FOREX PRO Weekly May 02-06, 2011

[Sive Morten]

Thanks Sive

In this case, if we apply this chart’s similarity approach, the odds are for a breakdown move probability. Right?

Not quite.
Usually such price action suggests just appearing of strong move. But direction we have to somehow estimate from lower time frames.
Currently it looks like odds in favor of upward breakout

 

[ALF]

Not quite.
Usually such price action suggests just appearing of strong move. But direction we have to somehow estimate from lower time frames.
Currently it looks like odds in favor of upward breakout

Hi Sive

I think the market needs correction.

For the last 12 working days the speed is 63.3 pips/day. Impossible to mentain this one way motion to the up.

One can notice easily that for the first big part of this up trend, starting from 10th of January, the average speed is only 22 pips/day.

So, breakdown/correction is more likely to happen soon rather than later.

 

[Joshnix]

kiwi

Mr. Morten,

Could you take us through the kiwi analysis, as it should have it's second close below the 3x3 on the daily, as well as bouncing off of the MACDP. I will post a chart soon.

On the weekly the trend is still bullish, but nearest retracement target is sitting at monthly pivot point at 7820 and then support sits at 38.2% around 7745 area.

On the daily chart, this is where I get a little confused as to what constitutes DRPO because while we did not have one last week, as of today 5/4/11 we will have two consecutive closes below 3x3. I suppose this does not make a directional signal, but it would not cross the MACDP (red line), and there is no dollar strength. for me I would look at how the price acts around 38.2% retrace of current down move at 7962. If this is a strong bearish trend, price should bounce off of either the 38.2% or 50% fib retracement.

On the 4 hour chart, we have a bearish trend and the 3x3 is already containing the price action. I have shown the retracement from the focus point to the recent top.

Please provide your input to this, as I am still learning to trust my analysis, and you have way more experience.

 

[Icarus]

Hi Sive, In a 3-drive buy or a 3-drive sell, are all three drives the same length generally?

 

[Sive Morten]

AUD/USD Daily Update, Thu 05, 2011

Good morning,
our Butterfly on EUR/USD has worked perfectly and hit 1.27 target pips to pips.


But today I would like to turn to AUD, because it has excellent context for B&B "Buy" trade and also it will give you some clearer understanding of this pattern.

On daily chart we see excellent thrust up, market has closed below 3x3 (green line) and has hit Fib support + monthly pivot point, i.e. significant support area.
Just below the market 10602 - daily Oversold.
So placing the stop below Oversold level will be perfect, because market should not hit it ocasionally.

On 4 hour chart we see completing of AB-CD 1.618 target pattern right at daily Fib support, i.e. Agreement. Also here is bullish engulfing pattern is forming.
The target - 0.618 resistance from whole move down - 1.0836

On hourly chart we see that Butterfly "Buy" pattern has been accomplished very close to the same area and now is forming something that reminds 3-Drive Buy pattern. Trend turns bullish.

Still, the major problem with B&B trade is to estimate from which level it should start. Possibly it will start from this area.But here is a solid advantage also - we can place very tight stop. If you can't do it below daily oversold - then you can place it below the current low and enter on 0.618 retracement from current swing up on 60-min chart. If we will be wrong - then loss will be very small, and we will have another attempt to enter. Because risk/reward ratio in this trade significant.

 

[pragmatic]

exit

Hello Sive!
I entered long on AUDUSD on 0.618 retracement and placed stoploss below daily oversold. Seems like the price is going lower.
I think this is a good opportunity to teach us how to exit a bad trade. Can you give us some clues?
Thank you!

 

[Sive Morten]

Hello Sive!
I entered long on AUDUSD on 0.618 retracement and placed stoploss below daily oversold. Seems like the price is going lower.
I think this is a good opportunity to teach us how to exit a bad trade. Can you give us some clues?
Thank you!

Well, the major approach here is to try to exit during retracement back to your entry point, if your stop has not been hit yet.
Looks like currently is developing something like this.

 

[Sive Morten]

Mr. Morten,

Could you take us through the kiwi analysis, as it should have it's second close below the 3x3 on the daily, as well as bouncing off of the MACDP. I will post a chart soon.

On the weekly the trend is still bullish, but nearest retracement target is sitting at monthly pivot point at 7820 and then support sits at 38.2% around 7745 area.

On the daily chart, this is where I get a little confused as to what constitutes DRPO because while we did not have one last week, as of today 5/4/11 we will have two consecutive closes below 3x3. I suppose this does not make a directional signal, but it would not cross the MACDP (red line), and there is no dollar strength. for me I would look at how the price acts around 38.2% retrace of current down move at 7962. If this is a strong bearish trend, price should bounce off of either the 38.2% or 50% fib retracement.

On the 4 hour chart, we have a bearish trend and the 3x3 is already containing the price action. I have shown the retracement from the focus point to the recent top.

Please provide your input to this, as I am still learning to trust my analysis, and you have way more experience.

Hi Joshnix
On weekly time frame market has hit 0.618 Fib extension from ABC pattern, and move currently below monthly pivot. The nearest area of support is 0.382 Fib support from most recent swing up that coincides with monthly pivot support1. In futures quotes this is 0.7712-0.7717. You're right here. BTW, looks like the difference spot vs futures about 30 pips now.

On daily I agree that this is not DRPO - it looks more like potential B&B "Buy", but market should reach significant Support to trigger it. Second, we currently have third session in a row below 3x3. IF market will not bounce to the upside during nearest couple of sessions - this is not an ordinary B&B.

On hourly chart market has hit 1.618 Fib extension to the downside, but there is no any Fib support anywhere near. And upward thrust so smooth, that does not allow to find any significant node to build Fib retracements.
I think in such environment better to look for some clear upside reversal patterns on hourly chart - if you still want to trade B&B.

Hi Sive, In a 3-drive buy or a 3-drive sell, are all three drives the same length generally?

Hi Icarus,
Are you speaking about time or price? Usually, second drive is 1.27 extension of first one and third drive stands at 1.618 of first and 1.27 of second - they should be in tight range. The more harmonic drives in term of time - all the better.
Very often MACD shows divergence during 3-drive, but not always.

 

[ochills]

Hi Sive

Good day Sive,
pls I have few questions base on today AUD/usd
1 what is the perfect senero for measuring 3 drive sell/buy?
2 how can one determine significant resistance as in the case of BB trade
3 I look @ the higher time frame, monthly time frame I saw a formation of butterfly sell that has completed pls check pout this monthly time frame and let me here your view on this.
Finally I must say THANKS, you are doing a GREAT JOB
THANKS

 

[nicolebobbin]

Well, free fall like a stone for EUR after ECB meeting,