FOREX PRO Weekly July 02-06, 2012

[Sive Morten]

Monthly
Monthly trend holds strongly bearish. Although chart almost equals to previous one – market closed just 20 pips higher, we’ve seen a lot of price action within the week. Actually situation in EU is so, that it is better to not marry any position and try to appoint nearest targets. I’m talking for those who trade on daily time frame. I’ve looked again on monthly chart and find out that we’ve missed important detail. Currently market stands not only on crucial support range – 1.19-1.23 that held EUR twice from collapse. This is also 0.618 target from huge AB-CD pattern. We could also tell that this is 0.88 Fib support from most recent swing, but it has minor importance.
From that perspective it seems possible retracement to 1.30 K-resistance monthly level. We’ve discussed this already on previous week and told that even such bounce, that could be solid from daily perspective, on monthly chart could become absolutely reasonable and moderate retracement, that still will not change overall bearish bias on monthly time frame.
The problem though, that currently we have some lack of confirmation that a) this move has started and b) that it will reach this level. From monthly stand point we have couple of conclusions – although trend and price action are bearish, market stands at support. May be we should investigate possibility to buy against previous lows, because if market will break it – it will mean downward continuation.

Weekly
Weekly trend is bearish. In addition to monthly target, market has hit 1.27 target of butterfly pattern and weekly oversold, then it turned to upward retracement. Still, currently price holds below even first Fib resistance 1.2668. From weekly time perspective I do not want to buy and probably search the possibility to sell, since current price action is creating classical bear flag. Keeping in mind that market was at oversold and actually just shows sideway move tells that it rather heavy.
Looking at monthly pivot points for July we have MPP=1.2563, MPR1=1.2837, MPS1=1.2378. We know that when market stands in bear trend it often retraces to MPR1. That is very close to upper border of channel and weekly K-resistance.

On second chart we see downward destination points. Our AB=CD pattern is finished fight at the lower border of monthly support zone. Also if we apply classical rule of flag trading – move after breakout should be equal to mast – this point also will be around 1.18-1.19 area. So, on weekly chart I do not want to buy and probably start to look for sell possibilities around MPR1 and K-resistance area, if I will be able to find any daily AB=CD to sell into.

Daily
Daily chart mostly resolves our riddle. As you can see trend has turned bullish here again by solid upward candle. This give us some confidence to think that AB=CD is really could be possible. Market already has reached its 0.618 target and daily overbought.
So, I suppose that we could be buyers here against previous lows (red circle) at some pullback. The target of this AB=CD precisely at an area of MPR1 and lower border of K-resistance on weekly chart.

4-hour
Trend strongly bullish here. Keep in mind that WPR1=1.2761 is also a daily Fibonacci K-resistance area. I just put it out from the chart, since we’ve talked about it in every research. Here I like 1.2560-1.2585 area to search for buy opportunity. This is nearest Fib support level, WPP and MPP. If market will hold here it will simultaneously confirm bullish sentiment. Probably it could be a bit deeper retracement – to 50% support of total move. One thing that we do not want to see - erasing of this upward splash. If market will take out its lows, then we should forget about upward continuation. So, that is our point of stop placing. This is a bit extended stop – 200 pips, but current volatility is solid. Another way, how you may act – drop your time frame, find some patterns or downward AB=CD to buy into and stick with it. This may be even better way to act. Here I just show you the levels what to watch for.

Conclusion:
On long-term charts situation holds bearish, at least currently I do not see any upward explosive moves, that could force us think opposite. On weekly time frame bear flag is forming (in a shape of daily AB=CD) so, positional traders should wait for 1.29-1.30 level and then search a possibility to sell.
Daily traders could try to buy with hope of upward continuation of this AB=CD pattern against “C” point low. First level to watch as suitable for Long entry is 1.2560-1.2580.



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.

 

[Sive Morten]

EUR/USD Daily Update, Tue 03, 2012

Good morning,
as we've suggested yesterday market has shown reasonable retracement right to the area of 3/8 Fib support on most recent swing and agreement of pivot poinst - 1.2560-1.2584 Monthly and Weekly.
Daily trend is bullish, and currently our expectations of upward AB=CD are reasonable. Only if market will erase recent splash up, we might say, "yes, probably bulls have exhausted" and this could turn to butterfly "Buy" for instance, with deeper move down. But until that will happen, bias is bullish.

On hourly chart we see our downward AB=CD. Still it has steeper CD leg, and I will not be surprised if see retracement to 1.618 extension of it and 50% support level of whole up move. That is absolutely reasonable after overbought condition on daily time frame - as well as to get greater AB=CD down (current whole move down could be AB leg). May be market will reach 1.618 extension by some reversal pattern, for example butterfly, I do not know. But what I do know is that if bulls control the market - price should find support somewhere above 5/8 Fib level.
Currently you can see respect bounce from support level. If you have entered long use it to protect position.
So, bullish context still actual, just be patient and keep close eye on 50% support and watch fro reversal patterns around 1.618 AB=CD target on 15-min charts.

IF you're bearish, then stay flat, since currently market stands in reasonable retracement area and does not show any obvious bearish development. Wait for clear signs.

 

[Sive Morten]

EUR/USD Daily Update, Wed 04, June 2012

Good morning,
today is a holiday in US, so markets will be probably thin and in some range. That's why I would like to discuss with you thoughts on some perspective.

I have no new comments for daily time frame. Yesterday market has shown narrow range bar and continue coiling around pivots. Trend holds bullish.

Most interesting is 4-hour chart and 30-min chart. On 4-hour chart we see clear triangle consolidation. Although we didn't get our desirable AB=CD to buy into, triangle is not so bad also. If bulls are still in charge logical price action is upward breakout. Triangle gives us minimum target around 1.2750 area - right around previous highs of AB leg on daily time frame. Now let's take a look inside of it.

on 30-min chart we do not have any AB=CD, as I said. We do not have also a 3-drive. But still, we have something to watch for. Take a look at initial AB-CD pattern. Market has reached 1.27 extension of it and formed butterfly, that we've discussed yesterday on forum. That is what I particularly watch for before entering at higher frame support.
But this pattern has completed already. So, what to watch for?
Take a look that 1.618 extension of this pattern (I mean AB-CD) stands 30 pips lower than border of triangle - around 1.2530. Due today's coiling market probably will remain inside of pattern and we hardly will see significant price action. That's why I can't exclude price attempt to reach 1.618 target before upward breakout of triangle. 1.2530 area is also a 50% support of long bar on daily time frame.
So, this could turn to W&R and failure breakout of triangle. If it will be the case - this will become a nice bullish pattern and we should use it to jump in on a long side. Since move to 1.2530 will not be a real breakout but just market's gravitaion to AB-CD completion point. Once it will be reached, market will return right back and continue major direction. That is a sense of W&R.
So, it should happen if bulls are really control the market. I mean not definitely W&R, but upward triangle breakout. If it will be by W&R - much better.

 

[Sive Morten]

EUR/USD Daily Update, Thu 05, July 2012

Good morning,
Although there was a holiday, market has shown plunge down. On daily time frame it is approaching to 5/8 Fib support and WPS1=1.2475. Also trend breakeven point becomes closer, so, that will be important level.
Point of "no return" is the same, I suppose. If bulls are still here - price should not erase upward bar on daily.
Obvious opposite scenario to AB=CD is butterfly "Buy" on daily - we've discussed that already. You may think now that situation becomes more and more bearish, since market has not found support yet on intraday charts, although it comes to deep retracement already.
Today I would like to share with you another variant of bullish development, that looks actual currently, since on intraday charts we didn't get any AB=CD buy patterns.

On first 4-hour chart we see bear trend and downward breakout of triangle pattern. It looks bearish. But now take a look at second chart - this could be Butterfly "Sell" with 1.27 extension right around daily AB=CD completion point and 1.618 extension at lower border of Weekly K-resistance.
Since butterflies usually show deep move inside the swings - 0.786 is most common ratio - we must keep an eye on 1.2475 level. That is also WPS1.

On houlry chart, after triangle breakout price action turns to downward channel. Still inside of it we see swings. Let's call them drives. So, current drive stands at 1.618 extenion of previous retracement. IF we suggest that this price action will hold, then 3d drive should stand right at 1.2475 level.

The advantage of this scenario is the same crucial point as for daily one. Since if market will take out the low of upward move - it will erase butterfly as well. In this case we will start probably to prepare for short entry. But until that happen, it makes sense to keep an eye on 1.2475 area. May be it will be even 0.88 retracement - the most important is that market will not take the low.

 

[Sive Morten]

EUR/USD Daily Update, Fri, July 06, 2012

Good morning,
So market has put all dots on "i" by yesterday's plunge down. We have seen price action that we didn't want to - erasing of upward candle. At the same time market has broken down support of weekly bearish flag. That was happened due interest rate decreasing on 25 b.p. by ECB.

By looking on daily time frame we see that trend has turned bearish, price action is bearish. But market has hit oversold at MPS1 and minor 0.786 Fib support. Also it stands near 1.0 extension target of downward AB=CD pattern. Although we would like to sell, we do not want to do this right here - we need some rally to sell into.

on 4-hour chart we have couple of levels to watch for - First K-resistance area 1.2464-1.2471 - right around broken support line, and next area is 1.2510-1.2526. Although I like first one, we should be careful with it. Since we at oversold, I can't exclude that market could proceed even to second Confluece resistance area.
Those of you, who are looking on current trhust down as a context of potential DRPO.
This is not perfect thrust - most part of it is just a one candle, that is not very good. But, since market at oversold and support, if DRPO will appear - it could work. Let's call it as LAL. Probably it's better trade it with reduced position.

Also be careful, since today is NFP release. We should expect everything from market currently.

 

[seedof]

thanks commander Sive for making a rather complex and confusing situation easy and simple. i think FPA should give you the post of the grand commander of the allied traders army.

 

[papao]

thank you Sive for sharing with us your analysis.
In the beginning of june you posted your statement of your demo account. If you don't mind, can i ask you to keep us updated? (let's say, monthly). This would help me a lot (because i can compare, every month, the trade i placed with yours (which are better than mine!)).
Thank you again and have a good weekend

 

[Lolly Tripathy]

thank you so much for the fantastic analysis
as usual u are the fx-superman..
wish u a wonderful week ahead with lots of greenpips dear sive sir..
God Bless

GoodLuck & +pips all my friends..

 

[mrgummo]

A "Snap Salute" to you, Sir! Thank you for sharing and educating us "grunts" in the field!

PFC Gummo, recovering from battle wounds... (enemy broker, working with saboteur manager). It's a bloody war, but someone's got to fight it.

 

[shaggy83]

I am technically null cuz new bie.. but your detailed analysis always help me alot to understand market movements. Thanks for sharing your knowledge! God Bless.