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FOREX PRO Weekly June 18-22, 2012

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Jun 16, 2012.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Monthly
    Monthly trend holds strongly bearish. Very often after solid candles market takes some pause. This is not happen every time, but often. Now we see something of that kind. Although solid monthly resistance stands at 1.3028-1.3086 K-area, probably we should mostly focus on nearest resistance still – 1.2745. Usually market shows deeper bounce, when hitting some target and/or support level. That is what we particularly see during previous retracement, when market has hit 0.618 Fib extension target and 0.618 Fib support level. But currently market just stands at minor 0.886 support level.
    Most important for us is that market stands just at upper border of 4-year support zone – 1.1870-1.2320. This level is extremely important for EUR currency. It has been tested twice already and both times that was at monthly oversold – that, probably, has prevented it’s breakout from technical point of view. Currently market is not at oversold and coming for 3rd testing of it. Since 1.2320 level was passed by move down in 2008, there are no significant barriers for market to proceed lower right to the lower border of it. Breakout of this area could trigger serious downward consequences for this pair.
    If you let me, I still want to make single remark on possible upward retracement. That is what probably will take all our attention till the end of the month, since I see June mostly as retracement month. Although we’ve said that retracement should not be deep from perspectives of Fibonacci framework, it could become so from classical price action. Very often and many of you probably saw it, when market is testing some level for 2 times, usually it shows deep and almost equal bounce between these tests, while before breakout, last retracement approximately 2-3 times smaller, that indicates exhausting of support and buyers’ power around it. For us it means that we should be sensitive for upward price action, and possible move to 1.33-1.35 should not surprise us. I do not want to say that this has to happen, I still think that retracement, probably will be shallow (market already stands at 3rd testing of this area). I just want you to be sensitive, mind-open and flexible for any development and will not be frustrated by stronger upward action.

    [​IMG]

    Weekly
    Another reason of potential deeper retracement is here. In the beginning I want to note that trend, based on MACD, will remain bearish till 1.30 level. That is also significant resistance level that includes K-resistance and MPR1. So, formally price moving even to 1.30 could be treated as retracement, since weekly bearish trend will cover it. And here we have reasons, why we have to aware of this move. First is, hitting of oversold level – also do not forget that this has happen at minor but monthly 0.88 Fib support. Second reason is 1.27 Butterfly “Buy” point. Although this butterfly actually has reached minimum target – 0.382 resistance of its way down, it could show some deeper upside move.
    At the same time market has hit resistance as well. This is 1.2668 first Fib resistance, previous swing low and Monthly Pivot Point (MPP) that has been tested already. Currently I do not see clear signs here – will market continue move up or not. Our major pattern here is downward AB=CD. Its completion point stands precisely at lower border of Monthly support range – 1.1870.
    I see only one way how task with upward retracement could be resolved – MPP. If on coming week market will move above it, then we should be prepared to deeper bounce, probably even to 1.30. Appointment more precise target will be possible only in our daily updates, depending on how price action will progress.
    [​IMG]
    Daily
    Trend holds bullish here. It difficult to predict how elections in Greece will turn, but based on technical picture market could continue move up, because it shows absolutely logical price action. After hitting 0.618 target and K-resistance 1.2620-1.2670 it has shown 50% retracement (mostly due daily oversold) and now approaches to this level again. Actually this is also 3rd testing of it. Situation progressing so, that probably it will be AB=CD move up. Target of this pattern stands at 1.2775 – that is also next K-resistance, WPR1 for coming week and, probably, this will be also daily overbought. This area is our major target area for coming week.
    In longer perspective, if market will move even more higher, 1.618 extension of this AB=CD pattern stands precisely inside of weekly K-resistance and MPR1.
    As we said higher – our attention in the beginning of the week should be on price action around WPP and MPP. They could clarify what to expect.

    [​IMG]
    4-hour
    Here I would like to offer you a bit different view. Trend is bullish here. By dot line you can see our daily AB=CD pattern and it’s target around 1.2775 area, that will be also K-resistance on daily chart. If we will take into consideration leg’s slope, then we will see that CD leg is much flatter than AB. In fact, to be harmonic, this pattern should be finished in the middle of previous week. Usually with flatter CD leg, this pattern indicates that continuation higher than 1.0 extension will be difficult. This is just confirms that 1.2775 area is a good target for coming week.
    [​IMG]

    Hourly
    Hourly chart shows potential for retracement. Market has formed 3-Drive Sell pattern right under daily K-resistance area of 1.2668. Although it is not quite pretty, but ratios hold well – second top at 1.27 extension of first drive, while third at agreement of 1.618 and 1.27 extension of 1st and 2nd drives. 3rd drive finished by excellent bearish engulfing pattern.
    As commonly happens, 3-Drive accompanied here by classical Wedge pattern and bearish divergence with MACD. Minimum target of 3-Drive is a second low – that is also WPP=1.2582 and hourly K-support area 1.2580-1.2588. Nice area to look for buy opportunity.
    [​IMG]



    Conclusion:
    Long-term traders should wait some continuation to the upside. Extremely we can’t exclude move even to 1.33-1.35, but current price action suggests that 1.2770-1.28 area is most probable as potential retracement target. 1.30 is possible, but less degree.

    Greece elections could erase all our analysis for today. But currently our conclusion for coming week as follows:
    Daily context is bullish and market has chances to proceed higher. Most probable target is 1.2775. Confirmation may come from price action around MPP. If price will move above 1.2670 – this will become a confirmation of upward continuation.
    Although even 1.30 does not sound as unrealistic, current flat price action of AB=CD pattern, suggests that major resistance will appear around 1.2775.
    On Monday market probably will show pullback to WPP, hourly K-support area due 3-Drive “Sell” pattern. This is an area to look for bullish entry – 1.2580-1.2589



    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 19, June 2012

    Good morning,
    As on previous week market has hit our daily resistance area, that we've marked as nice area to enter short, completed butterfly "Sell" on 4 hour time frame and now stands in down move.

    On daily time frame is nothing to comment - bearish "Stretch" pattern has worked out already, trend holds bullish and market has not quite reached AB=CD target at 1.2775, so theoretically it could proceed higher. Currently we have no bearish directional patterns, but have bullish trend, so our context is bullish.

    On 4-hour chart is a bit complicated picture. Trend holds bearish. Two things to watch here - current move up with the gap looks similiar to previous week. This makes me think about applying of harmonic numbers. So, if we measure retracement down after previous gap, clone it and drag to current price action - this procedure shows that move down could be lower to 1.25 area. That is also 0.618 extension of downward AB=CD pattern and WP Support 1.

    Next area to watch for is Agreement 1.0 Extension of AB=CD and Fib support at 1.2463 area.
    Logically, if market still intends proceed move higher, it should find support around 1.25. In this case some kind of failure channel breakout could happen. IF market will proceed to 1.2463, it will be rather deep retracement.
    At the same time yesterday's move down has solid momentum and probably market will proceed to 1.25 at least.
     

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    #2 Sive Morten, Jun 16, 2012
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  3. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Wed 20, June 2012

    Good morning,

    On daily time frame we still have bullish bias. Although price action is not impressive at the first look, but how it behaves around important levels makes me think that we should see 1.28-1.2850 area.
    Currently price stands above both pivots, price has not reached daily AB=CD target, so probably it will gravitate to it. If it will happen in nearest couple of days - that will be also a daily overbought, so it could become nice opportunity to Short entry.

    Meanwhile, on 4-hour TF trend is bullish as well. Although we've suggested a bit deeper move down yesterday, but market has failed to show it (Try to not take positions against major trend!) and shown absolutely the same price action as on previous week - gap open, filling retracement - support at lower border of parallel channel and move up.

    So, here we could get another Butterfly. What is interesting, is that it's 1.27 point stands right around 1.618 of previous butterfly, while if market will reach 1.618 (~1.2850) - it will hit daily AB=CD as well, overbought at K-resistance.
    So, current butterfly could trigger significant retracement down, if not reversal. Keep an eye on it.

    On hourly chart trend is bearish. Perfect bearish engulfing pattern has minimum target equals to the length of its bars - that is around K-support. So, if you want to enter long - keep an eye on 1.2650-1.2660 area.
    But since, it could be Butterfly - be careful. Typically this pattern shows deeper retracement on second wing - 0.5-0.786.

    So, if you want to enter short - wait completement of patterns around 1.280-1.2850 area. Want enter long - watch on 1.2610-1.2623 mostly, probably on 1.2650-1.2660. Better to apply gradual enter here.
     

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    #3 Sive Morten, Jun 16, 2012
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  4. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Thu 21, June 2012

    Good morning,
    On daily time frame picture is the same - market is struggling with our resistance level.
    FOMC meeting has added doom and gloom on intraday charts. Still our 4-hour butterfly is still valid, although currently it could be drawn differently, but target will be the same.

    Take a look, that even retracement to 4-hour K-support and upward trend line will not cancel it. Only if market will break this area it will simulteniously cancel Butterfly. Actually this is the crucial point for upward continuation. If this will happen, hope on upward continuation will fade out.

    On houlry time frame I see bullish dynamic pressure. MACD shows development of bearish trend, while price action stands in the horizon consolidation. Usually it leads to upward breakout. Target of this breakout is the width of rectangle - approximately 1.28 area.

    I do not want to say that it has to happen, but such combination has a bullish sign. If even market will break it down - next level to watch is 1.2627 - Fib support and trend line. This move will not cancel, as I said, 4-hour Butterfly and market will still have chances to proceed higher.

    In general, standing right below significant resistance and knocking to it without any meaningful retracement and pullback is a sign of power.

    That's being said, until market will not break down 1.2550 area and cancel butterfly it will have chances to reach 1.28. Safer is to wait when and if it will happen and then enter short, because playing on Long side now is not safe - market is volatile and sloppy, but if you want you may, of cause.
     

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  5. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Fri 22, June 2012

    Good morning,
    current week comes to an end. Despite some patterns that were on yesterday's chart market has shown solid plunge down and engulf previous 5 trading sessions by close price.

    Will market continue move down? You might answer - that is obvious. But my answer is - I do not know. Very often happens, that what is obvious - is obviously wrong. Today I just want to share with you with single scenario of upward continuation. I suppose just few traders await it. So if it will be really that way - do not be surprised by it.

    This scenario is 3-Drive "Sell" pattern on 4-hour chart. Second important moment is that market stands at crucial level and its position is very fragile. If it will break it - it will erase a lot of bullish patterns and possibility to continue move up. But let's move step by step.

    On 4-hour chart you can see this 3-Drive "Sell' with 1.28-1.2810 destination point. Third drive should appear on agreement of 1.618 extension of 1st drive and 1.27 of the second. That is very typical for this pattern. So, it looks nice.

    Second important moment - now we have "222" buy pattern, since market has done nothing, but completed downward AB=CD pattern. From perspective of Fib work it gives us Agreement at 4-hour Confluence support. If market will break this area down - it will erase all these patterns and hope on further upward continuation will be become absolutely blur.

    On hourly chart we see some hint on potential reversal pattern - this could be either DRPO "Buy" or Butterfly "Buy". Anyway, today we have to keep an eye on this area, since it could trigger solid move up.

    I do not want to say that this has to happen. But this is "not obvious" scenario. We just have to be prepared for it.
     

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    #5 Sive Morten, Jun 16, 2012
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  6. FXEnjoyment

    FXEnjoyment Private

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    Dear Sir,
    Thank you for your weekly analysis and daily updates. They are a great help for me! Also I am attending your classes in the Military School and I see the results of my study every day! Last week was the turning point in my "Forex career", for the first time I made some profit!!!

    Lately there is a lot of "fuzz and buzz" about the future of the Euro and the future of Greece. Especially from people from outside the Eurozone. Living inside the Eurozone I know that everybody is ready for a Greek default, everybody worked hard on doom scenario's and prepared themselves for the worst. It was known from the beginning of the Euro already that Greece does not belong in the Eurozone and that they forced themselves into it using fraudulent figures. The markets are prepared for a Greek exit, look at the rates of Italy and Spain this week, risk is already calculated into the price! Personally I think that the Greek elections will be used by the market makers to grab as much of the publics money as they can get! They will cause a lot of "Hip Hop" during the opening of the markets and after London Close everything will be back to normal.

    Best regards, and have a nice and quiet weekend!
     
  7. Andrew2010

    Andrew2010 Recruit

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    Sive, I am wondering why you have moved the fib levels on some of the charts, the daily in particular and why you have chosen those levels that you did? I ask because I am trying to learn from you not criticising.

    Thanks,
    Andrew
     
    #7 Andrew2010, Jun 16, 2012
    Last edited: Jun 16, 2012
  8. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi Andrew,
    initially I look at all levels, but to keep chart clear I draw only most significant and that will definitely be useful in trading on coming week.
     
  9. Andrew2010

    Andrew2010 Recruit

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    Hi Sive, thank you, I'm assuming that you are looking for as many fibs and s&r lines as possible to confirm areas of agreement or confluence in any given timeframe.
     
  10. Marky$

    Marky$ Private, 1st Class

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    Hi Sive,

    Do you remember, last week I asked you a few naive questions about acronyms you use (WPP, WPR1, etc.). You've pointed me out the FPA Forex Military School. So, I went to the School and have done my homework. I've read only two chapters (10 and 15) and I'm amazed how much they explained to me. You can believe or not, but before you have posted this analysis I 've drawn "my own" MPP, MPR1, MPS1, WPP, WPR1 and WPS1 and I've planned my trade for next week. The plan is:
    1) Don't trade in Monday according to Greece elections,
    2) Wait for retracement to WPP (1.2582),
    3) Put BUY STOP order at 1.2615 with SL@1.2580 and TP@1.2715 (just bellow WPR1=1.2722).

    You Can't even imagine how proud of myself I was reading your analysis :D
    Thank you for FPA Forex Military School. It's really big deal. It's the most comprehensible material concerning FX I've ever read. Even that english isn't my mother tongue. I've add FPA Forex Military School to my Favorities and I gona read it throughout.

    I'd be really grateful for any comments to my plan.
     

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