Sive Morten
Special Consultant to the FPA
- Messages
- 18,785
Monthly
As we said previously since this market move is based on fundamental data and mostly was triggered by Fed sentiment changing concerning US economy growth, QE program and inflation – we can’t treat it as occasional and short-term. Probably it will have some lasting impact on medium-term perspectives on EUR. In previous research our conclusion on monthy time frames aproximately sounds as – “it’s all about the flag”. Depending on breakout direction – further action will follow. And here we have significant bearish pattern – bullish trap or fake upward flag breakout. By classical school of technical analysis this should lead to oposite real breakout, i.e. downside. An on passed week we have seen this. Market has returned right back and almost has reached lower border of the flag pattern. As situation stands in a row with our expectations yet – minimum target stands the same area around Yearly Pivot support 1 and preavious lows 1.2150-1.23. Potentially this probably will trigger downward action by huge AB=CD pattern that has minor 0.618 target and will challenge 1.1875 lows around all time major 50% support. As you can see, any big thing starts with small one. With this flag breakout failure we have bearish long-term context, I suppose.
On coming week market probably will re-test again significant support level of 1.2880-1.2910. It includes 50% support and Yearly pivot point. Interestingly, that this level aproximately coincides with lower border of the flag.
Weekly
On weekly time frame we do not have something special or unexpected. On previous week we have got a perfect bearish engulfing pattern right around 5/8 resistance. That is still our foundation for trading by far. If we will take a look at this pattern wider we will see that it stands right at top of H&S pattern. Currently it’s becoming a trigger for downward action and holds the harmony of this pattern. Take a look, left shoulder also has mirror AB-CD shape. This H&S pattern looks very attractive. The target of this pattern will challenge the lows of 1.18 area as well. The target of engulfing pattern in turn – is neckline area. Since we mostly do not trade weekly time frame, we will use this as general direction. This is great assistance and advantage for us, when we know direction of price movement for extended period of time.
Daily
So, we’ve estimated our context by far and confirmed that there were no drastical changes on higher time frames and it’s bearish. Now we’re shifting to our major problem – short-term trading plan. We have to estimate when to enter and where to enter. On daily time frame market stands at 1.30 5/8 Fib support. Could any bounce follow here? Probably yes, but first we have to recall that market has not given us any bounce from major 50%+WPS1+oversold condition on previous week. Market has failed to show retracement on B&B trade. And this happens very rare, since by this action market in fact breaks itself, since B&B is based on nature of the market, its natural momentum. That could happen mostly by impact of some external factors, such as mass money flow that was triggered by serious changes in overall world’s sentiment. By the way, gold market now stands under the same impact.
So, as market has failed right at such significant support levels, what is the probability of bouncing from current support? Under retracement I mean some visible bounce at least to 3/8 daily resistance. It’s obvious that we could get some retracement of 40-60 pips but now I’m speaking about retracement that could be noticeable on daily chart. Actually we do have nothing here – no patterns, no directional, some exhausting signs – nothing. Current swing down is too small to treat it as foundation for possible DRPO or B&B. All that we see here is that market at 1.30 support and next support, as we already know is 1.2880-1.2910 area. Nearest target here is 1.28 area – this is 0.618 extension of AB-CD on weekly chart and bearish engulfing target. And take a look – market is not at oversold right now.
60-min
On hourly chart market has broken downward channel and in general the angle of price action has become flatter but that is all that we have currently. On Friday We’ve warned you to be careful with this retracement up and that it looks not very attractive. As result market was not able to continue move up any further and almost has returned right back to previous lows. Still it holds above channel...
So, as we do not have any patterns and major support levels stands lower than carrent market, I do not see any choice but wait either some kind of AB-CD action or appearing upward reversal pattern.
Speaking about upward scenario we have very strong resistance around 1.3115-1.3140 level, that includes MPP, WPR1, major 3/8 Fib resistance and very strong bearish momentum.It is very probable that market either re-establish downward move from this level to next targets or, at least will show some bounce down from it.
Second scenario, if market will start to show downward continuation. Here you can see chance for butterfly “buy”. If it will appear - that will be anyway that something that we could use as possible justifying of our long position. But if even this will be butterfly – it is difficult to expect significant move or drastical reversal. Actually we need the bounce only for short entry. That was our major task on previous week either, based on B&B, and trying to ride on B&B was just secondary product but not a primary object.
Conclusion:
Current move down could have significant consecutives in long-term perspectives since it could become a trigger for long-term bear trend continuation and lead EUR to 1.18 area.
Shorter-term analysis points on possible reaching of previous lows around 1.28, but as we’ve seen how market disrespected all significant support levels, now is very difficult to place bet on potential bounce. Besides, market currently gives us no clear leads. All that we could say now is if market will show bounce to 1.3140 area as upward AB=CD as based on any reversal pattern – that will become our objective for short entry.
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.
As we said previously since this market move is based on fundamental data and mostly was triggered by Fed sentiment changing concerning US economy growth, QE program and inflation – we can’t treat it as occasional and short-term. Probably it will have some lasting impact on medium-term perspectives on EUR. In previous research our conclusion on monthy time frames aproximately sounds as – “it’s all about the flag”. Depending on breakout direction – further action will follow. And here we have significant bearish pattern – bullish trap or fake upward flag breakout. By classical school of technical analysis this should lead to oposite real breakout, i.e. downside. An on passed week we have seen this. Market has returned right back and almost has reached lower border of the flag pattern. As situation stands in a row with our expectations yet – minimum target stands the same area around Yearly Pivot support 1 and preavious lows 1.2150-1.23. Potentially this probably will trigger downward action by huge AB=CD pattern that has minor 0.618 target and will challenge 1.1875 lows around all time major 50% support. As you can see, any big thing starts with small one. With this flag breakout failure we have bearish long-term context, I suppose.
On coming week market probably will re-test again significant support level of 1.2880-1.2910. It includes 50% support and Yearly pivot point. Interestingly, that this level aproximately coincides with lower border of the flag.
Weekly
On weekly time frame we do not have something special or unexpected. On previous week we have got a perfect bearish engulfing pattern right around 5/8 resistance. That is still our foundation for trading by far. If we will take a look at this pattern wider we will see that it stands right at top of H&S pattern. Currently it’s becoming a trigger for downward action and holds the harmony of this pattern. Take a look, left shoulder also has mirror AB-CD shape. This H&S pattern looks very attractive. The target of this pattern will challenge the lows of 1.18 area as well. The target of engulfing pattern in turn – is neckline area. Since we mostly do not trade weekly time frame, we will use this as general direction. This is great assistance and advantage for us, when we know direction of price movement for extended period of time.
Daily
So, we’ve estimated our context by far and confirmed that there were no drastical changes on higher time frames and it’s bearish. Now we’re shifting to our major problem – short-term trading plan. We have to estimate when to enter and where to enter. On daily time frame market stands at 1.30 5/8 Fib support. Could any bounce follow here? Probably yes, but first we have to recall that market has not given us any bounce from major 50%+WPS1+oversold condition on previous week. Market has failed to show retracement on B&B trade. And this happens very rare, since by this action market in fact breaks itself, since B&B is based on nature of the market, its natural momentum. That could happen mostly by impact of some external factors, such as mass money flow that was triggered by serious changes in overall world’s sentiment. By the way, gold market now stands under the same impact.
So, as market has failed right at such significant support levels, what is the probability of bouncing from current support? Under retracement I mean some visible bounce at least to 3/8 daily resistance. It’s obvious that we could get some retracement of 40-60 pips but now I’m speaking about retracement that could be noticeable on daily chart. Actually we do have nothing here – no patterns, no directional, some exhausting signs – nothing. Current swing down is too small to treat it as foundation for possible DRPO or B&B. All that we see here is that market at 1.30 support and next support, as we already know is 1.2880-1.2910 area. Nearest target here is 1.28 area – this is 0.618 extension of AB-CD on weekly chart and bearish engulfing target. And take a look – market is not at oversold right now.
60-min
On hourly chart market has broken downward channel and in general the angle of price action has become flatter but that is all that we have currently. On Friday We’ve warned you to be careful with this retracement up and that it looks not very attractive. As result market was not able to continue move up any further and almost has returned right back to previous lows. Still it holds above channel...
So, as we do not have any patterns and major support levels stands lower than carrent market, I do not see any choice but wait either some kind of AB-CD action or appearing upward reversal pattern.
Speaking about upward scenario we have very strong resistance around 1.3115-1.3140 level, that includes MPP, WPR1, major 3/8 Fib resistance and very strong bearish momentum.It is very probable that market either re-establish downward move from this level to next targets or, at least will show some bounce down from it.
Second scenario, if market will start to show downward continuation. Here you can see chance for butterfly “buy”. If it will appear - that will be anyway that something that we could use as possible justifying of our long position. But if even this will be butterfly – it is difficult to expect significant move or drastical reversal. Actually we need the bounce only for short entry. That was our major task on previous week either, based on B&B, and trying to ride on B&B was just secondary product but not a primary object.
Conclusion:
Current move down could have significant consecutives in long-term perspectives since it could become a trigger for long-term bear trend continuation and lead EUR to 1.18 area.
Shorter-term analysis points on possible reaching of previous lows around 1.28, but as we’ve seen how market disrespected all significant support levels, now is very difficult to place bet on potential bounce. Besides, market currently gives us no clear leads. All that we could say now is if market will show bounce to 1.3140 area as upward AB=CD as based on any reversal pattern – that will become our objective for short entry.
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.
