Forex FOREX PRO WEEKLY, March 14 - 18, 2022

Sive Morten

Special Consultant to the FPA
Messages
16,284
Fundamentals

Markets prepare to the Fed meeting next week, and CPI numbers this week has become the major driver probably. ECB statement was unsigned, but situation for EUR could change if EU approves bond-issue programme to finance government support to the economy. Next week, beyond the Fed meeting, we also get important data of PPI and Retail Sales. Currently the US population loyalty to rising inflation is challenging and people start loosing patience.

Market overview

The U.S. dollar rose on Monday, lifted by safe-haven flows, as investors weighed the effects on global economic growth of oil prices that hit 14-year highs after the United States and European allies considered banning Russian crude imports.

"The conflict is continuing to lead to further surges across several commodities, which is threatening growth prospects for the year," said Edward Moya, a senior analyst at Oanda. There are a growing amount of jitters that will probably keep the dollar supported, as you're going to see the U.S. economy is still nicely positioned in the short term because it's not as dependent on Russian energy supplies as Europe is," Moya said.

According to Goldman Sachs, a sustained $20 oil rise shock would lower real economic growth in the euro area by 0.6% and by 0.3% in the United States. But in a more adverse scenario if Russian gas shipments via Ukraine were curtailed, then euro area GDP could fall by as much as 1% from gas alone.

Potentially more damaging for European banks in the longer run are the risks of delayed central bank rate hikes, dwindling prospects of returning excess capital to shareholders, and the threat of stagflation, whereby prices rise as growth stalls.

Prior to the conflict, markets had priced in the European Central Bank's deposit rate rising from -50 basis points (bps) to zero by year-end. They now expect only a 20bp increase, Berenberg analyst Michael Christodoulou said.

That hurts banks because higher benchmark rates help them generate greater profits on the spread between rates charged on lending and those paid out to depositors. A likely freeze on corporate fundraising could also hit banks, such as Barclays and Deutsche Bank, which have significant capital markets businesses.

"Debt and equity issuance by clients will be put on hold until there is greater certainty, and this could negatively impact overall revenues in underwriting," said Maria Rivas, senior vice president for global financial institutions at DBRS Morningstar.

Global financial conditions have reached their tightest since May 2009, according to a widely watched Goldman Sachs index, a possible sign of a world economic slowdown. Financial conditions reflect the availability of funding in an economy and, perceived as strongly correlated with future growth, are watched closely by central bankers. How loose or tight they are dictates spending, saving and investment plans of businesses and households.

Goldman's index rose to 100.92 points as of Thursday, 130 basis points tighter than before February 24th.
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The tightening is an unwelcome development for a world economy already threatened by the knock-on effect of surging commodity prices and supply chain setbacks.
Goldman Sachs, which uses metrics such as exchange rates, equity swings and borrowing costs to compile the most widely used financial conditions indexes, has in the past shown a 100-basis-point tightening in conditions crimps growth by one percentage point in the coming year.

Richard McGuire, head of rates strategy at Rabobank, expects conditions to tighten further.

"Central banks are focused on inflation rather than growth so any hope of a conciliatory stance reflective of the fact that demand is weakening is likely to be disappointed," he said. You have to brace yourself for demand destruction either delivered by central banks, which in itself tightens financial conditions, or via eroded profit margins, negative real income growth without central bank growth," McGuire said. That can cause further market selloffs, another channel through which conditions tighten, he added.

None of the metrics Goldman tracks signal relief. The dollar is near two-year highs, world stocks have fallen more than 10% this year and companies' borrowing costs are sharply higher as investors assess the hit to companies' profits.

The euro retreated from its overnight gains on Thursday following the European Central Bank's announcement it will phase out its stimulus in the third quarter, while the dollar strengthened after a strong U.S. inflation report. The statement from the ECB, which left the door open to an interest rate hike before the end of 2022 as soaring inflation outweighs concerns about the fallout from Russia's invasion of Ukraine, briefly sent the euro higher, before market sentiment turned negative.

The European Central Bank will stop pumping money into financial markets this summer, it said on Thursday, paving the way for an increase in interest rates as soaring inflation outweighs concerns about the Russia - US conflict. While a handful of policy doves at Thursday's meeting argued the war justified a pause for thought, they were outnumbered as worries about inflation, which hit a record 5.8% in February and is seen rising further, dominated the debate.

The waning impact of the coronavirus pandemic on the economy, improved labour market conditions and the prospect of an easing of supply chain bottlenecks all showed the euro area was in fundamentally healthy shape, Lagarde added.

While the bank announced modest growth downgrades for this year and next, it ramped up inflation forecasts more strongly and now expected price growth of 5.1% this year, 2.1% next year and 1.9% in 2024. This fulfils the only outstanding condition that the ECB has set for its first rate hike in over a decade, namely that inflation is seen stable at its 2% target.

"Since the ECB now sees its inflation target effectively achieved, it is likely to raise its key interest rate twice this year, by 25 basis points each time," Commerzbank's chief economist, Joerg Kraemer, said.

Indeed investors ratcheted up their bets on rate hikes after the ECB's decision and now expect it to increase its rate on deposits by nearly 50 bps by the end of the year. This would take it back to zero after eight years in which banks were charged for parking their idle cash at the ECB.

The bank confirmed plans to wrap up its 1.85 trillion euro Pandemic Emergency Purchase Programme at the end of the month and said purchases under the older and stricter Asset Purchase Programme (APP) will be smaller than previously planned. It said any adjustments in interest rates would take place "some time" after the end of asset buys, a change from the previous formulation that purchases would end "shortly before" a rate move.

In a Reuters poll, nearly two-thirds of respondents said the APP would be shut by end-September, with nearly half saying it would be in that month. The euro quickly firmed on the ECB decision, seen as a modest victory for conservative policymakers, and bond yields rallied.

"All in all, today's decisions are a good compromise, keeping maximum flexibility in a very gradual normalisation of monetary policy," ING economist Carsten Brzeski said. "A first rate hike before the end of the year is still possible."

Geopolitical turmoil may be setting the stage for more gains in the dollar, upending investor expectations for a weaker greenback as geopolitical uncertainty and worries over European growth raise the U.S. currency’s appeal. The U.S. Dollar Currency Index , has surged 3% year-to-date to its highest level in 21 months, buoyed in part by investors seeking shelter from market volatility that has hammered stocks across the globe and fueled wild swings in commodity prices. Russia calls its actions in Ukraine a "special operation."



How much further it runs may depend on the paths taken by the Federal Reserve and European Central Bank in their efforts to normalize monetary policy. While investors are betting the Fed will likely push through several rate increases this year to fight surging inflation, many believe the ECB faces a tougher slog, with soaring raw materials prices posing a greater threat to Europe’s energy-dependent economy. Bets on a widening gap in yields between the U.S. and euro zone have helped drag the euro near its lowest level against the dollar in more than two years.

"The view at the start of the year that the euro would appreciate after a couple of months of dollar strength has taken a bit of a setback," said Bipan Rai, North American head of FX strategy at CIBC Capital Markets.

"Everything that created that bullish case for the euro earlier this year now creates a very bearish case," said Eric Leve, chief investment officer at wealth and investment management firm Bailard.

While Leve had started the year expecting the euro to strengthen at the dollar’s expense, he has now trimmed exposure to European equities and is looking to hedge euro currency risk.

A sustained rise in the dollar could have broad implications for markets and the U.S. economy. Though a strong currency tends to weigh on the profits of domestic exporters, it could also help the Fed tame inflation, which recently logged its largest annual increase in 40 years. Conversely, a weaker euro could exacerbate already high consumer prices in the euro zone.

Markets are pricing the fed funds rate to rise by more than 165 basis points in the U.S. this year, starting with a widely anticipated increase at next week’s Fed meeting. ECB rate hike expectations firmed on Thursday, with markets pricing around 43 basis points' worth of interest rate hikes this year. Analysts at Nuveen said earlier this month that a Brent crude price of $120 per barrel would sap two percentage points from growth off the euro zone, compared to one percentage point from the United States, due in part to the country's greater domestic energy supply and lower taxes.

"There is much more fear on this side of the pond, and I think that's going to reflect itself in the ECB," Aashish Vyas, investment director at Resonanz Capital, a Frankfurt-based hedge fund investment advisor.

Robin Brooks, chief economist at Institute of International Finance, wrote earlier this week that the euro can fall below $1.00 as markets adjust to "a major adverse shock to the euro zone." The currency recently traded at $1.0987.

Some believe dollar strength will moderate later this year.

Steve Englander, head of global G10 FX research at Standard Chartered, believes the Fed will deliver less rate hikes than expected and the war in Ukraine will ebb, leaving the euro at $1.14 by year-end.

But in the near term, there may be a little bit more pain for the euro, said Paresh Upadhyaya, director of fixed income and currency strategy at Amundi US. Just north of parity is probably the trough in the euro," said Upadhyaya, who is maintaining a short euro position for now.

A report that the European Union may soon announce a plan to jointly issue bonds to finance energy and defense spending could be a boon for the euro and mark a turnaround for the single currency, after it dropped to its lowest level in almost two-years against the U.S. dollar. Bloomberg News reported on Tuesday that the EU may unveil a plan as soon as this week to jointly issue bonds to finance spending on a potentially massive scale as the region struggles with the fallout from Russia’s invasion of Ukraine.

“This could represent a game changer for the euro,” Citi FX analyst Vasileios Gkionakis said in a report, assuming that the news is confirmed at this week’s EU emergency summit in Versailles and that the “timing/size are prompt/meaningful.”

An “appropriate package” was agreed to, it could boost the single currency in three ways.

Firstly, it would cushion the supply-side impact on growth in the region. By cushioning growth it would also make it easier for the European Central Bank to bring forward expectations on stimulus withdrawal. Also, “on a broader basis, this would constitute another act of debt-mutualization; hence, positive for EU and euro-sentiment,” Gkionakis said.

Americans are giving President Joe Biden a break on inflation. War in Ukraine has led U.S. citizens to say they can stomach higher gasoline prices. But this new tolerance may not last. The consumer price index jumped 7.9% in the year to February reaching a 40-year high, the Labor Department said on Thursday. Gas accounted for almost one-third of monthly increases for all items.

That's usually a hot button for Americans. But nearly 80% of them support a ban on Russian oil imports even if it means higher energy prices, according to a recent Wall Street Journal poll. Biden got a 7-point bump from February to approval by 47% of voters in a survey last week by NPR/PBS Newshour/Marist.

One problem, though, is that the latest whopping inflation number predates the start of Russia's assault. In the two weeks since then, commodity prices have soared again, encompassing wheat, fertilizer and cooking oil in addition to oil and gas. As everyday items become more expensive, Americans may not be so forgiving.

U.S. consumer prices surged in February, forcing Americans to dig deeper to pay for rent, food and gasoline, and inflation is poised to accelerate even further as Russia's war against Ukraine drives up the costs of crude oil and other commodities. Lower-income households bear the brunt of high inflation as they spend more of their income on food and gasoline.

"Consumers' shock at rapidly rising gas prices at the pump will continue to put pressure on the Fed and policymakers to do something, anything, to slow down the speed at which prices everywhere are moving higher," said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.

Prices for fruit and vegetables increased by the most since March 2010, while the rise in the cost of dairy and related products was the largest in nearly 11 years. Last month's CPI data does not fully capture the spike in oil prices following the outbreak of the war in Ukraine. Prices shot up more than 30%, with global benchmark Brent hitting a 2008 high at $139 a barrel, before retreating to trade around $112 a barrel on Thursday.

Soaring inflation is wiping out wage gains. Inflation adjusted average hourly earnings fell 2.6% on a year-on-year basis in February, the Labor Department said. Moody's Analytics estimates that inflation at February levels was costing the average household $296.45 per month, up from $276 in January.

Economists expect the annual CPI rate will peak above 8% in March or April and start to slow in the following months as the high readings from last spring drop out of the calculation.

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Despite high inflation, tighter monetary policy and the conflict in Ukraine, a recession is not expected. Demand for labor is strong, with a near record 11.3 million job openings at the end of January. Households are sitting on about $2.6 trillion in excess savings.

"The cost to consumers is high," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania. "However, there are also reasons to be optimistic that consumers can weather a temporary spike in gasoline prices, as household balance sheets in aggregate are in great shape. Gasoline spending as a share of total nominal consumption is low."

But U.S. consumer sentiment fell more than expected in early March as gasoline prices surged to a record high in the aftermath of Russia's war against Ukraine, boosting one-year inflation expectations to the highest level since 1981.

The third straight monthly decline reported by the University of Michigan on Friday pushed consumer sentiment to its lowest level in nearly 11 years. It said 24% of respondents "spontaneously mentioned the Ukraine invasion in response to questions about the economic outlook."

The University of Michigan's preliminary consumer sentiment index dropped to 59.7 in the first half of this month, the lowest reading since September 2011, from a final reading of 62.8 in February. Economists polled by Reuters had forecast the index falling to 61.4.

Economists said the continued slump in the University of Michigan's sentiment index was overdone relative to fundamentals and they expected the economy to continue growing.

"The relationship between spending and sentiment is loose, particularly in the short-run, and real disposable income growth and other determinants of household budgets and finances are more important," said Scott Hoyt, a senior economist at Moody's Analytics in West Chester, Pennsylvania. "Support will also be coming from plentiful jobs and abundant available cash and credit for many. The volatility of income expectations may suggest consumers are struggling to understand how labor market tightness and inflation will impact their budgets."

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BofA Securities in its latest research note on Wednesday highlighted liquidity strains in U.S. Treasuries. Over the last two weeks, the bank cited the wash-out of popular trades that reflect multiple rate hikes by the Federal Reserve this year, such as shorting the front-end of the Treasury curve, flatteners, as well as, shorting the belly of the U.S. TIPS market. The exit from these trades has left the Treasury market susceptible to liquidity issues, BofA said.

Aside from volatility, BofA cited the "uncertain utility" of U.S. Treasuries in portfolios given the surge in inflation. The risk-off environment has led investors to price out the more aggressive 50 basis-point hike at next week's FOMC meeting, although the rate hike cycle remains firmly on track.

BofA said 100 basis-points of tightening is clearly justified due to inflation and labor tightness. But beyond that, the bank said the rate hike path is contingent on the geopolitical state of the world, reflecting a Fed response that may start to show concern for slower growth against an inflation backdrop that could ease over the year.

"This...creates scope for higher structural inflation and constrains the potential response of the nominal UST curve in a risk-off dynamic," BofA said.

The bank noted that without a ceasefire or sharp easing of geopolitical tensions, it expects U.S. Treasury illiquidity to persist. "Fed or Treasury actions may be needed to sustain U.S. Treasury market functioning."

COT Report


Despite the tough situation around the EUR, the overall net position has not dropped miserably. Recent CFTC data shows just minor increase of bearish positions on a background of small increase of the Open Interest. At the same time, it would be correct to treat sentiment as moderately bearish, as hedgers contract positions against EUR growth.
Speculators' net long bets on the U.S. dollar edged higher in the latest week, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Friday. The value of the net long dollar position was $5.44 billion for the week ended March 8. Last week, speculators' net long position stood at $5.12 billion, the lowest level since mid-August 2021.

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To be continued...
 

Sive Morten

Special Consultant to the FPA
Messages
16,284
The bottom line

So, situation is going more or less according to our long term view. Even before tragical events we said that the US inflation has structural character and it can't be stopped by just monetary tools, such as rate change. As a result, we warned that the US could use some external event as the reason of inflation and that they can't do anything with it, taking responsibility off the Fed and government and accusing force-major events.

This view is confirmed by BofA analysts, as they said "This...creates scope for higher structural inflation", while Joe Biden on Friday blamed high inflation rates on Vladimir Putin in remarks at the House Democrat Caucus Conference at the Hilton Philadelphia at Penn’s Landing. “Democrats didn’t cause this problem. Vladimir Putin did,” said Biden. “Make no mistake, inflation is largely the fault of Putin.”

Friday morning, the Wall Street Journal reported that Democrats have 'lost ground' over key issues - primarily inflation and the economy, which 50% cited as a top issue.

A majority of voters, 63%, said they disapproved of Mr. Biden’s handling of rising costs, the president’s worst rating on six policy issues surveyed in the poll. Meanwhile, 47% of voters said Republicans were better able to handle inflation, compared with 30% who preferred Democrats. -WSJ

"The mood of the country hasn’t gotten any better since the last poll. In fact, it’s gotten a little worse," said John Anzalone, the lead pollster in Biden's 2020 presidential campaign whose firm conducted the survey for the Journal. The devastating poll comes as the White House has spent the better part of the last week rebranding inflation as the "Putin price hike":

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Currently, guys, we should not be deceived by statistics that shows improving of labour market and economy growth. The real things that do matter is prices, people sentiment and inflation data. April and May data will be distorted by big money inflow from the EU. Russia doesn't impose any sanctions yet, but here there are more and more calling to do this. Even if this will not happen - the ability of mutual counter-EU sanctions will keep investors in tension support capitals outflow in short term perspective. This supports the US economy within few months. As we've said above - "...a strong currency could also help the Fed tame inflation" and this is the reason why "Economists expect the annual CPI rate will peak above 8% in March or April and start to slow in the following months"

EUR could resist actually, and major downside trend could show few solid bounces. Thus, announcement of EU bond programme to increase financing of defense and energy independence, shut down of liquidity flow and anticipation of 0.5% rate change this year could provide tactical support, despite that the US/EU potential rate difference stands not in favor of the EUR. But, you should understand the simple thing. The US stands at the edge. Democrats are loosing ground, and elections come right in November, Inflation doesn't self-disappear. EU stabilization is not in plans of the US. Once they see it, they could trigger escalation of the conflict in the Europe, involving Eastern Europe countries, such as Poland, Baltic countries and others. US intends to protect own interests until the last european soldier.

With all this stuff in mind, we're very skeptic on EU stabilization, despite any possible financial drivers that we've mentioned, as the US could intrude in situation at any moment. This makes us to have big doubts on possible EUR rebound this year and keep focus on bearish trend and 1.05, then 1.0 targets.

Technicals
Monthly

EUR has passed the way that we thought should take a month for just a single week. Technical factors point on bearish context in all aspects. MACD trend remains bearish, market has no valuable Fib supports and it is not at oversold. CD leg of our AB=CD pattern shows clear signs of acceleration, which means that OP reaching is just a question of time.
Right now market stands at the last support that it has - YPS1 and long-term trend line. On lower time frames it could provide some background for upside performance, but here hardly EUR stands for the long term. The only thing that could save the EUR from collapse is drastic changes in geopolitical situation, which is hardly possible because it doesn't fit to the US.
This makes us treat current pause as temporal stop on a way of bearish trend and watch for the next OP target around 1.05 area:
eur_m_14_03_22.png


Weekly

Weekly chart gives no reasons to be positive by far. Trend stands bearish, EUR was not able to close the gap, formed in the beginning of the week, which happens rare on the FX market. This week action might be interpreted as indecision and confusion. Market stops after been stunned a strong flow of events last week, panic is eased a bit.
As we have no patterns here, the range of the "High wave" pattern might be used as a signal. As EUR is oversold now, the immediate downside continuation is hardly possible. With coming Fed rate decision we also see no reasons to suggest the rally. Thus, unfilled gap should work as like resistance as like potential upside target, if still upside bounce starts. Now it seems that EUR could spend the next week in the same range.
eur_w_14_03_22.png


Daily

So, our B&B trade mostly is done. Those who are still keeping it, be aware of weekly oversold and think about result booking around the recent lows. Hardly EUR keeps dropping immediately. Daily chart provides no new trading setups by far, so it seems that we need to wait a bit.

eur_d_14_03_22.png


Intraday

It seems that for the beginning of the week we could consider only the extension that we already have in progress. As the reaching of the OP could treated as completed fact, and XOP stands right near the lows, which we consider as ultimate target for the coming week - chances that EUR could proceed lower are not bad. Especially because here CD leg shows acceleration as well.

Thus, in a case of bounce, supposedly we could keep an eye on 1.0950-1.0980 levels for short entry.
eur_1h_14_03_22.png
 
Last edited:

Sive Morten

Special Consultant to the FPA
Messages
16,284
Morning guys,

EUR today behaves a bit contradictive to the Dollar Index and the US interest rates. While EUR is trying to climb higher - DXY stands near the top, and interest rates jumps. On intraday chart we've got proper downside reaction from predefined 1.10 K-resistance area, but this reaction was not able to grow into downside continuation.

Besides, on daily chart EUR is flirting with the MACD at the eve of the Fed meeting, so, this makes us think that the best choice for 1-2 sessions is to wait and see what will happen:
eur_d_15_03_22.png


On 1H chart here is the bounce out from the K-area, as we've suggested in weekly report, but now price returns back, which is not really bearish type of action. It keeps door open for more extended upside retracement. Thus, in current circumstances, it makes sense to not take any new short position by far. The performance of the stock indexes DAX and S&P is also different - S&P looks heavier, and I wonder what the EU optimism stands behind... as nothing in the news yet.
eur_1h_15_03_22.png
 

Sive Morten

Special Consultant to the FPA
Messages
16,284
Morning everybody,

So, on the EUR there are few moments to comment. First is - we've got the bearish grabber on daily. Congrats.:
eur_d_16_03_22.png


As DXY and 10 UST yields are not dropping, and Investing.com shows that 50 bp rate change is expected - that might become the reason of EUR performance as well.

Still, EUR just can't stay without tricky moments. On 4H chart we have bullish grabbers as well:
eur_4h_16_03_22.png


In general, longer-term patterns overrule shorter-term. Still, for conservative traders it would be better to stay aside and wait for the clarity... IMO, the bearish scenario looks better, just because of the performance on 1H chart. After final spike that we've discussed yesterday, market has formed downside reversal swing, erasing existed AB-CD pattern. Flag consolidation also has been broken, and current performance is very difficult to call as bullish reversal. This makes me tend in favor of bearish scenario...
eur_1h_16_03_22.png


That's being said, you could sell with the daily grabber, you could buy with 4H grabbers, you could do nothing. Finally you could use Stop entry orders, say Stop "Sell" around "C" (blue) point which let you to step-in when data will be released already and do not take risk of uncertainty. Entry price is a bit worse, but the risk is lower as well...
 

Sive Morten

Special Consultant to the FPA
Messages
16,284
Morning everybody,

So, once again market reacts on short term tactical result but ignores major things. Fed 25 bp action is treated as dovish step and supports dollar rivals across the board. Despite that we think it doesn't last too long, EUR could try to reach 1.11 target. Our daily grabber has been cancelled. At the same time, we have strong feeling that EUR is forming the bearish pennant on daily chart and next week downside action could continue. This pattern looks better on the DXY.
eur_d_17_03_22.png


On 4H chart we have upside AB-CD with COP at 1.11. EUR could try to hit it tod-tom. The OP stands too high and in excess of daily OB area. That's why we do not consider it this week. Besides, upward action stands too choppy to treat it as upside reversal. As we also suggest that we could get big bearish butterfly here, COP is might be an area where good chances to go short might appear:
eur_4h_17_03_22.png


On 1H chart we've got "222" Sell and 30% pullback might happen before action to 1.11 continues. Thus, if you would like to go long - keep an eye on 1.10 K-support area:
eur_1h_17_03_22.png


That's being said, bears could wait until 1.11 target will be reached and watch for the bearish signs there. Despite that personally I'm not very fascinating with long positions on EUR now, bulls still could consider 1.10 K-support for short-term scalp trade.
 

FreddyFX

Sergeant
Messages
409
At the moment not a nice time to trade this, will keep my shorts.
NO dollar smile, it looks like, and parity is now further away.
 

Sive Morten

Special Consultant to the FPA
Messages
16,284
At the moment not a nice time to trade this, will keep my shorts.
NO dollar smile, it looks like, and parity is now further away.
Freddy, my friend, it is too early to dispear. :) EUR has collapsed this year strongly, it can't drop without any pauses.
 

Sive Morten

Special Consultant to the FPA
Messages
16,284
Morning everybody,

As we've suggested, EUR hits the COP and even shows minor W&R around it. But, as daily price hits the overbought, hardly we get upward continuation today. Potentially, on next week EUR could complete OP target as well, but the foundation of upward action looks fragile as the US interest rates stands at top and not dropping. Thus, it seems that recent rally is more emotional relief, rather than reasonable reversal.

Today we could update our GBP view, where we wait for reaction on strong support area. Although daily chart suggests that cable should move slightly lower later, to complete XOP, now we see reaction on 1.27 butterfly target:
GBP_d_18_03_22.png


Upside reaction takes the shape of reverse H&S and invalidation point is seemed to be set already, as price has formed the bottom of the right arm. As we have minor bearish grabber, GBP could try to reach one of the minor support levels. Thus, if you search chances to buy GBP, maybe this setup could be useful. Target you could calculate from the H&S shape:
GBP_1h_18_03_22.png
 

jianean

Private, 1st Class
Messages
50
Morning everybody,

As we've suggested, EUR hits the COP and even shows minor W&R around it. But, as daily price hits the overbought, hardly we get upward continuation today. Potentially, on next week EUR could complete OP target as well, but the foundation of upward action looks fragile as the US interest rates stands at top and not dropping. Thus, it seems that recent rally is more emotional relief, rather than reasonable reversal.

Today we could update our GBP view, where we wait for reaction on strong support area. Although daily chart suggests that cable should move slightly lower later, to complete XOP, now we see reaction on 1.27 butterfly target:
View attachment 75046

Upside reaction takes the shape of reverse H&S and invalidation point is seemed to be set already, as price has formed the bottom of the right arm. As we have minor bearish grabber, GBP could try to reach one of the minor support levels. Thus, if you search chances to buy GBP, maybe this setup could be useful. Target you could calculate from the H&S shape:
View attachment 75047
Hi Sive,
As always, many thanks for your daily posts. All posts, but GBP in particular, are always eagerly awaited.
Please may I just confirm that I am correctly understanding what you are saying?
The 1-hour chart indicates a possible reverse H&S; the invalidation point is at 1.3087; the shoulder is shown by the blue line and the final target to take the profit is in the 1.34 area.

I particularly have a greater interest in this specific post because I already have a long [currently with a minus position] and wondering where to put my S/L - and is 1.34 too ambitious for the T/P?
 

jianean

Private, 1st Class
Messages
50
Hi Sive,
I don't suppose there is any possibility of being able to add subtitles to your daily videos? The reason for asking is that I have a hearing disability, which is gradually getting worse and a few months ago, reached the stage where I now find the telephone very difficult to understand what is being said and videos and the TV are the same.
I have often struggled with working out what you are showing us in the daily narrative posts. For example, at the same time, a monthly chart can be indicating a falling market, whereas the 1-hour chart can be indicating a rising market. So when you mention, say, a retracement, I am sometimes unsure whether you mean a retracement up or down. Before my hearing reached its current level, I usually found your videos would allow me to understand your chart/narrative satisfactorily. But now I am unable to find them of any help - which is frustrating for me - but something I have to live with. So subtitles would be fantastic. Any possibility?
 
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