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FOREX PRO Weekly March 28- April 01, 2011

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Mar 27, 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. In current research I exclude some targets, that stand above 1.4350. Most of them stand around monthly 5/8 Fib resistance, but the nearest one is 1.4350.
    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 I want to attract your attention to ABC pattern I’ve pointed on weekly timeframe. Look, how harmonic AB and CD legs are. Although 100 Fib expansion stands too far currently (above 1.52), the harmony in AB and CD is important moment. Second important moment – I suppose that market stands very close to 0.618 target and previous highs from weekly time frame view. The closer we to extreme, the more probable that market makers will force the highs to get stop orders.

    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 1.3921. Stop should be placed at least below 1.3710-1.3732 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. Also you can see that trend will remain bullish precisely till that area.
    I’m a bit trembled to promise such things as follows, but usually, when “BC” retracement stands not lower than 0.618 of AB move (like we have here), then, usually market reaches 100% extension target.
    [​IMG]

    Daily
    Daily price action was not able to maintain previous pace of up move. On Friday market has returned back to weekly pivot of previous week and closest Fib support at 1.4040. The most important is that trend has shifted bearish. Colored dash lines stand for pivot points – blue one for weekly pivot, lime – support 1 and red resistance 1. Due to the tight price behavior during previous week, these points stand very close to each other.
    In the beginning, let’s tight together our weekly view and daily chart. On weekly part of research we said, that we can enter long from 1.3921 area. On daily we see, that this is daily Confluence support and weekly pivot support 1 at 1.3981. But how we can be sure, that market will reach this area during next week? What if market will turn upward and continue move up?

    Potential price action around pivot point (1.4105) will help to solve this problem. Here is what we should watch for:
    As we already know, market trades weekly pivots in 70% of cases during the week. So, retracement up to pivot in the beginning of the week is very probable.
    1. If market will move above it, hold there and particularly will shift trend bullish again – this will be some kind of MACDP Failure pattern. In this case, up move will probably continue, and market hardly will show move to 1.3920;
    2. If market will show retracement up, but will to be able to hold above it – then possibly we will see deeper retracement and the nearest target for it – daily K-area at 1.3920.
    Here is also an important warning for intraday traders. Since daily trend is bearish – you have no context to enter long. Your way to trade – is to downside.
    [​IMG]

    4-hour
    Here we can see that trend is bearish. Market is forming clear AB-CD pattern. Price totally disrespected 0.618 target, and two strong bars down near it tells that very probable that market will hit at least 100% target. Also this fact is confirmed by more fast CD leg than AB.
    Meantime, market is oversold on 4-hour time frame, so, particularly this fact could initiate retracement up to weekly pivot point that we expect.
    Now about the targets… We see two potential levels, where retracement could over – 1.3980-1.4010 – Agreement with Fib support and weekly pivot support 1. And second area is Agreement with daily K-area 1.3888-1.3920. Currently it’s difficult to say how it will turn, but if market will accelerate to 100% extension target, then deeper retracement is more probable.
    [​IMG]

    1-Hour
    And here is some material for intraday traders. As we’ve said – your context for trading is bearish. On 60-min chart trend is bearish and will remain bearish till 1.41 area. Market has formed strong resistance at 1.41-1.4105 – hourly Confluence resistance and weekly pivot point. So, we can use this area to enter short with stop order above 1.4140.
    And last important notice – the recent low is higher than the previous one (blue circle on the chart) at 1.4035. It means, that butterfly Sell pattern, that we’ve discussed on Friday could work, at least theoretically, if market will turn to upside right now.
    [​IMG]

    Conclusion:
    Position traders:
    Buy 1.3920; S/L below 1.3700, T/P 1.4350

    Intraday traders:
    1. Wait for pullback to weekly pivot around 1.4105;
    2. Be sure that market does not explode to upside – move up should be gradual;
    3. You may try to sell from there with tight stop – possibly above 1.4145 will be enough;
    4. Target – 1.4010.
    5. If market will hold above pivot point – don’t be short.




    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. Jyotiprakash Pal

    Jyotiprakash Pal Sergeant

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    ECB will start raising sales as soon as April ...Euro Jump is matter of time ...:) Thanks sir .. i love this harmonics ... :D :embarrassed:
     
  3. Mohankumar

    Mohankumar Recruit

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    great work....

    Hi.....sive
    great analysis....this time u used candlesticks rather than bar charts....it's good...continue.....all the best...
     
  4. Ahmed El-Shazly

    Ahmed El-Shazly Private, 1st Class

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    Hi Sive-
    Thanks as usual for this great analysis.

    I want to take your opinion about the chart attached in EUR/USD. It is the 5-0 patten. Don't you think that after the rejection of Thursday candle and the candle on the weekly (bearish dark cloud), that the EUR/USD might be targeting at least 1.3750 then 1.357 area at least (they also coincide with two weekly support pivots)?
     

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  5. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi Ahmed,
    well, I'm not a big follower of EW methodology, but still - anything could happen. May be it will turn that you will be right.
    We can't exclude that, but my approach to market is "moving gradually". Usually in analysis I point only those levels, that I could justify somehow and that I can see definitely ahead of time.
    I can't speak definitely about 1.3570, because I do not have any tools that clearly point on it. In current time this is more "When and If" or slicing and dicing discusion, than detailed trading plan.
    I usually wait for market behavior around some levels that I've already estimated. If market continues move in this direction - I also shift to lower targets - but they should be determined with high precision.
     
  6. Ahmed El-Shazly

    Ahmed El-Shazly Private, 1st Class

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    Hi Sive-
    I am also not an EW fan. Just want to point out that this is a harmonic setup. My issue is to define the holding period to achieve such a target.
    For example, I am attaching a gartly pattern in the daily timeframe for EUR/GBP. The 4 hour trend turned negative, however, the target is far away and I dont know if it is realistic. What do you think?
     

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  7. Sector

    Sector Private

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    Hello Sive, wonderful analysis..........., great to see you using candlesticks. Thanks
     
  8. Sive Morten

    Sive Morten Special Consultant to the FPA

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    You're right about butterfly. Its target seems too far. Besides, looking at recent AB-CD, market already has shown some extension of AB. CD leg is slower, so, currently it looks like market exhausts gradually.
    But, on weekly GBP looks very bearish. So, may be Butterfly will reach at least 1.27...
     
  9. Joshnix

    Joshnix Corporal

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    Eur/aud

    Sive I wanted to get your opinion on the weekly portion of my EUR/AUD chart. I have never seen a railroad track other than in mr. dinapoli's book, but it looks as though there is one setup on the weekly timeframe of this pair. Your thoughts?
     

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  10. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi, Joshnix,
    the shape and length is OK, but RRT demands no price action to the left at the same price level for a long time.
    On your chart the previous high is not too far. So, I better treat it as W&R of the high, that in the beginning of your chart (to the left), if high of RRT is higher than of that bar. On picture they look very close and I can't estimate precisely.
    If "RRT" is higher - then this is W&R of those high.

    If not - then, possibly the could work. But, sence we are talking about what perfect RRT looks like - this RRT is not perfect.
     

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