Forex FOREX PRO WEEKLY, March 07 - 11, 2022

Sive Morten

Special Consultant to the FPA
Messages
16,092
Fundamentals

The global situation is changing, forming tight сan of worms that drugs as economical as geopolitical factors. We see how EUR, under the burden of geopolitical problems in EU, shows almost no reaction on key economical statistics, such as recent NFP report. According to our suggestion the problems stay for the longer term, which is impossible to predict by far. Keeping aside a lot of noise, scream in media, we see big money flows effect, initiated by the US to support its economy, using the crisis in the EU. This changes the global economic balance for at least of 6 months, or maybe for longer. With this new environment we suspect that EUR almost impossible to avoid USD parity within few months.

Market overview

Geopolitical worries are clouding the outlook for U.S. stocks, even as military tensions moderate expectations for how aggressively the Federal Reserve will tighten monetary policy in coming months. The see-saw moves come as investor hopes that the Fed may raise rates less severely than anticipated vied with worries about inflation and higher commodity prices, stoked by sanctions against Russia, one of the world’s biggest commodity exporters.

Investors have virtually priced out the chances of a hefty 50 basis point rate hike in March, giving a lift to the technology and growth stocks that had been pummeled in recent weeks by anticipation of harsh Fed tightening. Meanwhile, geopolitical concerns have propelled oil prices, prompting fears of slower growth and higher inflation over the long term. U.S. crude prices topped $115 a barrel this week and hit their highest levels since 2008, while other commodities such as wheat also surged.

Investors next week will be watching data on U.S. inflation, due out Thursday. Consumer prices in January grew at their fastest pace in nearly four decades.

"The Fed will be less aggressive now, in the near term, but the problem that the Fed faces has not been ameliorated," Neuman said. "In fact, it has been exacerbated."

Truist Advisory Services this week lowered its rating on the financials sector to "neutral", while upgrading its ratings on two defensive groups, consumer staples to "overweight" and utilities to "neutral. Because of what is happening overseas, it complicates the global picture," said Keith Lerner, Truist's co-chief investment officer. "The global economy will be somewhat slower, capping rates, and by itself that is a negative for financials.”

You wouldn't believe if you just had a glimpse over the bund's negative yield (-0.03%) but euro zone inflation actually just hit another record high. Inflation surprisingly jumped to 5.8% in February and with energy prices soaring due to Russia's war in Ukraine, it's unlikely to cool off anytime soon. But despite fast-rising prices, money markets have dramatically scaled back their expectations for an ECB interest rate hike which a first one is now only expected in October.

There's indeed a strong assumption that policy makers need a clearer picture of how much economic damage the war in Ukraine will cause before they can go ahead and tighten. But that doesn't mean inflation isn't a burning concern for the ECB.

"It's fair to say we have two huge conflicting forces here", Deutsche Bank Jim Reid wrote in his morning note. For this week though the geopolitics are steamrolling over the inflation hawks for which I will put my hand up and say I am one", he said.

As highlighted by Mark Haefele, CIO at UBS GWM, rising oil prices constitute a double whammy in that they both fuel inflation and drag growth down at the same time.

"On our calculations, if oil prices were to rise to USD 125/bbl or higher for two quarters, it would result in roughly half a percentage point lower in global GDP growth, and higher inflation affecting consumer spending power", he argued this morning.

Traders are rushing into currency derivative markets to protect their portfolios against further euro weakness, a sign of broadening stress for European assets. The euro has slipped to the weakest since May 2020 at $1.1059, down 2% since last Thursday. But that decline is modest compared to moves on derivatives, where bearish euro positions have more than doubled in the same period, suggesting investors are preparing for further weakness.

One closely watched gauge of investor demand for options that give traders the right to sell the euro, versus the right to buy it, has slumped to five-year lows, indicating a bias to selling the currency. Three-month risk reversals on Wednesday dropped to March 2017 lows. Currency options charge a premium in the direction deemed most likely, and the outbreak of war on Europe's eastern border has cast a shadow on the regional economy.

"The FX options market in euro/dollar is extraordinary. Risk reversals have never been as extreme," said Richard Benson, co-chief investment officer at Millennium Global Investments.

Options volumes betting on more euro losses are building too. Refinitiv data showed an outsize $4 billion-plus of euro options expiring at end-March. The single currency has seen deepening inverse correlation with the price of oil and natural gas, a large proportion of which Europe sources from Russia. The price of crude oil in euros has soared to record highs above 100 euros per barrel this week.

"The more oil and natural gas push higher, the more the euro drops, pushing commodities priced in euros even higher - a vicious inflationary spiral," Deutsche Bank strategist George Saravelos told clients.

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Federal Reserve Chair Jerome Powell, balancing high U.S. inflation against the complex new risks of a European land war, said Wednesday the central bank would begin “carefully” raising interest rates at its upcoming March meeting but be ready to move more aggressively if inflation does not cool as quickly as expected.

Powell called the situation around Ukraine "a game changer" that could have unpredictable consequences. "There are events yet to come and we don't know what the real effect on the U.S. economy will be," Powell told the House Financial Services Committee during a monetary policy hearing overshadowed by the conflict in Europe.

But he said for now the Fed was proceeding largely as planned to raise the target overnight federal funds rate and reduce the size of its balance sheet in order to tame inflation that is currently the highest it has been since the 1980s. Powell said he will back a quarter point rate increase when the Fed meets March 15-16, effectively putting to rest debate over starting a post-pandemic round of rate hikes with a larger than usual half-point increase.

But the Fed chief said he was ready if needed to use larger or more frequent rate moves if inflation does not slow, and may over time need to push rates to restrictive levels above 2.5% - slowing economic growth rather than simply stimulating it less robustly.

What Powell described as a collision between strong consumer demand and pandemic constraints on global product supply was "not as transitory as we had hoped...Other mainstream economists and central banks around the world made the same mistake. That doesn’t excuse it, but we thought these things would be resolved long ago.”

"We have an expectation that inflation will peak and begin to come down this year. To the extent inflation comes in higher or is more persistently high ... we would be prepared to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings."

The euro extended recent declines and hit its lowest since 2016 against sterling on Thursday as investors worried about the impact of rising oil prices, while the U.S. dollar index rose as Federal Reserve Chairman Jerome Powell reiterated that he supports a 25-basis-point hike this month.

"The dollar is in a significant groove right now, benefiting from safe-haven flows and the solid shape of the U.S. economy," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. Certainly the data this week has been really bullish ... so if we see strong job growth coupled with oil exacerbating inflation, we think that would keep big Fed rate hikes in the conversation," he said.

In other U.S. data, new orders for U.S.-made goods increased more than expected in January, pointing to continued strength in manufacturing.

The ballooning euro cost of oil and gas to record highs as war rages in Ukraine has prompted markets to murmur about the chances of a rare, even if unlikely, ECB intervention to bolster the euro against the dollar. And while the euro has slumped against the dollar this week, exaggerating the cost of dollar-priced commodities, it's stable against a broad trade-weighted basket of currencies - still less than 5% from record highs.

There have been few signs of disorderly movements, and it has been more than 20 years since a direct euro-targeted intervention on the markets. But in times of war and crisis, nothing can be ruled out.

The surge in commodity prices, particularly oil and natural gas, is of such a magnitude that further euro depreciation could spin an already toxic inflationary vortex out of control. At least, that's the warning from George Saravelos, head of global currency strategy at Deutsche Bank in a note headlined:

"The ECB should intervene in EUR/USD." To be clear, he says this remains unlikely and that the ECB can support the euro in other ways, like interest rate hikes or verbal intervention. If financial conditions get disorderly, there is precedent for coordinated FX intervention from the G7," Saravelos says, pointing to the G7's action in 2011 to weaken the Japanese yen after the Japanese earthquake, tsunami, and Fukushima nuclear disaster in March that year.

But he argues that surging energy prices are now the single biggest threat to the euro zone economy, which could unleash "a vicious inflationary spiral" that infects broader financial conditions.

1646476443192.png


A weaker euro may yet pose a headache for the ECB - annual inflation is at a record high 5.8% and likely to rise further - but that seems some way off. As former ECB Vice-President Vitor Constancio points out, the exchange rate is generally not an objective of monetary policy because it is very difficult to reliably identify its drivers.

Constancio also notes that unilateral intervention is rarely effective. In that context, it is difficult to imagine the U.S. Federal Reserve getting on board a policy to weaken the dollar just when it will almost certainly be raising interest rates.

"Right now, the euro is hovering around $1.11, and there is no need or the possibility of organizing a multilateral intervention. It is better, therefore, to forget the issue," he said.

There is a building consensus, however, that the euro is heading lower. Robin Brooks, chief economist at Washington-based Institute of International Finance, reckons parity with the dollar - a 10% depreciation from current levels - could come within three months.

ECB policymakers' consistent position since the euro's launch in 1999 has been that the central bank will intervene in the currency market if it sees disorderly movements or unwarranted volatility. But even if the euro soon trades at parity with the dollar, as the IIF's Brooks predicts, market volatility may not matter to ECB policymakers if they are facing down an oncoming recession.

"The picture in the euro zone has turned on a dime and the whole notion of second-round inflation effects is just fanciful now. ECB intervention to support the euro is counterintuitive. An effective tightening of policy makes no sense," Brooks said.

A slumping euro will aggravate European Central Bank President Christine Lagarde’s already difficult policy predicament. The euro zone economy is more exposed than other regions to the fallout from Russia's invasion of Ukraine and the knock-on effects of sanctions, which is why the single currency is falling. Its broad-based slide will make imports more expensive and exacerbate high inflation.

The euro on Friday fell below $1.10 for the first time in nearly two years and was on track for its biggest daily percentage decline since March 2020, a time of massive demand for dollar funding as Covid-19 hit the West. This time, Europe’s single currency is also displaying independent weakness: It slid to a seven-year low against the Swiss franc and to its weakest since 2016 against the British pound.

In 2021, Russia was the fifth-largest partner for EU exports of goods and the third largest for EU imports of goods, according to the European Commission. Germany, Europe’s biggest economy, was both the largest importer of goods from the country and the largest exporter of goods there. The single currency bloc also depended more heavily on Russian energy than other regions.

A falling currency makes imports pricier at a time when inflation has just hit a record high of 5.8%, nearly three times the ECB’s target. The problem is all the greater because the price of oil, denominated in dollars, is already soaring. Expected efforts to control inflation would come at the expense of economic activity, while changing tack to support the economy would risk prolonged price pressures. She can’t win.

U.S. job growth accelerated in February, pushing the unemployment rate to a two-year low of 3.8% and raising optimism that the economy could withstand mounting headwinds from geopolitical tensions, inflation and tighter monetary policy. The Labor Department's closely watched employment report on Friday also showed the economy created 92,000 more jobs than initially estimated in December and January.

Though average hourly earnings were flat last month, that was because of the return of workers in lower-paying industries and a calendar bias. Companies are raising wages to attract scarce workers, which is contributing to higher inflation. Economists said absent war in Europe, which has pushed up prices of oil, wheat and other commodities, the strong employment report would have pressured the Federal Reserve to raise interest rates by half of a percentage point later this month.

"On balance, despite weakness in wages, this is one more in a long line of reports suggesting the Fed should have started raising rates ages ago," said Chris Low, chief economist at FHN Financial in New York. "The Fed has its work cut out if it wants to slow demand enough to stabilize the unemployment rate at 4%."

The survey of establishments showed nonfarm payrolls jumped by 678,000 jobs last month, leaving employment 2.1 million jobs below its pre-pandemic level. Economists expect all the lost jobs will be recouped by the third quarter of this year.

The unchanged reading in average hourly earnings followed a 0.6% increase in January. Data for the employment report is collected during the week that includes the 12th day of the month.

"There's a very well-established pattern when the 15th of the month falls on a Saturday that typically boosts average hourly earnings that month and the following month falls to the downside," said Robert Rosener, a senior economist at Morgan Stanley in New York. "That was the case in January, when the 15th of the month fell on a Saturday ... and February was expected to show some payback that would drag down the figure."

COT Report

Speculators' net long positioning in the U.S. dollar dropped in the latest week to the lowest level since mid-August 2021, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Friday. The value of the net long dollar position fell to $5.12 billion for the week ended March 1, from $5.80 billion the previous week. U.S. dollar net long positioning fell for a seventh consecutive week.

"Data released today showed a decline in U.S. dollar bullish sentiment despite elevated market anxiety owing to the war in Europe," wrote Scotiabank in a research note after the release of the CFTC data.

Speculators also increased net long positioning on the euro to 64,939 contracts, the largest since July 2021.

Scotia, however, said positive drivers are limited for the euro. That should see investors trim net bullish positions on next week's data "particularly ahead of a dovish ECB (European Central Bank) decision on Thursday given the risks posed by the war."

Thus, despite the big collapse on the market, the sentiment data doesn't reflect yet the changes. Thus, CFTC numbers shows increasing of net long position on a background of rising open interest:
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To be continued...
 

Sive Morten

Special Consultant to the FPA
Messages
16,092
Sanctions backfire

Although sanctions make impact on Russian economy, it also backfires European countries. Banking and auto sector has dropped for 20% this week, while Nokian tyres has lost 80% of its production power. The $60 Bln bulk are stucked in ETFs, specialized on Russian assets, and Russia have significantly increased the chance of the country defaulting on its dollar- and other international market government debt, analysts at JPMorgan and elsewhere warned on Wednesday. While Russia has got these money long time ago - it can't service the debt as EUR and USD assets frozen. This makes direct impact on foreign investors in amount of just under $40 billion worth of international market, and a lot more in corporate debt.
Thus, f
oreign investors are scrambling to pull money out of Russia -- if they can. They have found their assets frozen as the sanctions, Russian-imposed restrictions and a lack of liquidity make it impossible to exit. It's also been tough to work out the full extent of the damage. Asset managers will be hoping for more clarity on just how little their Russian investments are worth, if anything. Many will also be bracing for Western sanctions to go even further and target Russia's energy industry. Expect more jaw-dropping moves in the rouble and oil prices if they do.

But, other consequences look more serious. First is wheat, corn and bakery. Even consumers in two of the world's biggest wheat-growing nations, Canada and the United States, are paying the price.

"Unfortunately for the short and intermediate-term, food inflation and the cost of baked goods in the United States will go up more. This will impact the most vulnerable in our society the most," said Robb MacKie, president and chief executive of the American Bakers Association.

Weeks before the latest wheat price spike, Calgary Italian Bakery in Alberta raised prices 7% to keep pace with costs associated with last year's Canadian drought and inflation in prices of flour and yeast. Now Louis Bontorin, co-owner of the 60-year-old family business, fears he will need to raise prices significantly again, once he has depleted his four to five months' flour supply.

"This could be really, really devastating," Bontorin said. "Bread is one of the fundamentals, the essentials, and that's the hard part. You're trying to just take what you need, but you're also cognizant of what effect (higher price) has on the consumer. "The buying power of everybody is just being eroded.

Dollar Tree Inc on Wednesday missed Wall Street expectations for quarterly sales and flagged insipid annual sales, in another sign of rising inflation and declining stimulus hitting shoppers' pockets. Like other retailers, discount stores, traditionally known for their wide array of $1 products, have been raising prices and focusing on more expensive products such as clothes and home decor to deal with shrinking margins. Chesapeake, Virginia-based Dollar Tree said a headline-grabbing decision to start selling most products for $1.25 was implemented in its U.S. stores two months ahead of schedule.

"As we look at the year, we do not see things getting better in the supply chain world," Chief Financial Officer Kevin Wampler said on a call with analysts.

European equities as well as financial stocks funds suffered their biggest outflows on record as investors piled into cash in the week to Wednesday as the war roiled global markets, BofA said in its weekly flow note on Friday. Investment banks, including BNP Paribas, have slashed their targeted returns for European equities while financial stocks have bled heavily as investors have been forced to unwind bets of large interest rate increases this year due to the war.

European equity funds haemorrhaged $6.7 billion while financial funds saw outflows of $3.5 billion, said BofA in its report based on EPFR data.

"Russia/Ukraine means bigger 'Inflation shock', smaller 'Rates shock', bigger 'Recession shock'," Michael Hartnett, chief investment strategist at BofA, said in a note to clients. Fed/ECB hopelessly trapped between deflation on Wall St & inflation on Main St (Euro producer prices up staggering 30.6% YoY pre-war); oil price spike, military-sanctions escalation cycle, financial market accidents threaten global recession," he said, referring to the U.S. and euro zone central banks.

U.K. Energy Cost Surge Risks Leaving 8.5 Million in Fuel Poverty. As many as one in three U.K. households could be pushed into fuel poverty if energy bills soar further, a group of charities warns. If the average energy bill rises as high as 3,000 pounds (about $4,000), that would leave 8.5 million British households unable to pay their bills, the End Fuel Poverty Coalition said in an emailed statement. Record-high energy prices this week risk worsening the U.K.’s cost-of-living crisis and driving up inflation even further.
Energy crisis could force more UK factories to close. British companies that produce steel, paper, glass, cement, ceramics and chemicals say they will be forced to close factories or pass on rising costs to consumers unless the UK government provides relief from soaring energy prices.

Next week to watch

#1 US CPI


Expect data on Thursday to show U.S. inflation surged again in February, confirming what we all know already: the Federal Reserve will likely hike rates in March.
Economists forecast headline inflation at 7.8% year-on-year, surpassing January's four-decade high 7.5% print.

#2 ECB meeting

Before Russia invaded Ukraine, the European Central Bank's March 10 meeting was expected to accelerate its exit from ultra-easy policies. Inflation at a record high 5.8%, more than double its 2% target, strengthens that case. Here's the problem. The war, by sparking a fresh surge in energy prices, is causing upward pressure on inflation. At the same time it hurts consumption and economic growth.

ECB plans are in turmoil and big decisions on Thursday appear unlikely.
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The bottom line

Now we have to discuss serious questions guys. This is not the statistics release, we try to make conclusion on big, global geopolitical and financial shift. Maybe our reaction is a bit too radical, but it seems that Europe should prepare to 50's time. With the coal price around $400 per tonne and gas around $2400 - its nothing to catch around. ECB now is trapped on the deadway. It can't rise rates because it hurts consumption and could put the households wealth deeper into recession later. But it also can't not change the rate, as inflation probably runs much higher. And Russia has not imposed any mutual sanctions by far...

But this is only what stands on the surface. The background is more cynic. To keep it simple - the US opens its last "piggy bank" to safe its own economy. And this "piggy bank" is EU. This is the reason why J. Powell said that he expects "inflation should pick soon and start decreasing". Indeed, first is the US gets capital out from the EU. Supposedly it should be around 1.5-2 Trln moved out of the EU. This money will be invested in the US assets, keeping rates lower and rising consumption and economy performance.
Second - the US starts selling LPG to Europe at "slightly higher price", which is probably around $2.5K per tonne, which is two times higher than current gas price. The defence spending from the EU countries are also flow to the west, making good contracts for the US companies, and etc, etc, etc. Finally, the Import becomes more expensive. This is robbery of the century guys, and we agree with Powell, that it should support the US economy until the end of 2022.

As a result, EUR can't be the dollar rival as on a background of general economy conditions as disbalance of Fed and ECB policy. We agree that ECB interventions might become a reality in current situation. As market hits our long-term 1.0850 target within few weeks, the parity stands around the corner and could be achieved within few months. The geopolitical tensions stand for the long term, as we said many times. The core of the tensions are not resolved. Russia demands NATO to move to 1997 year borders, and it doesn't take it off the table. Social problems and refugees flows to Eastern Europe makes situation more difficult. EU companies are leaving Russia - Daimler, BMW, VW, Ikea, LVMH and many many others. It never happens, when conflict is supposed to be short-term. After Crimea precedent noone has left the country. Situation already stands critical, but negative processes could accelerate if war escalation happens. With ECB inaction, we're focused on parity with intermediate next target around 1.04-1.05.

Technicals
Monthly

Currently the lower time frame charts lose the importance as with the recent scale of action we have to focus on higher time frames to set the targets. Thus, as EUR hits rather fast our target of 1.08-1.09, which is trendline and YPS1, the parity stands right around the corner, with possible short-term pause around OP @1.0450-1.05. Currently it is difficult to predict whether any reaction on 1.09 area starts, so we should keep an eye on daily performance.
Additional technical problem for the EUR is absence of Fib levels and oversold until the parity on the monthly chart:
eur_m_07_03_22.png


Weekly

After the breakout of last 5/8 support, the oversold - the only thing that matters. Hopefully it could provide some short-term support to the EUR, together with monthly technical levels:

eur_w_07_03_22.png


Daily

Market is overextended on daily chart as well. Additionally to monthly targets, price hits 1.618 extension of previous retracement swing. Here we do not have any other extension targets. WIth solid downside thrusting action, we consider bearish B&B as a primary pattern to watch, if EUR re-tests broken lows and reach 3/8 resistance level around 1.11:

eur_d_07_03_22.png


Intraday

With the big overall scale of action, intraday brings no important information by far.
 

soul rebel

Sergeant
Messages
166
Thanks Sive
UK & Europe increasingly becoming vassal states of the US, or 'air strip one' as depicted by George Orwell in his novel '1984'.
Do you still feel there could be a run into GBP in the short term?
 

Sive Morten

Special Consultant to the FPA
Messages
16,092
Thanks Sive
UK & Europe increasingly becoming vassal states of the US, or 'air strip one' as depicted by George Orwell in his novel '1984'.
Do you still feel there could be a run into GBP in the short term?

Well, In less degree than into US. In fact, UK is the one that drives global politics. It can't be vassal of the US. I would say, US/UK should be treated as the single political power. Canada, Australia and NZ are UK vassals. In fact we have "AUKUS" military block already...
 

jianean

Private, 1st Class
Messages
50
Well, In less degree than into US. In fact, UK is the one that drives global politics. It can't be vassal of the US. I would say, US/UK should be treated as the single political power. Canada, Australia and NZ are UK vassals. In fact we have "AUKUS" military block already...
Hi Sive, Regarding your GBP comments on Friday, please did the weekly closing price clarify that the earlier target you mentioned of 1.37 is or isn't still a possibility? I cannot make up my mind.
 

Sive Morten

Special Consultant to the FPA
Messages
16,092
Hi Sive, Regarding your GBP comments on Friday, please did the weekly closing price clarify that the earlier target you mentioned of 1.37 is or isn't still a possibility? I cannot make up my mind.
We haven't got the bullish grabber by the weekly close price. So, this scenario has not been materialized.
 

Sive Morten

Special Consultant to the FPA
Messages
16,092
Morning everybody,

So, while EUR is trying to stabilize around 1.08 - our predefined monthly support of YPS1 and trendline, we can't say something really new. As it stands at oversold as on daily as on weekly chart, our primary pattern to watch is the same - daily B&B "Sell" if it will be formed. So, let's just keep watching for it.

Thus, today, let's take a look at GBP. Those who read us for a long time, should remember our long-term analysis of GBP. In fact even last year we've mentioned huge reverse H&S pattern on GBP, and market now is going to the major 5/8 support around 1.22-1.25 area:
GBP_w_08_03_22.png


Thus, if you plan to buy GBP, it would be better to wait for completion of daily XOP and butterfly targets:
GBP_d_08_03_22.png


Some minor reaction on 1.27 butterfly extension could follow, but mostly due oversold condition. As cable is accelerating down, it is only the question of time when it goes to 1.618 extension and XOP target.
At the same time, we call you to not treat the GBP in the same way as EUR. They have tight relation but in current conditions, GBP looks much more stable and could show normal reactions on technical signals.
 

Sive Morten

Special Consultant to the FPA
Messages
16,092
Morning guys, I hope you're fine.

So, it is some relief on markets, as news background was so strong that it seems that markets start loosing some sensitivity to them. Anyway, technically, EUR is showing reaction on oversold level, as no other reasons exist.
That's why we keep the same scenario of B&B "Sell", which we suggest, is very good chance for short entry, almost riskless one. Currently it seems that it could start somewhere from 1.1030-1.1090 area:
eur_d_09_03_22.png


We haven't got any DRPO on 4H chart, that potentially could be formed, but has not appeared. And, to be honest, price action on 1H chart shows no feature of reversal - slow and heavy action with multiple overlapping candles. Here we watch for XOP target as it makes Agreement with daily resistance. Once it is completed - the B&B setup is ready to use. The possible driver that could support EUR is ECB meeting, if Lagarde tells something supportive, at least 60-70 pips to our target it could pass...we'll see.
eur_1h_09_03_22.png
 

Sive Morten

Special Consultant to the FPA
Messages
16,092
Morning folks,

So, markets calm down a bit showing healthy pullback across the board. I'm not sure that this is it, mostly it reminds temporal relief, but anyway, it lets us to go with our plan. B&B scenario goes accurately. On daily chart major conditions are met - price has closed above the 3x3 DMA and hits the Fib level. By the same common rules, market has two days more to start B&B action.

By looking at daily chart 1.1140 area seems most suitable for this purpose, while logical stop placement is above 1.1170 - FIb level and Overbought area.
eur_d_10_03_22.png


Here is potential minimal target of the trade - around 1.0910-1.0930 (5/8 support), depending from the starting point:
eur_4h_10_03_22.png


So, market has hit and exceeded our initial XOP target, forming no reaction. In fact, on the last stage of B&B trade, we need to get clear bearish pattern here. First is, lets extend target to the XOP around 1.1135. ECB meeting could bring volatility, so it might be hit.
eur_1h_10_03_22.png


Waiting for this new XOP is a kind of "fine tuning' of the B&B, as market mostly stands on spot already. That's why, depending on your experience and confidence level you could act differently. If you're not sure in ability to catch the entry point accurately - split position in parts, and enter gradually. For those who are confident enough maybe it makes sense to wait final spike to XOP and appearing of, say, butterfly or H&S...
 
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