921 and daily overbought at 1.60 (see table in left down corner – OB stands for overbought). It means that currently not the time to establish any Bull positions, despite the fact the previous move up was really strong. If you are bullish – that’s fine, but wait for some retracement lower is a better way to enter right now. Besides, here could be reverse H&S pattern is building. B-C move is a left shoulder by the way.
    Second, if you’re bearish – wait for Sell patterns or signals in 1.5920-1.60 area.
    #1
    [​IMG]

    Just below the market some levels of support that are worthy to be considered, especially, if you intend to enter long. First area 1.5740-1.5765 that includes 3/8 Fib support and weekly pivot point, but I think that 1.5670-1.5690 is more suitable for this purpose, because market is almost at overbought condition and retracement could be deeper. Third area is 1.5580-1.56 includes weekly pivot support 1 and 5/ Fib support. Anyway is better to see some confirmation from intraday chart – some Agreement with one of these levels to use it for entering on the Long side.
    #2
    [​IMG]

    4-Hour
    This chart allows us to add some details. First of all, we know in advance that just above the market is a strong area of resistance – daily Agreement and Overbought. Since, we should look for Sell signals in this area. Meantime, market has not accomplished 1.618 expansion target yet. And there is another reason that allows me think about possible splash to upside. This is Dynamic Pressure. Look at the chart in the circle, see, trend turns bearish (the red line is MACDP) but price action does not confirm that and continue to creep to the upside. The possible target of this move up could be 1.618 expansion from previous retracement and it coincides with 1.5925 area. Furthermore, in this case we can see H&S Sell signal.
    #1
    [​IMG]

    Conclusion:
    On Long-term charts market has no strong patterns or signals. There are a lot of scenarios that could take place in the future, but currently market still coiling and preparing further action.
    On monthly chart, market has not still triggered engulfing pattern to any side, it’s not even necessary to talk about huge triangle pattern.
    On weekly time frame we still need to see, will market confirm H&S or not and how it will behave around 1.60 area. H&S pattern is very obvious, so I can’t exclude its transformation to butterfly, for example.
    So, all that we can trade with relatively suitable probability is intraday or daily time frames. Here I expect the follows:
    1. In the beginning of the week reaching 1.5920-1.60 area. Here I will wait for sell signals, due to area of resistance and overbought.
    2. Then retracement lower. It’s difficult to say what particular level could hold the market, but, possibly it will be 1.5650-1.57


    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. INVESTOR

    INVESTOR Private, 1st Class

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    Cable Gartley?

    Hi Sive,

    Following your analysis for Cable this week, I jumped into my charts and seems to me that a 4H Gartley just formed. Also, MACD crossed downwards, and finally, and this might be just me wanting to see what I wanna see, could be a DROP LAL also in the making?

    Like always, your valuable opinion is always appreciated!
    Thanks a million. :D
     

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  3. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi, Investor,
    Yes, I think, it could be Butterfly, may be it will work.
    Well, about DRPO... I think that 4-hour EUR FX has more clear DRPO pattern...
     
  4. INVESTOR

    INVESTOR Private, 1st Class

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    Thank you!

    Thank you very much Sive for giving your time, patience and knowledge.

    And you are right, EU looks better. Thanks againg.
    I follow you everyday here. :)
    Investor
     
  5. m0z1

    m0z1 Private, 1st Class

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    EUR/USD 4hr chart B/B Buy?

    Sive

    Thank you for your feedback on USD/CHF.

    For EUR/USD it seems to form a B&B Buy trade on 4hr chart. It is currently retracing to .0382 resistance from the whole up-swing which is also near the weekly pivot point. Can you please confirm this analysis? If correct from the weekly pivot point till the highs - .618 retracement should be the target for the trade around 1.3370.

    Look forward to hearing from you.

    Thanks and Regards
    Mili
     

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  6. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi, Mili
    I think that you are late a bit to this party, because, EUR has a DRPO on 4-hour chart (we've just discussed it with Investor 1 post higher).
    But do not be upset too much. There definitely will be patterns more...
    I recommend you to take a look at weekly USD/CHF chart. I'm going to make a video research with franc tomorrow. It has very interesting context.
     
  7. MidnightRun

    MidnightRun Sergeant

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    Eur/usd

    Sive,
    Late last week you wrote that you expected the EU to go down to the 1.3280 area and then resume to the upside. Is this analysis still valid, or there have been developments that have invalidated it in your opinion?

    Thank you
     
  8. ochills

    ochills Master Sergeant

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    Good work Sive
    thanks
     
  9. ochills

    ochills Master Sergeant

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    Thanks for Your GREAT ANALYSIS

    Hi Sive
    It appears head & shoulder is in the making on Cable. After a price text 1.5953 level. am waiting for the right shoulder,left shoulder formed @1.5908. and am anticipating formation of the neckline @ 1.5885 sloping downward. do you agree?
    thanks
     
  10. Sive Morten

    Sive Morten Special Consultant to the FPA

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    USD/CHF Daily Update, Tue 18, January 2011

    Good morning,
    I've decided to shift to CHF, because yesterday I've found very nice context on weekly time frame. And it looks bullish.
    First, on monthly chart we can see nice Butterfly Buy, that has not been accomplished yet. Meantime market has reached AB-CD 100% target.

    On weekly time frame you can see it more clrearer. Also we have a Bullish divergence at D point, W&R of previous lows and lows of 2008 by the way that is also a RRT pattern and Bullish engulfing. Interesting, right?
    But also this RRT pattern has completed MACDP failure or weekly stop grabber and it's target is around 1.0070.

    Now, what we should to do then? First, we do not want to see deep retracement from recent swing up. I suppose if market will hold above 0.618 Fib support - this will be fine. If not, well, this fact will reduce the attractiveness of RRT because break it's mechanics.
    On 4-hour chart we can see H&S is developing. 1.618 target coincides with deep 0.786 support, but 100% and 127.2% precisely in area between 50% and 61.8% Fib support. So personally I will look for Buy signals there.
     

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