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FOREX PRO Weekly July 09-13, 2012

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Jul 7, 2012.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Monthly
    Monthly trend holds strongly bearish. After hitting of 0.618 target from huge AB-CD pattern market has shown light but logical retracement. Now price is entering into support area 1.19-1.23 that held EUR twice from collapse – first time in 2008 when sub-prime crisis has started and second – in 2010 at beginning of Greece turmoil. Although market is now also at 0.88 Fib support from most recent swing, but it has minor importance. Our minimum target is 1.16-1.17 area, based on analysis of quarterly chart of Dollar Index that we’ve made in Nov 2011. Index has 95% correlation with EUR/USD. Also this is AB=CD target of most recent pattern on current chart. Technically this level has an explanation as well.
    Now we see price action that supports overall bearish situation. Market is not at oversold, so from that perspective it has no significant support that could hold price action till previous lows at 1.1875

    [​IMG]

    Weekly
    Weekly trend is bearish. Market has corrected oversold level. Overall price action looks bearish –our bearish flag has been broken down. Look at the weekly candle - it has opened at the high and closed at the low. Its range engulfs whole previous month – 5 weeks. That was solid price action. As we can see upward retracement was shallow, right till previous lows nearest Fib resistance level. Also take a look – market has closed below monthly pivot support 1. This is very bearish sign.
    Despite the way, how you will calculate the target – either based on mast of flag counted down or using our AB=CD pattern, result will be the same. It points on lower border of monthly support range. Probably we can use recent swing down as a working space of our daily analysis for searching suitable entry levels.
    [​IMG]
    Daily
    Daily trend is bearish, as well as price action. But market stands at oversold – I apply here 100% oversold level, while usually I use 80% that is more suitable for this pair. But market has penetrated even this level. Sometimes, under some strong fundamental or political factors, when price stands under solid pressure – it could be oversold for long period or even creep with oversold over time. But financial markets rare stand at oversold per se, contrary to commodities. You may act as you want of cause, but logic and technical picture tells that we need some rally to sell. Personally I do not want to sell at oversold.
    As you can see on the picture market has renewed previous lows and butterfly “Buy” could be forming by it. Most interesting for us is 1.618 extension of it, since it stands in relatively close to weekly target of AB=CD pattern. Target of butterfly is 75 pips above, but by some piercing or tale it could hit simultaneously weekly AB=CD level. Still, 1.27 target also could lead to some bounce, since this is also a WPS1=1.2139.
    [​IMG]
    4-hour
    Trend is bearish. Here we see AB=CD pattern, that has much steeper CD leg, and price already has accelerated right to 1.27 extension of it. Interestingly, that 1.618 extension stands right at WPS1 and 1.27 level of daily Butterfly pattern. That is probably the next destination. Still, as we’ve said, market at oversold that’s why I prefer to see some bounce, at least to 1.2425 area that is nearest Fib resistance, WPP and previous swing low.


    [​IMG]



    Conclusion:
    Market has shown abrupt downward acceleration, so overall context is bearish now on all time frames. Still, market now stands at oversold on daily time frame and I prefer to get some bounce for selling opportunity. Nearest downward destination is 1.2120-1.2140 WPS1 area. Next possible target is 1.1930-1.20.
    Probably 1.2425-1.2445 level will be not so bad for searching sell possibility around it.



    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. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Tue 10, July 2012

    Good morning,
    yesterday was rather calm day, so not much to add on daily. Steep right wing of butterfly pattern hints on potential move to 1.618 target although some bounce could happen from 1.27 as well, since this is solid support - 1.618 extension of AB=CD, WPS1 and butterfly's 1.27 extension itself.

    Market is trying to correct oversold condition and give us a rally to sell. Currently I still stand with weekend plan - 3/8 retracement to 1.2420 area - that is also WPP.

    On 4-hour chart I hope on appearing DRPO "Buy", since half of the pattern already exist. Very good thrust, during first penetration of 3x3 market has not touched any significant Fib resistance. Anyway, currenty I do not see any other pattern to stick with. So, as usual, if we will get confirmed DRPO - keep an eye on 2 events: either reaching of 1.2420 or appearing of DRPO "Failure". These two different patterns will lead us to different action.

    If you're scalper you may try to trade DRPO "Buy" on long side of the market.
    On hourly chart I do not see any interesting to comment. So, today-tomorrow DRPO will be in our focus.
     

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    #2 Sive Morten, Jul 7, 2012
    Last edited: Jul 10, 2012
  3. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Wed 11, July 2012

    Good morning,

    Situation on daily time frame is the same but with just single difference - market is not at oversold anymore. Level for today is 1.2170 - next destination on daily chart. It includes 1.618 extension of AB=CD pattern, 1.27 Butterfly point, WPS1 and oversold. Precisely speaking, this is an area 1.2140-1.2170.

    Still market holds at current level. Why? I suppose because it is a monthly 0.88 Fib support - 1.2260. But what could be minor for monthly time frame - could be enough for daily time frame for a bounce.

    On 4 hour chart our potential DRPO pattern has failed. Still, looking at it, I can't call it DRPO, since second bottom is too small. When we deal with DRPO, we would like to see even greater second bottom as indicator that sellers try to push market lower but failed. Here we do not see it. Anyway, we will not discuss it any more. Still here we could get reversal pattern. This could be bullish wedge and 3-DRive buy.

    On houlry chart it looks better. Also it is accompanied by nice MACD divergence at monthly support. That is very typical for exhausting patterns. Actually - that is the only pattern that I see here. So, what we can do from practical standpoint? Two things, I suppose:

    1. As usual, appy partial entry. Your stop should be above 5/8 Resistance - this is rather far, so calculate your trading lot, it will be probably rather small. Although we see wedge at support and so on, but market is really heavy and nobody will guarantee that pullback will happen. And market is not at oversold anymore. So, you may enter with tiny lot here and add more at 1.2410.

    2. Second way is trade by fact. But this way demands more skills, since you will have to deal with fast running market. It means - wait clear price action. If retracement will start - look for 1.2410 to sell. If market will break 1.2260 down and show fast downward acceleration - drop your time frame and enter short at nearest 3/8 resistance from most recent swing.
     

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    #3 Sive Morten, Jul 7, 2012
    Last edited: Jul 11, 2012
  4. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Thu 12, July 2012

    Good morning,

    I will not stop on daily TF, since here the same comments could be done. Just one moment - market is not at oversold currently.

    On 4-hour TF we see that market has completed forming of wedge/3drive pattern. I intentionally draw nearest 3/8 resistance here. If we apply classical rules to wedge breakout trading and target of 3-drive - they will appoint on area slightly higher than 1.2336 level. Since market is not at oversold anymore and looks really heavy, I do not exclude possibility that retracement could stop at this level and will not reach our 1.2395-1.2413 prefferable K-resistance. That's why, if market will start bounce, probably makes sense to apply gradual enter, partially at 1.2336.
    Another thought here is bearish Dynamic pressure. TAke a look - MACD shows bull trend, but price action does not support this. IT could lead to downward acceleration without any bounce. So, we have two contradictive signals, concerning breakout of the wedge. How we should act?
    Probably, it should be some sort of breakout strategy. If market will show a bounce up - we know what levels to watch. If it will be downward breakout, then we have to sell at nearest 3/8 resistance on lower time frame from most recent (Breakout) swing down.

    If you do not feel confidence to catch this retracement, then you may enter with tiny lot here, inside of the wedge. Then you may open major position at bounce up and at least, you will have position if market will plunge down.

    One possible hint on bounce we could get on hourly chart. If market will show swing up greater than last swing down inside of the wedge, this will tell us that bounce is under way and we can count at least on 1.2336. If price will continue coil inside, then probability of downward breakout will increase.
     

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    #4 Sive Morten, Jul 7, 2012
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  5. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update Fri, July 13, 2012

    Good morning,
    market looks really heavy currently. All hints on potential patterns that could lead to any, even minor bounce were denied and market has moved lower and hit 1.27 extension of butterfly target.
    Although price is not at oversold, 1.2140-1.2170 area is significant. It includes WPS1, 1.618 target of AB-CD pattern.

    But speaking particularly about 1.618 target of AB-CD pattern... market has not quite reached its target. As we've discussed previously, price usually gravitates to it and very rare left it behind. I will not even think about any pullback before price will touch it. That is what probably we should look at during current trading session.

    On hourly chart I do not see any interesting. Yesterday's wedge has transformed into parallel channel.

    Our next target is 1.618 exstension of Butterfly - 1.20 area.
     

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    #5 Sive Morten, Jul 7, 2012
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  6. ochills

    ochills Master Sergeant

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    Thanks Sive for the complete forex military school and Ur indepth analysis as usual.
    As promised I have tried to upload the PDF version of the complete military School but the Size is too Big about 126M.
    But I will try to solve the problem but this might take time. because of the nature of my job presently.
    Thanks once again and big THANKS to FPA.
     
  7. macplauz

    macplauz Private

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    Great analysis as always! I will create a link from my website to your weekly analysis. Go on with this good work. Its much appreciated!
     
  8. h0rked

    h0rked Private

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    Hello Sive,

    Awesome analysis as always ..

    I would like to ask you again about the consuldation at the K level , How can you explain it ?

    As you see in the picture bellow the Weekly gold has been sitting at the K level for long time now , Is that mean weakening it ? or It may rise from it at any moment ?

    gold.



    Best regards.
     
  9. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi, h0rked

    Sorry for delay... In general, K-area is not a signal and not even a single context for trading. This is some sort of leading indicator, that warning us about support or resistance in advance. K-area is just stronger level than single Fib support or resistance. That's all.

    To use this properly you should incorporate this in overall context, what trend is, oversold, overbought, any directional patterns and so on.
    And only after that apply level. K-area per se does not tell you will market go up or down.
    Speaking particularly about gold, yes we at support, triangle is forming, that also could be butterfly Sell on monthly time frame.
    But on weekly market shows strong opposite moves and market stands in some range. Until it will be broken, it is difficult to predict possible direction.
    If we will take a look at non-technicals, personally I have more bullish rather than bearish view on gold. But I do not trade it now. this is just my point of view. On Nov-Dec US will meet new debt ceil problems, turmoil in EU in progress, so that makes me think positively on gold.
     
  10. mrgummo

    mrgummo Corporal

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    Hi Sive,

    Thank you for your many hours of guidance that you give to us FPA members! I don't have any great comments to add, or questions to pose today, but I didn't want to miss an opportunity to express my appreciation for all that you have given us, and continue to give!

    Best always,
    Ron
     

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