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FOREX PRO Weekly March 21-25, 2011

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Mar 19, 2011.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Monthly
    Trend is bullish, price action supports the trend. Market is neither overbought nor oversold on monthly time frame. So, there are no serious barriers for up move continuation.
    I still show you the range of this nasty down bar with black dash lines. Currently is a fourth consecutive month of increasing up move, so market almost erase this down bar. Price action during March is solid, but this bar still holds the price action during 4th consecutive month. From this perspective the high of this bar at 1.4276 is particular interesting for us, partially because there are a lot of stops just above it.
    Now take a look at monthly ABC pattern. The nearest target is 0.618 Fib expansion stands at 1.4354 – just above the highs at 1.4276. I suppose, you can imagine what will happen, when market will trigger stops that had been placed their – in most unwelcome place. Just above it – strong Fib resistance stands. This is major 5/8 resistance at 1.4416 from all time high. The coincidence of Target and Fib resistance creates Agreement. Also 1.4444 is 0.786 Fib resistance from the recent swing down. What all this stuff means for us?
    First, 1.4350-1.44 is a nearest monthly target. Second, the probability suggests that stops above 1.4276 will be triggered, if market will continue move up. Third – market can show W&R due to strong resistance just above the previous highs, or, at least, bounce to the downside during first touch of this area.
    Taking into account some fundamental thoughts about difficulties with supporting the same economy growth as for EU Core, as Periphery, I suppose, that W&R has more probability to happen, rather then further EUR up move.
    [​IMG]

    Weekly
    Weekly trend is also bullish. Let’s start from the targets first. Look at initial ABC pattern – 1.272 expansion target stands at 1.4443. Meantime the most recent AB-CD pattern has a 100% target at 1.4410 – also at Agreement with monthly Fib resistance. So, at 1.4350-1.4440 are stand – three different ABC targets (1.4354; 1.4443; 1.4410), monthly major 5/8 Fib resistance (1.4416) and 0.786 Fib resistance 1.4444. Hence, I definitely will not want to buy in 1.4350-1.4440 area and will close any Long positions if I’ll have any. So, that’s the target. Also pay attention to the way how market has passed our target t 1.4033 - didn’t even bounce.
    At the same time market is not overbought currently and another strong resistance much higher. So, if you’re long-term trader and use weekly and monthly context for trading – then you have definitely bullish one. All fact, that we’ve discovered here tells, that if you want to enter the market – you should buy from nearest Fib support level 1.3883. Stop should be placed at least below 1.3672-1.3708 Confluence support, but it is safer to place stop below C point at 1.3424, although I’m not sure will it be correct from risk/reward ratio.
    [​IMG]

    Daily
    Ok, let’s shift to most interesting stuff for us – trading plan for next week. Trend is bullish, and price action, no doubt, confirms it. As you can see, on Friday market has hit our target at 1.4106. The way how market has done it show a solid strength, market just has passed through it and closed almost on top. Pay attention that 100% Fib extension target stands at 1.4336 – very close to our monthly/weekly target. Intermediate target is weekly pivot resistance 1 (red dash line on the chart) at 1.4257, that coincides with daily overbought level.

    So, the only way to trade current situation is to buy on pullback. And here market gives us an excellent opportunity. First, market has hit just 0.618 target, so we do not want to see deep retracement. Furthermore, this “deep” should not bee deeper than 1.40 area, because 1.4040 area includes Fib support and weekly pivot point, and 1.4014 – previous highs. Keep in mind, that if market will move and hold below weekly pivot – don’t be Long. Personally, I will not buy in this case - this is a caution sign. Besides, moving below 1.40 could shift daily trend bearish again, so this is mostly unwelcome for bulls. Just below the market you can see daily confluence support 1.3899-1.3916 and weekly pivot support 1. This is strong support area.
    [​IMG]

    4-hour
    This time frame gives us more details, that extremely useful. As we’ve decided from previous time frames – we want to buy. And we want to do this from the levels that will not bee deeper that 1.40 – if it will be weekly pivot at 1.4047 much better.
    4-hour trend is bullish, and it will remain bullish till our preferable level for enter. But to enter we need some retracement to this level, and I suspect that it can start from 1.4190 area or from 1.4260-1.4270. First area includes the 1.618 target of Butterfly “Sell” and 1.272 extension from AB-CD pattern. Second area includes daily overbought (for Monday), weekly pivot resistance 1 and 1.618 extension from the same AB-CD pattern.
    Also I suppose that it is safer to enter not during move down, but when market will turn up and move above weekly pivot. We will be able to use any shallow retracement after that for this purpose.
    [​IMG]

    Conclusion:
    Position traders:
    Buy 1.3880-1.3900; S/L below 1.3670, T/P 1.4350

    Intraday traders:
    1. Wait for pullback to weekly pivot around 1.4047
    2. We do not want to see two things:
    - Market falls like a stone below 1.4014 (previous daily highs);
    - Market breaks weekly pivot and hold below it, or even continue its move down

    3. If point “2” will not happen, then wait when market will end to flirt with pivot and turn to upside again;
    4. Drop your time frame and enter long on shallow retracement with hourly chart.
    5. Nearest target 1.4250, extended target 1.4350-1.44




    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. Maluco

    Maluco Private

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    Thank you Sive for your analysis!

    I am curious to know if this new attack on Lybia by the coalition forces today (Saturday) is going to change the overall view on the EUR/USD. This is a whole different scenario for the area, and I wonder if now we'll see a sell off instead.
     
  3. RahmanSL

    RahmanSL Major

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    You think Libya will come out winner from the confrontation?? : )

    This is the EUR/USD and both economies have more bad news than good.
    At this point in time, I agree with Sive analysis which makes perfect logic sense to me.
    European Central Bank President Mr Trichet suggestion that the ECB still intents to raise the interest rates next month, despite current factors affecting the markets, most certainly will increase speculation by currency traders to support the EUR/USD on a bullish trend.

    BUT, it will be much wiser to observed true market sentiment/taste the water on Monday before going for a swim;yah!

    I'll go on a Yen downside though 'cause high Yen will only hurt already badly bruised Japan's economy.
     
  4. Jyotiprakash Pal

    Jyotiprakash Pal Sergeant

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    :confused: sorry for posting here sir ..but some key thing making me nervous ..this trendline rejecting the Bears back too back .. after breaking this trendline break by bullish candle (**marked Tick) and also Harami! ... now i am very very confused did i find ABCD correctly!!! :( but 1.5960/1.5840 looks matter of time .. if i draw it correctly ..
    :nerd:
     

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  5. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Yes, this is it. If you except the most recent candle, then you'll see, that at D point market has formed bearish engulfing.
    Well, possibly this AB-CD will fail, who knows, I just want to show you, what means "harmonic" AB-CD.
    Speaking about Harami - in general this is neither purely reversal, nor purely continuation pattern - all will depend, where market will close later.
    And I prefer to see longer first candle in Harami. Anyway, personally, I would pay more attention to bearish engulfing. If it will fail - this will tell us something definite
     
  6. kayman36

    kayman36 Recruit

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    Sive, what would I do without your analysis? Since I work with DiNapoli you are my biggest help!

    Stephan
     
  7. Jyotiprakash Pal

    Jyotiprakash Pal Sergeant

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    wow!!! Jeez .. i neva think like that !!!! thats great learning from you sir .. learning very new side of market ...

    Here is my Plan sir .. i am tracking this GU 1 Hour AB=CD which agreed with daily resitance 1) .. ... if this thing happened(If not then will trigger with my strategy).. i will enter and stoploss will be just above the weekly Bear Engulfing ..( 1.6333 weekly resistance 1 .. which gives me more confidence) and target! My God thats amazing risk reward ratio! Position Traders will love it ! Thanks sir ... for showing me this ... and as usual EUro analysis is awesome
     

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  8. auna

    auna Corporal

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    Thanks Mr Morten. Libyan strike is a two way sword . Is the country safe now that we got a three way split(west Rebels and Khadaffi forces) or does that undermine the oil industry because the attacks would want to hit refineries at some point to cripple the cash flow. So no doubt USD might gain on monday since people will think horrah for USA but then during the week as the war sets off to be another Iraq style drama, i expect Europeans and American to become frustrated and then uncertainties will push oil upwards and stave interest from the USD and may be Eur.

    My money is on the USD making a comeback at least till 1.40 As Mr Morten says and then we shall have to wait to see afterwards....is Libya going to be Iraq or else. Then there is the Japanese situation which might push straight in USD's favor as well.
     
  9. Paul McConnell

    Paul McConnell Private, 1st Class

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    Sive, thank you for the analysis.

    And thanks for the heads up on cable..
    All the best,
    Paul
     
  10. Icarus

    Icarus Private, 1st Class

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    Hi Sive, Do you think the EURUSD be forming into an eventual 3-drive-buy pattern on the monthly time frame?
     

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    #10 Icarus, Mar 20, 2011
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