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FOREX PRO Weekly June 25-29, 2012

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Jun 23, 2012.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Monthly
    Since market still stands in retracement on daily time frame, monthly chart looks almost the same as on previous week.
    Monthly trend holds strongly bearish. Very often after solid candles market takes some pause. This does 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 - price has reached it during previous week. 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. 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 of that kind and will not be frustrated by stronger upward action. This speech does not relate to short-term perspective and probably not even to current research, but for farer future – if we will see upward move to 1.30, then 1.32, we should not surprise and tell it can’t be. This will not become a major reversal – initially this will be just bounce up from strong 1.18-1.20 support area if market will not be able to pass it through.

    [​IMG]

    Weekly
    From perspective on weekly time frame some upward continuation will not become a tragedy for bears, since trend will hold bearish if even market will hit 1.29-1.30 K-resistance that is also MPR1 and upper border of long-term parallel channel. The major question though – do bulls have enough power to continue push market higher. I’m not sure that we could resolve it by now, since price action is sloppy and no definite patterns just yet, that could point of retracement finish.
    From technical perspective, market could continue move down – all previous bullish patterns have worked out. Particularly, market has corrected oversold and butterfly “buy” has reached minimum demanded target – 0.382 retracement at 1.2670 – previous K-resistance, MPP and previous lows (grey circle on the chart). Currently price action here looks like flag consolidation after significant move down and this lets us thing that sooner or later downside action should continue. But, unfortunately weekly time frame can’t give us any precise information.
    Our major point here is AB=CD pattern destination point around 1.18-1.19. Looks like that as on previous week we will have to stick with daily and intraday charts dealing only with some short-term intraday scenarios, until we see some clearer and significant patterns, or, at least market will reach significant resistance.
    [​IMG]
    Daily
    Trend holds bullish here. Yesterday price action was relatively tight, so only few moments could be added here. On Friday we’ve discussed that on first view market obviously looks bearish – plunge on Thursday has engulfed 5 previous trading sessions by close price, market moved below as WPP as MPP and broken upward channel support line. Well may be this is really so. My task here is not to argue, but to give you another view on current price action that will be based on some patterns.
    On Monday the great importance will become a WPP at 1.2612. First – because this is pivot point and we know its importance for sentiment identification, second, because this is simultaneously broken channel’s support line. If market will return above this level, it will tell us that bulls are still in charge. If not – then it will be retesting of trend line and WPP for goodbye and downward continuation. So anyway, 1.26-1.2610 area is very important level for beginning of the week.
    [​IMG]
    4-hour
    Trend holds bearish here, but it clearly could be seen that market has found some support. That is what we’ve talked about yesterday. Here you also can see excellent educative moment, about which Joe DiNapoli tells in his book. “If market has some AB=CD extension target slightly lower than some support level and price has pierced it – it does not mean that this level is broken. It still could be valid, since market just gravitates to achieve AB=CD target”. This is not the quote – just a meaning of it. Here we also can see, that it seems like market has broken K-support, but in reality it has just achieved AB-CD target, so this level probably valid. Price action was really choppy around it on Friday. Also we have here Gartley “222” Buy, based on recent swing up. Other words, situation is not absolutely bearish here, bulls were disguised, but they still have chances on counter attack. And should be ready to get signs of it.
    [​IMG]

    30-min
    Here I’ve decided to change common way and apply 30-min chart instead of hourly one, because it will help us clearer to see what has happened previously. Trend is bullish as on hourly as on 30-min chart now.
    First of all, let’s take a look what has happened on Friday. At the moment of daily update we had thrust down and I’ve said – keep an eye on possible reversal patterns, that could be either DRPO or may be Butterfly. So, here is nice 1.27 butterfly that looks even better on 15-min chart. Also, take a look that price action has started by ugly H&S pattern, when market was not able to conifm dynamic pressure inside of rectangle that we’ve also discussed on Thursday and broken it down. So, current K-support on 4-hour chart is also an Agreement with 1.618 target of H&S pattern and this target has achieved.
    Second, look at price action of Friday – three times, it was seemed that bears totally destroyed buyers and pulled prices down to K-support, but by the end of the day bulls again and again returned their positions. As a result here has appeared broadening bottom pattern, or, triangle – as you wish, that very often could lead to some kind of reversal.
    This price action makes me think that if even market will not turn to upward continuation, some deeper retracement is possible on Monday, as we said, most probable to WPP=1.2612. Here we also can see that this is K-resistance area.
    [​IMG]



    Conclusion:
    Long-term traders should wait some clearer signs of retracement finish, or at least reaching of significant resistance level to enter short. Although some small lot, mostly indicative probably could be opened even here – for the case if market will continue move down.

    Short-term perspectives mostly related to 1.26-1.2620 area and WPP. Friday’s price action and broadening bottom gave some hint that current support may be stronger that it seems, so on Monday some upward continuation after opening could happen, probably right to WPP.
    And here we will get decision. If market will just retest trend line in a sort of “Kiss goodbye” this will be chance to enter short, while moving above pivot and trend line will suggest further upward continuation.
    There is no need to say, that if market will continue move down, then bulls’ hopes will become mostly phantasmal.



    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 26, June 2012

    Good morning,
    today will be an update of warnings :)
    Yesterday market has shown price action that we have not quite expected, partularly speaking quite unexpected. WPP has not been tested and market has shown downward continuation. So, we might say that price action is bearish.
    Still I prefer to wait until tomorrow to make any trade decisions. Here is why...

    On daily chart market at support - WPS1 and major 0.618 support level 1.2463. I do not want to sell at support. Second important moment is that market stands at MACD breakeven and flirting with the trend. Tommorow you may get bullish stop grabber pattern. Although it could fail (any pattern could), but still it is bullish and it will mean taking out of previous highs - i.e. move to 1.28.
    Second moment. If you will calculate extensions of retracement - you will see that previous top stands at 1.27 of previous retracement (that was a butterfly Btw). 1.618 of it stands precisely at an area of completement daily AB=CD. If market will find support at current levels, then 1.27 extension of current move down will be at the same area around 1.28 as well. So, it might be some kind of 3-Drive "Sell", accompanied and confirmed by stop grabber.
    From another point of view I do not want to buy as well, since price action is bearish, I and I have no bullish pattern yet.

    Now, take a look at 4-hour chart. Market has hit 1.27 extension of large AB=CD pattern. 1.618 stands slightly lower and below major 0.618 support. Current swing low stands at 1.618 extension of previous retracement (that's Lolly's butterfly). So if we clone this retracement and drag, then we will get 1.618 extension of it right at an area of 1.618 AB=CD pattern - that will be 3-Drive "Buy" on 4-hour chart. IT could be trigger of daily stop grabber.

    Hourly chart shows that this also could be reverse H&S pattern.

    So, current situation is very tricky. Safer is to get confirmation and then either enter long or enter on some intraday retracement short. If you will act today - try to stick with particular patterns, since tomorrow you may get a knife in your back either by bullish stop grabber (if you will be short) or by breakout of current support if you will enter long today without any confirmation.
     

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    #2 Sive Morten, Jun 23, 2012
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  3. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Wed 27, June 2012

    Good morning,
    so, we have confirmed bearish daily trend. Still, market at support and 1.2460 area is testing for third time within current retracement on daily chart.

    4-hour trend is bullish and market has formed some kind of 3-Drive "Buy" pattern. This suggests that some deeper retracement could happen. IF you're scalper, you may try to make scalp buy against 3-Drive's lows. Minimum target is the top between 2nd and 3d drives.
    For others - look on two K-areas. First one is around 1.2530, while second is 1.2560. I like more the second one. Mostly because this is also previous support - low between tops, also because trend is bullish and market has formed short-term reversal pattern.

    Hourly trend is also bullish. Price action is forming downward parallel channel with a company of bullish divergence at daily support. So, if breakout will be upside, and we suggest move equals to the channel width - then it will be precisely around 1.2560-1.2575 K-area.

    But two notes have to be made here. First, we do not want to see explosive upward move, we need gradual upward price action, that will confirm just respect of support, but not a reversal from it. If it will be fast and furious thrusting move - do not enter short. Wait.

    Second, if even we will become wrong and market will break 1.2560 K-area, I suppose, price will respect it at first touch. That will allow us move stops to breakeven.
    Current situation on market still unstable, so watch closely over your positions.
     

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    #3 Sive Morten, Jun 23, 2012
    Last edited: Jun 27, 2012
  4. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Thu 28, June 2012

    Good morning,
    actually we've awaited some sort of current price action yesterday, that's why I can make almost the same comments here.

    On daily chart we have bearish trend and it will remain bearish till 1.2580 area by MACD. So, price has sufficient room to proceed a bit higher. Still, since we treat current move up just as respect of 1.2660 Fib support and WPS1, this pullback should neither change trend on bullish again nor be explosive sort. This should be gradual move up.

    On 4-hour chart trend is bullish and the same two levels to watch for - 1.2530 and 1.2560. My prefferable one is 1.2560-1.2578 K-resistance. I suppose that 0.382 retracement is absolutely enough to respect support level on daily time frame. Also this area contains previous swing low, that also will be resistance.

    On houlry chart trend is bullish as well, market finally has broken channel. Applying classical approach to target estimation - the Width of channel itself, we get the same level - 1.2560. AB-CD 1.618 target also stands here.

    So, two things to watch - avoid of thrusting move up, second - keep a close eye on price action around 1.2560. Probably, market will at least respect it at first touch. This allows us to move stop to b/e, if we will become wrong.
    Moving through this level, probably will mean something more, than just respect of daily support. So, be careful.
     

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    #4 Sive Morten, Jun 23, 2012
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  5. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Fri 29, June 2012

    Good morning,
    so, this crazy week comes to an end. Probably you already know what has happened - Spain and Italy have not supported bailout plan for stimulating of economy on 120 Bln until Germany and France will not take any steps to reduce cost of debt for them. That is a common sense of the statement.

    So, currenty it is very difficult to make any reasonable analysis, since we do not have any investors' response on it - will they support this splash or erase them. Because now we have just a reaction on the news event.

    Speaking shortly, for those who trade on daily basis is better to stay flat. We still have bearish trend, but price action currently does not support it. Also by the Friday's close we can get weak sort of bearish stop grabber, if market will close below black line on the daily chart.
    If this will not be the case and market will support initial thrust, then it could lead to greater AB=CD pattern with 1.2860 target and deeper retracement on weekly time frame. Still, this will not break overall bearish long-term bias. Even fundamentally, disagreement among major EU countries hardly could be called as positive sign.
    If market will erase this splash and we understand that this was just a reaction, then we will start search possibility to enter short.

    on 4-hour chart trend is bullish. Market has hit our resistance - 1.2560-1.2578, but by explosive thrusting candle - that is what we do not want to get. So we can't enter short here. If you're scalper you probably can stick with momentum of this candle and try to make some buy against its lows with target point around highs of this thrust.

    On hourly chart trend is also bullish, here we have some sort of H&S pattern. One thing that I do not like with it, is that it has appeared not after solid trend up. In fact this pattern is a most part of whole retracement. Still it looks like H&S and now stands at important level - 0.618 resistance from head point. If market will move higher, then this pattern will probably fail and that will be the first hint on potential upward continuation. If not, then chances will be on seller's side. Also two opposite butterflies could be formed here. So, I expect tricky price action in nearest couple of weeks.

    That's being said, it makes sense to be flat, since we do not know response of market to this splash - will it be supported or not. Scalpers could try careful buyings based on momentum of this thrust with nearest targets.
     

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    #5 Sive Morten, Jun 23, 2012
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  6. seedof

    seedof Corporal

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    thanks for your helpful analysis Commander Sive, please i want to ask the parameter you use for the settings of the indicator you use on monthly chart to get the overbought and oversold thanks.
     
  7. Aldo Colombo

    Aldo Colombo Corporal

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    Monthly analysis

    Sive, would you please clarify on the quoted sentence, currently I don't see such 2-3 times smaller retracement, does it mean that market has not good chances (from this point of view) of downward breakout? So if I got it right, another upward try is probable before final break downwards, is it?
     
  8. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi Aldo,
    actually on current monthly chart we have not 2 but 3 attempts to break 1.18-1.23 area. And beween all of them it was deep pullback. By those moment that you've quoted I just want to tell, that 2-3 times smaller retracement in terms of monthly chart could be still rather solid - 1.33-1.35 area.
    But do not pay too much attention to it, since this is not so significant currently, just some thoughts.
     
  9. mtnova

    mtnova Recruit

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    Thank you Sir

    Hello everybody and hello to you Sir,Mr Morten,

    Long time reader but rarely commenting anything since i am still learning this art.

    I just want to express my deep gratitude for your effort and analysis Mr Morten.

    I feel that i have learned a lot since i am following this site and forum.

    Big,big thanks for sharing your wisdom and knowledge wih us ,Sir.

    Best regards,
     
  10. minimax

    minimax Sergeant Major

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    Hello Sive,

    great analysis and thank you, I mised Gartley 222 !
    Missed establishing new high, strong down trust, configuration remindes on 5 waves impulse with current consolidation/correction of 4th and with the first target of 5th around 1,2400, RRT as top of 4th on channel line (I have a bit different approach of drawing trend lines and channels), last lower fractal as an impulse looks like 1st of 5th bigger and then correction in 2nd topped with fractal on 78,6. BUT I do not like the whole structure and what I see. This configuration reminds me on ˝bear trap˝!
    At the moment the consolidation is sitting on ideal confluence of shark so just short pullback and move up is possible or even directly up. I think the big ones will not approve direct move up and will make visually strong move down to new low, minimum is taking the last low at 1,25209 or even last LL at 1,25183 and then maybe even to 1,2500 where Gartley 222 and lower extension limit of shark have confluence and then I expect very aggressive rotation. These conclusions of mine are based on developing fractals on 4H chart because with 1,25208 AB for up will be in place and with low below 1,25183 first ABC down could be completed and the move even toward the triple top will be opened with extraordinary caution at 50% which could agree with WP because 5 -0 pattern is possible but everything depends on speed and development of future patterns. This last leg down I still see as a corrective leg after Flat correction. As long as top at 1,25824 (marked black ˝xx?˝) holds I am short and very cautious around 1,2520 and 1,2500; if the drop will continue I will become careful again at 1,24414 where I see the last chance to make up move into new correction (there is also 161,8 expansion). We definitely change market flow with taking the low at 1,24341 marked with blue ellipse.
    Why ˝Land of Confusion˝? Because if I trade what I see, there is not w and x but a and b, so I must be extra careful if there will be more noise in current zone. The rule is: Double ZigZags are common Triple are rare, so however and whatever, one down to new lower low is possible.

    Ps
    Dear Sive, reading your weekly analysis and watching your daily videos helps me making my analysis, you are warning me to a lot of developing patterns, improving my attitude and approach to graphs and I am really thankful for all your contributions. That is why I am sending my graphs to share with you and the community. If this is not welcome, just let me know. Thank you again and good trading to all.



    EURUSD_062412_1H.
     

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