Sive Morten
Special Consultant to the FPA
- Messages
- 18,668
Monthly
Monthly trend holds strongly bearish. Market is not at oversold although has hit minor 0.886 support area. Currently I do not see any significant patterns, although downward momentum is solid and currently I do not see any reasons to speak about possible reversal. Although you can ask about solid black recent candle and treat it as Marubozu, but by looking back – it is not very good idea to rely on it. Take a look, how often market has shown strong opposite move after huge candles as upside as downside. Although it supports our confidence of south continuation, still better do not rely on it solely.
Nearest resistances are 1.2745 and 1.3028-1.3087 K-resistance.
Weekly
Although we have clarity on monthly chart, weekly one gives us real difficulty. Here we have to decide what to expect – downward continuation or deeper upward retracement. I will share with you by facts as in favor of the former as the latter and then give you my thought. You will have to thing independently and make your own choice. So, market could show deeper retracement, because:
- It has hit weekly level oversold and usual retracement target is minimum the middle between bands of Oscillator Predictor;
- It has reached minor 0.886 support level;
- Also it has achieved as 0.618 target of most recent AB=CD pattern as 100% extension target of former long-term AB=CD;
- MPP was not tested yet. Usually, when market retraces in long-term solid trend it does it either to PP or PR1;
- We see hint on bullish divergence (unconfirmed pattern).
Market could, probably continue move down, because:
- Now it stands not quite at oversold, so this condition was slightly corrected;
- If we will take a look at yellow ellipse then we’ll see that market could just creep with oversold lower and lower and react only by reaching some target (this was 1.618 extension target);
- Now if we will drag this situation on current moment, then will see, that slightly lower – around 1.1950-1.20 stands 1.618 Extension of previous AB=CD pattern (drawn on the chart) right near MPS1. So, market probably could reach it first, as it was in situation with yellow ellipse on chart.
This discussion gives us potential targets. If retracement up will continue most probable target is 1.2745 Fib resistance and next is 1.30, that includes K-resistance and MPR1.
If market will continue move down, then it will be area of 1.19-1.20 – 1.618 extension target and MPS1.
So, what is your thought?
After some time I’ve come to conclusion that we have to keep an eye on 2 levels. First one is previous low at 1.2287 and second is MPP 1.2661-1.2745 area. Why? Since market has reached significant targets, support and oversold – it has as no reasons, as no other targets slightly lower that could gravitate it. Hence, if price has real intention to continue north it should not take out previous low. If it will happen - then we can search possibility for short entry with confidence.
From the other side, if market will move above MPP – it will confirm divergence, shift monthly sentiment to bullish side and move above previous swing low. In this case, since market retraces to MPR1 – that will be our next target. Till market will flirt inside of 1.23-1.26 long term traders should stay flat. But again – if market will stand here too long - for 3 weeks or more and will not go up, then it makes sense enter short, because oversold pressure will become week and market indecision will be on bears’ side.
Daily
So, since we have found some reasonable arguments for long-term positions, now let’s turn to our day-by-day work. First – our bearish “Stretch” pattern has hit target and even moved 20 pips lower, but, anyway it is not valid anymore. Market is not at overbought, trend is bullish and we have no bearish directional patterns. In the beginning of the week, we, as usual, should be careful to price action around WPP that is 1.2509 for coming week. Major rule tells “Don’t stand against the Pivot”. Also we see that if market will form AB=CD pattern, then it’s 1.618 target stands precisely at MPR1 1.2987 and weekly K-resistance zone.
Daily chart also gives us intermediate target as 1.0 extension of potential AB=CD pattern at 1.2775. 1.2620-1.2670 area is still strong resistance, since it includes all the same levels that were on previous week, except, may be, overbought, since it will drift higher on Monday.
4-hour
It’s a very important time frame for Monday trading session. Trend holds bearish, hence we need to wait some signs of stabilization and turning to upside before even thinking about it. Pivot point will become great helpers here. First, since market will open very close to WPP – keep an eye on it. If market will move down, next level to watch is WPS1 and 1.2416 Fib support. Here is also could be downward AB=CD pattern that could create an Agreement, who knows…
Logic is simple here. We have to check upward continuation on daily TF. Hence, on 4 hour chart this should be only retracement. Even deep retracement should (theoretically) hold WPS1 and major 0.618 Support. If this will not happen, then AB=CD start on daily time frame will be under question, at least on Monday. Take a look that both ultimate Butterfly targets (1.272 and 1.618) stand lower. I’m afraid that in the beginning of the week we will have watch mostly but not to trade. Still, this is a part of the business.
Hourly
Here is another help for us – potential H&S pattern, although it is a bit skewed, but head stands precisely at 1.618 of left shoulder that is very typical for H&S. If market will break through 1.2552 resistance and will fail to form this pattern – this will be the sign of upward continuation. Another way is if market will form H&S but will fail to pass through WPS1. Trend is bullish here.
Conclusion:
Long-term traders should wait of breakout either 1.23 or 1.2660. Also, there could be a sign of weakness, if market will just stay inside of 1.23-1.2660 area for 3 weeks or more.
On short-term perspective our task is to get either confirmation of upward continuation or be ready for downward breakout. On Monday we should keep an eye on 2 major things – pivots and trend. If market will move below WPS1 then upward continuation will decrease probability to come, at least on Monday. If price will hold above WPP and preferably destroy H&S on hourly chart, then upward continuation will become probable.
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.
Monthly trend holds strongly bearish. Market is not at oversold although has hit minor 0.886 support area. Currently I do not see any significant patterns, although downward momentum is solid and currently I do not see any reasons to speak about possible reversal. Although you can ask about solid black recent candle and treat it as Marubozu, but by looking back – it is not very good idea to rely on it. Take a look, how often market has shown strong opposite move after huge candles as upside as downside. Although it supports our confidence of south continuation, still better do not rely on it solely.
Nearest resistances are 1.2745 and 1.3028-1.3087 K-resistance.
Weekly
Although we have clarity on monthly chart, weekly one gives us real difficulty. Here we have to decide what to expect – downward continuation or deeper upward retracement. I will share with you by facts as in favor of the former as the latter and then give you my thought. You will have to thing independently and make your own choice. So, market could show deeper retracement, because:
- It has hit weekly level oversold and usual retracement target is minimum the middle between bands of Oscillator Predictor;
- It has reached minor 0.886 support level;
- Also it has achieved as 0.618 target of most recent AB=CD pattern as 100% extension target of former long-term AB=CD;
- MPP was not tested yet. Usually, when market retraces in long-term solid trend it does it either to PP or PR1;
- We see hint on bullish divergence (unconfirmed pattern).
Market could, probably continue move down, because:
- Now it stands not quite at oversold, so this condition was slightly corrected;
- If we will take a look at yellow ellipse then we’ll see that market could just creep with oversold lower and lower and react only by reaching some target (this was 1.618 extension target);
- Now if we will drag this situation on current moment, then will see, that slightly lower – around 1.1950-1.20 stands 1.618 Extension of previous AB=CD pattern (drawn on the chart) right near MPS1. So, market probably could reach it first, as it was in situation with yellow ellipse on chart.
This discussion gives us potential targets. If retracement up will continue most probable target is 1.2745 Fib resistance and next is 1.30, that includes K-resistance and MPR1.
If market will continue move down, then it will be area of 1.19-1.20 – 1.618 extension target and MPS1.
So, what is your thought?
After some time I’ve come to conclusion that we have to keep an eye on 2 levels. First one is previous low at 1.2287 and second is MPP 1.2661-1.2745 area. Why? Since market has reached significant targets, support and oversold – it has as no reasons, as no other targets slightly lower that could gravitate it. Hence, if price has real intention to continue north it should not take out previous low. If it will happen - then we can search possibility for short entry with confidence.
From the other side, if market will move above MPP – it will confirm divergence, shift monthly sentiment to bullish side and move above previous swing low. In this case, since market retraces to MPR1 – that will be our next target. Till market will flirt inside of 1.23-1.26 long term traders should stay flat. But again – if market will stand here too long - for 3 weeks or more and will not go up, then it makes sense enter short, because oversold pressure will become week and market indecision will be on bears’ side.
Daily
So, since we have found some reasonable arguments for long-term positions, now let’s turn to our day-by-day work. First – our bearish “Stretch” pattern has hit target and even moved 20 pips lower, but, anyway it is not valid anymore. Market is not at overbought, trend is bullish and we have no bearish directional patterns. In the beginning of the week, we, as usual, should be careful to price action around WPP that is 1.2509 for coming week. Major rule tells “Don’t stand against the Pivot”. Also we see that if market will form AB=CD pattern, then it’s 1.618 target stands precisely at MPR1 1.2987 and weekly K-resistance zone.
Daily chart also gives us intermediate target as 1.0 extension of potential AB=CD pattern at 1.2775. 1.2620-1.2670 area is still strong resistance, since it includes all the same levels that were on previous week, except, may be, overbought, since it will drift higher on Monday.
4-hour
It’s a very important time frame for Monday trading session. Trend holds bearish, hence we need to wait some signs of stabilization and turning to upside before even thinking about it. Pivot point will become great helpers here. First, since market will open very close to WPP – keep an eye on it. If market will move down, next level to watch is WPS1 and 1.2416 Fib support. Here is also could be downward AB=CD pattern that could create an Agreement, who knows…
Logic is simple here. We have to check upward continuation on daily TF. Hence, on 4 hour chart this should be only retracement. Even deep retracement should (theoretically) hold WPS1 and major 0.618 Support. If this will not happen, then AB=CD start on daily time frame will be under question, at least on Monday. Take a look that both ultimate Butterfly targets (1.272 and 1.618) stand lower. I’m afraid that in the beginning of the week we will have watch mostly but not to trade. Still, this is a part of the business.
Hourly
Here is another help for us – potential H&S pattern, although it is a bit skewed, but head stands precisely at 1.618 of left shoulder that is very typical for H&S. If market will break through 1.2552 resistance and will fail to form this pattern – this will be the sign of upward continuation. Another way is if market will form H&S but will fail to pass through WPS1. Trend is bullish here.
Conclusion:
Long-term traders should wait of breakout either 1.23 or 1.2660. Also, there could be a sign of weakness, if market will just stay inside of 1.23-1.2660 area for 3 weeks or more.
On short-term perspective our task is to get either confirmation of upward continuation or be ready for downward breakout. On Monday we should keep an eye on 2 major things – pivots and trend. If market will move below WPS1 then upward continuation will decrease probability to come, at least on Monday. If price will hold above WPP and preferably destroy H&S on hourly chart, then upward continuation will become probable.
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.
