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FOREX PRO Weekly July 23-27, 2012

Discussion in 'Sive Morten- Currencies, Gold, Bitcoin Daily Video' started by Sive Morten, Jul 22, 2012.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Monthly
    Monthly trend holds strongly bearish. Price continues to force significant 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 we see that market has not moved much deeper during previous week, but still, one significant event has happened. Market has passed through 0.88 Fib support or recent swing up and closed again at 50% support (1.2140 area) of rally swing 2000-2007. Speaking about price action within current month – currently it looks impressive, since price has opened at the high and currently closed at the low.
    Second significant moment is that market has no meaningful supports till our target - 1.16-1.17 area, and current 50% support has been tested already once and deeply pierced to 1.1875 area. Due to these reasons, may be, this level is not as strong as it was initially. So, it could be a hint on potential acceleration below 1.21 area.
    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. Also take a look – this is significant support of 2005 as well – marked by yellow rectangle.
    From long-term perspective market is entering into very, say, “dangerous” area, and it comes to it not at oversold as it was two times previously. If it will break it – this will be the road to 1.07-1.10 area or ultimately even to parity.

    [​IMG]

    Weekly
    Actually during previous week market just has returned back to 1.2140 support level. So, our previous analysis of weekly time frame mostly valid. Analysis of a weekly chart is a bit difficult currently, since a lot of different supports slightly below market are forced us to be careful. This in turn a bit uncomfortable since currently it is impossible to predict how market will behave there and makes difficult the task of trading plan creation.
    Currently market again has approached to 1.618 extension of butterfly, 50% monthly support at 1.2140 and MPS2. Price already has shown a bounce from this area and Friday’s acceleration was solid – looks like market is seriously tuned on breakout attempt.
    Weekly chart is not at oversold, MPS2 is minor level and the fact that price has passed through MPS1 tells about strong bear trend. Also price has formed two side-by-side narrow ranged weeks, first was even a small doji. Usually thrusting weeks come after narrow weeks. So, acceleration is possible. Other words, it is hard to find any bullish signs on a weekly chart.
    [​IMG]
    Daily
    Trend again has turned bearish, as we’ve noted during previous week, that price action in general does not support trend shifting to bullish. Since market was not able even retrace to WPR1 and to complete any Fib extension patterns on intraday charts that we’ve talked about daily updates - this looks really heavy. Also our suggestion about steepness of butterfly right wing starts to show its results on market – after retracement from 1.27 extension market has accelerated lower. We have two support levels for coming week – WPS1 at 1.2094 and stronger support at 1.20-1.2030, that includes 1.618 Butterfly point, daily oversold and WPS2=1.2029.
    If you do not have still short position, recent swing down is the one that we should focus on.
    [​IMG]
    1-hour
    Trend is bearish as on hourly as on 4-hour chart. Here we see nice acceleration after triangle breakout. Applying classical rule of target estimation – counting triangle’s width to the downside from breakout point gives us 1.21 area – very close to WPS1. Here we will use the same tactic – potential retracement to WPP = 1.2210. It is also surround by Fib resistant levels, so it might be nice level to watch for short entry or scaling in.
    [​IMG]


    Conclusion:
    In long-term perspective nothing has changed. Nearest destination and crucial level for EUR is 1.18-1.19, while medium term target is 1.16. Breaking through it could lead to 1.10-1.12 level or even to parity in long term perspective.
    Currently market stands at monthly support (and some other lower-time frame levels) that held EUR from collapse in 2008. Although it has been pierced previously, still it is valid and price shows some signs of pullback.

    In short-term perspectives – suitable area to enter short 1.2210 with target around two support levels – WPS1=1.2090-1.21 and more significant support around 1.20. If this is real bearish continuation, market should not show deep upward pullback. If it will pass through WPP as knife through the butter – it will mean that something wrong.



    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 24, July 2012

    Good morning,
    a lot of different events now are happening in EU. Moody's put under revision Germany, Netherlands and Luxembourg credit ratings with negative forecast. Greece also meets IMF and EU committee, that should estimate - provide additional 31 Bln help or not. If Athens will not get it, then default could come even on August, since Greece has to pay out 3.5 Bln EUR.

    From technical perspective, market has hit our first target - WPS1 at daily oversold. Will price show any pullback or not - it is difficult to say, although some signs of it are exist. Still some pause in downward move could come, mostly due oversold condition. Market looks pretty heavy now.

    On 4-hour TF there is a nice bullish engulfing pattern right and WPS1. Here I do not see any more patterns.

    Hourly chart has formed nice DRPO "Buy". If DRPO works, usually it reaches 50% resistance of its thrust down. This level stands very close to WPP. So, here our potential retracement destination - 1.2195-1.2210.
    From the other side is 1.2097 support. Market could form DRPO Failure if will show close below it. This probably will lead to continuation till our next target - 1.20 area.

    So, two levels to watch - if retracement will happen and DRPO work - 1.21 area for short entry. Close below 1.2095 will give us DRPO "Failure" that is also bearish pattern - downward continuation could follow right after this.
     

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    #2 Sive Morten, Jul 22, 2012
    Last edited: Jul 24, 2012
  3. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Wed 25, July 2012

    Good morning,
    mostly price action was meaningful on intraday charts yesterday. On daily we just can see how oversold line holds market. At the same time price is approaching our target for current week - 1.20 level. Since this is solid support - WPS2+1.618 Butterfly + daily OS, it is logical to expect some respect of it, at least minor bounce, that could be triggered by some intraday reversal pattern. And today we will talk about it.

    On 4 hour chart I do not see any interesting moments. So, our focus, probably with houlry time frame. I suspect, that here we could get 3-Drive Buy. One thing that push me to this thought is huge bullish divergence with MACD near at solid support. 3-Drives very often accompanied by divergences.
    Yesterday's DRPO has failed - by closing below 1.2095 it has confirmed it, and continue move lower. So you should have short position. Bottom was reached right at 1.27 extension of recent swing high and at daily oversold (again).
    Now we have some kind of parallel channel, and if market will creep somehow to its top, then, potential point of reversal by 3-Drive pattern will be around 1.2015-1.2020 area - 15 pips higher than the target of daily Butterfly.

    If daily butterfly fails and price will plunge down through 1.20, this will be fast and furious move, since usually butterflies fail miserably. And market will get free space till 1.1875 - previous lows on monthly TF.

    Anyway, think about stop tight or even taking profit closer to 1.20-1.2020 range. Currently market is showing hints on potential pullback.
     

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    #3 Sive Morten, Jul 22, 2012
    Last edited: Jul 25, 2012
  4. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Thu 26, 2012

    Good morning,

    yesterday market has shown stronger bounce, than we've expected and that was a bit surprising. Still, in most cases, especially after solid bear trends, as we have now, market quite rare lefts significant targets beyond it. And 1.618 extension of Butterfly is signficant. I believe that at some point market will reverse and return back to 1.20.
    Taking a look at chart after this bounce I found another potential pattern here - this is 3-Drive Buy. If we will take a look at price action from this perspective - bounce looks not as unexpected as at first look, because starting point of this upward move is 1.168 extension of previous retracement (flag on daily).
    So, may be price action still quite logical...

    on 4-hour chart trend is bullish. If we assume of appearing of 3-Drive pattern and apply here harmonic swings, then nearest target of current retracement stands around WPP - 1.2209. Take a look that recent swing up is greater than last swing down - this is first sign of reversal. Also this tells, that upward move should continue.

    Hourly chart also points on the same level. First - classical target of channel breakout, second - buttefly "Sell" pattern. If you will use triangle instead of butterfly - in the case of breakout, it's target also will be very close to it.

    So, today, probably market will try continue move up till 1.22-1.2210. If our assumption about potential 3-DRive on daily is correct, then somehere around 1.2210 we should see hints on downward reversal. Precisely speaking, we already have a pattern - now we just need to get confirmation that it will lead price to reversal. I'm speaking about butterfly.
    If this will not happen, then it will be quite another tune.
     

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    #4 Sive Morten, Jul 22, 2012
    Last edited: Jul 26, 2012
  5. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Fri 27, 2012

    Good morning,
    yesterday we've caught some sort of force-major event - comments of ECB Head, Mario Draghi. So, currently looks like forcing and breaking of 1.20 has been postponed somewhere in the future.
    Personally I'm not very fascinating with this and worry that we should expect nothing but high volatility. When authorities turn to their favorite weapon - microphone, this usually start to twisting and turning the markets, since their speeches, as a rule stand against investors' understanding of situation. When they either do not know what to do, or need to win some time - they turn to microphone.
    Particularly, Draghi said, that ECB will do all possible and impossible to save EUR, and that ECB has sufficient sources to do that. Most investors uncover here the hint on financial stimulation and debt buyback of problem countries. Using the noise around Draghi speech, Italy has issued 2.5 Bln new debt.

    But I have to ask you - what has really changed? Spain paid out all debt? Greece has reached budget surplus? Or what? Either we do not know that ECB will do anything to save the EUR? Or ECB has sources to do that, especially because it prints EUR.

    So, currently there is no place for euphoria. When cold wash will pass and investors rationally will take a look again on overall situation - that the bottom of the well can't be seen yet, market should return to previous tendency. This will happen even sooner, if ECB will do nothing in nearest time to confirm this speech.
    Citi things that there is 90% probability that Greece will leave EU within 1-1.5 years.

    So, there is tough times ahead, volatility probably will grow significant. It will be very difficult to trade on long-term perspective.

    Now let's turn to technicals...
    on daily time frame we have bullish context - nice recovery, trend has turned bullish, market not at overbought but stand at resistance around WPR1 and Fib resistance.
    We do not have any bearish directional patterns here, so logical enter is on the long side of the market.
    But we have to take only short-term positions and targets due moments that we've just discussed. This move up has no fuel except voice sound of M. Draghi, and I will not be surprised if it will finish at any moment.

    On 4-hour chart trend is bullish as well, but I can't add anything more here. Maybe only the moment that 50% support of thrusting bar coincide with WPP.

    Hourly chart shows two supports to watch for. Since market is not at overbought and all trends are bullish, I like 1.2250 support as potential for long entry signal, while stop could be hide below 1.22-1.2220 K-support area, that is also WPP and 50% support of thrusting bar.
    It is better to focus currently on scalp trades and do not marry any position, especially before weekend. Heads of investors could chill out with it, and on Monday we could see quite other picture.
     

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    #5 Sive Morten, Jul 22, 2012
    Last edited: Jul 27, 2012
  6. Triantus Shango

    Triantus Shango Sergeant Major

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    sive, the last leg down on weekly, does that look like the 3rd drive of a potential 3-drive buy? i know, the 2nd drive stopped neither at 127.2 nor 161.8, but this last weekly candle is at 161.8 from the most recent fib structure.
     
  7. Lolly Tripathy

    Lolly Tripathy Sergeant Major

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    Thank you very much dear sive sir

    Sir there are 2butterfly in weekly and daily time frame.And monthly chart showing strong support..
    So can we expect it, for a big pull back after hitting this strong area..?? before hitting 1.1600 or so..??

    Wish you a wonderful weekend with ur family and friends..
    God Bless you with all the fortune..
     
  8. Kalgan

    Kalgan Private, 1st Class

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    I think the No.1 biggest lesson I have learned in all my years of forex trading is not to expect anything....

    One must be like water and remain totally flexible...

    Still, we will see what Sive has to say about it...

    Best of Luck to Us All*
    K2* :cool:
     
  9. aise

    aise Recruit

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    wanting for long time to ask a couple of questions

    First i need to take the time and say thank you for taking the time and write your analyses every day. I see that you are using Alpary broker, and wanted to know if you are using this broker for your main accounts and if by any chance is this is an ECN broker and if you would recommend it to your best friends to use.
    Second i am study Joe DiNapoli system ( just recently started) and wanted to know what are the green and red numbers you post on your platform that are connected by lines with the same color. I am trying to find out how do u get to them.
     
  10. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi Aise,
    Actually I use Alpari UK terminal for chart porposes only - just to prepare research. In general, I prefer futures trading instead of spot forex, just because this is safer and has some advantages.
    About lines... I suppose that you're talking about pivot points. Visit our Forex Military School corresponding chapter - to understand how calculate them.
     

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