1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.

FOREX PRO Weekly May 21-25, 2012

Discussion in 'Sive Morten- Currencies, Gold, Bitcoin Daily Video' started by Sive Morten, May 19, 2012.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

    Joined:
    Aug 28, 2009
    Messages:
    12,528
    Likes Received:
    18,090
    Monthly
    Current situation in EU looks like dual fork for EUR. I’m talking about Greece mostly. Problems of such countries as Italy and Spain demands additional talk and this is, in fact Pandora box, but situation with Greece, probably will give support to USD anyway. Since currently US economy shows improvement – this fact already puts it in advantage to EU, and even if we just compare recent data from US with EU USD looks preferable. Taking into consideration Greece situation makes me thing about couple of issues. If Greece will out from EU it will save some money for Europe, but other side of this event will be difficult to calculate. It will become a dangerous precedent, and after that nobody will have assurance that other countries can’t follow Greece. As you understand, EUR is a currency of EU, not Germany, not France but all Euro Union. If existence of EU is under question, how we can be sure with its currency? This will be a political turmoil and such events are always support dollar. Second, by Greece elimination some important industrial and merchant ways and systems will be broken and it is almost impossible to predict how it will impact on Europe’s economy.
    If Greece will hold with EU and other countries will not take any attempts to cut their spending it is leading and will lead to even greater social instability. South countries, such as Spain, Portugal, Greece, Italy do not want to cut spending, since they inhabit to live wide and this is quite understandable, why people start to scream, although now they have been asked just to pay for this wide-living. From the other side Germany and France pull from the swamp all the others and, in fact, citizens of these countries pay for spending of others. They have to contract personal needs without any necessity, since their taxes spend to support other countries while those who have to do that – do not want it. Such situation leads to social tensions and instability. Surplus here different elections in France and Germany and situation becomes indeed complex. These thoughts lead me to conclusion that current USD appreciation has significant fundamental foundation that gives us confidence and possibility to join it. Also do not forget about possibility of rate hike in US. It is hardly happen till 2013, but still US have more chances to do it, rather than EU. This also could support USD in long-term.
    So, on monthly chart we see perfect picture of reaching support and respect of it. Market has hit Agreement at 1.29-1.30 area and shown retracement to K-resistance area 1.35-1.37. Now it is pulling back again and continue move down. Recent price action has eliminated possibility of deeper AB=CD retracement, so our major task now is to join with downward trend. As you can see, next monthly target is 1.16-1.1650.

    [​IMG]

    Weekly
    Finally our general confusion has been resolved by price action – upward AB=CD move will not happen. This is the value of patience – sooner or later you will get the answers. So, we have solid bearish context – trend is bearish, price action shows bear pressure – market rapidly negates upward attempts inside of triangle and once we’ve said that market is “heavy”. That leads to downward breakout and acceleration. Such price action rises solid doubt with potential “222” Buy pattern that currently still has chances to happen, at least theoretically.
    Currently we see that market slows down the pace and that is our chance to enter short. Nearest target on weekly time frame is 1.25 level – 0.618 Fib extension target of most recent AB=CD. 100 pips lower stands another 100% extension target from major AB=CD pattern. Take a look that both levels stand below previous low. Stops will be triggered and market could accelerate right 1.24. I will not be surprised if after hitting of this level market will turn to some retracement due weekly oversold. This will be another chance to add more to position or initiate another one.
    [​IMG]
    Daily
    Trend is strongly bearish here. Market has hit support area – 1.618 extension of recent AB=CD pattern, previous low and daily oversold. So, here is our chance to catch retracement and join this downward trend. I hope that we will be able do that by B&B “Sell” pattern, since we have perfect context for that – thrust is really outstanding. Now, where is to enter?
    First level is 1.2803 that also includes WPP 1.2775. Although this level is solid itself, but it is not quite in a row with B&B that we are expecting. B&B needs penetration of 3x3 DMA (green line) and reaching of significant resistance within 1-3 periods after penetration, but market stands at this level already. Hence, we have just single level to watch for potential enter – K-resistance 1.2886-1.2903 that is also a WPR1=1.2907. We know that when market stands in a solid bear trend and turns to retracement – WPR1 usually will hold it. Basing of that logic 1.29 area seems perfect for short entry. Still you can try to enter with small lot (15-20% of total position) even around 1.2804 level – who knows what will happen?
    This example also has huge educational value. Many people ask why we need retracement to sell, may be it is better to enter right now, to jump in running market. What if retracement will not happen – we will skip all move down. But now take a look – if market will show this B&B you will be able to enter around 1.29 level – that is the same level as it was in the beginning of the week. Those, who has jumped in running market will hurt by counter move and will have to hold drawdown on position.

    [​IMG]
    4-hour
    Trend is bullish here. We see bullish divergence right from support area. More significant information is on hourly chart…
    [​IMG]

    Hourly
    Well, here trend is bearish, that is quite logical since we expect retracement on daily time frame. Market is confirming our expectations by Butterfly “Buy” pattern, that already has reached 1.27 target around hourly K-resistance. Probably reversal pattern also could be treated as 3-Drive “Buy”, but this is not so important.
    Also, take a look that recent swing up is greater than previous swing low. This is the sign of short-term upward reversal. Taking into consideration solid upward move here, reaching of 1.29 looks probable.
    There is no need to say that if you’re scalper you may trade on long side of the market as well, since here could appear bullish B&B.
    [​IMG]



    Conclusion:
    Long-term traders have to think about short entry around 1.29. Long-term picture looks so, that downward move is continuing.

    On short-term perspective most probable pattern that could be used for short entry is daily B&B “Sell” around 1.29 area.



    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. Sive Morten

    Sive Morten Special Consultant to the FPA

    Joined:
    Aug 28, 2009
    Messages:
    12,528
    Likes Received:
    18,090
    EUR/USD Daily Update, Tue 22, May 2012

    Good morning,

    On daily chart retracement is in progress. Here I see two things that could complicate overall situation. First is a possibility of reestablishing downtrend right from 1.2803 resistance level. We have foreseen this and recommended apply gradual enter with retracement.
    Second is possibility of DRPO "Buy". So, if you have entered short - take care of your position - if market will start downward action - move your stop to breakeven.

    On 4-hour TF 1.29 level looks absolutely perfect - K-resistance and Agreement + WPR1. Also, take a look that small gap stands in the same area, so market could make attempt to close it. This is the level where we have to open major part of our short position.

    Hourly chart shows nothing important. Here is bearish wedge and divergence that indirect hints on potential downward reversal and continuation, but this wedge could be broken to upside as well.
    As we can see, retracements are very complex right now on most markets. It's very difficult to predict its targets, so gradual enter (scaling in) is a good oportunity to possess, if you have some high-odds resistance level on your side.
     

    Attached Files:

    #2 Sive Morten, May 19, 2012
    Last edited: May 22, 2012
  3. Sive Morten

    Sive Morten Special Consultant to the FPA

    Joined:
    Aug 28, 2009
    Messages:
    12,528
    Likes Received:
    18,090
    EUR/USD Daily Update, Wed 23, May 2012

    Good morning,
    although market is very kind currently for different patterns and possibilities for trading, current situation is complicated by existance of weekly targets around 1.2530. What will it be? W&R and deeper retracement, or market will pass it easily?
    From that perspective current price action is not so simple...

    Still possibility for DRPO "Buy" still exist. Market stands close to previous bottom. If there will be new low at second bottom of DRPO - much better. Also you can see, why application of gradual entry is useful - market has hit only nearest Fib resistance and shown solid plunge down. B&B has worked. Although as a rule B&B and DRPO can't exist together, but current price action is unique mostly due the fact that nearest Fib resistance is a hidden one and based on gap.

    By looking at 4-hour chart we see that market has hit WPS1 and 4-hour oversold. Current pause could be as reaction on this support as possible reversal pattern - Double Bottom, that leads to DRPO "Buy" as well.
    Our task here is to monitor price action very closely. But here is another thin moment. If market will show some pullback as respect of support - we might get Butterfly Buy with 1.27 extension slightly lower 1.26 - this could become triggering pattern for daily DRPO, or 1.618 extension stands precisely at 1.2530 - weekly 0.618 extension target. Interesting, right?

    Hourly chart has perfect context for DRPO "Buy". If market confirm it - it will lead to retracement and, hence either to Double bottom or Butterfly.
    If market will form DRPO Failure, then, probably we will not see DRPO on daily and market will continue right to weekly target around 1.25 area.
    Sounds sophisticated, but that market is.
     

    Attached Files:

    #3 Sive Morten, May 19, 2012
    Last edited: May 23, 2012
  4. Sive Morten

    Sive Morten Special Consultant to the FPA

    Joined:
    Aug 28, 2009
    Messages:
    12,528
    Likes Received:
    18,090
    EUR/USD Daily Update, Thu 24, May 2012

    Good morning,
    Market is approaching to our short-term target - 1.2480-1.2530 area. It's a bit wide, since it is weekly one. So, if you have shorts - you may hold it. Currently is a bit difficult to say - will market show some pullback as respect of this area or not, but I suspect that some retracement should come. Tomorrow will be Friday, week was fast and furious, market has renewed lows and some traders will probably take some profit. Besides, this is weekly Fib target, so my opinion that retracement has more chances to happen than not to happen.
    Here is choice is up to you - will you take profit or tight stops or do nothing.

    On daily time frame price action finally has eliminated possibility for DRPO and price has hit oversold.

    on 4-hour chart we see that yesterday's pause in trend was due oversold as well and WPS1. Today we see the same - market at oversold. Since major targets stand slightly below current action we can count on similar price action.

    Hourly chart indirectly confirms that. Now Butterfly "Buy" is forming with targets precisely around 1.25-1.2530 levels.
    Also take a look what a price action was on yesterday's DRPO. DRPO has been confirmed by Butterfly "Buy" (BTW, Butterflies very often become a part of DRPO) but later there was DRPO "Failure" and as we've suggested this has led to downward continuation.

    So, that's being said - if you have shorts - you may hold it till 1.2480-1.2530. What to do after that - this is up to you, but retracement is possible.
     

    Attached Files:

    #4 Sive Morten, May 19, 2012
    Last edited: May 24, 2012
  5. Sive Morten

    Sive Morten Special Consultant to the FPA

    Joined:
    Aug 28, 2009
    Messages:
    12,528
    Likes Received:
    18,090
    EUR/USD Daily Update, Fri 25, May 2012

    Good morning,
    today is Friday and current week has given us a lot of possibilities to trade. We even meet the target that have specified right in the beggining of it.
    By this fact, I can't exclude some retracement. Move was solid and some traders probably would like to take profit before weekend, especially because market has hit weekly target.

    Still, today some downward move for 30-40 pips could happen. On 4-hour chart we see potential for DRPO LAL "Buy" and simulteniously for Stop grabber, since price stands at the eve to shift trend to bullish. They are contradictive patterns - keep an eye on it within nearest 2-3 hours.
    My opinion is that downward continuation is more probable. This also indirectly confirms hourly chart. Here we see that market has hit 0.618 extension and already stands a bit lower. 100% extension stands precisely at 1.2480. Also we have possibility to get Butterfly Buy" here with the same reversal point.
    Hourly chart also shows bearish dynamic pressure, since trend holds bullish while price action is not. This looks like divergence that is not worthy to be relied on it.
    Besides, 1.25 is interesting level to clear out, especially on Friday. When it stands just 15-20 pips lower, market makers could make some action.

    One thing that points on upward retracement right from current levels is that market stands at 1.618 extension of previous retracement. This ratio is very typical for H&S patterns. If retracement will come it could be shaped with this pattern.
    But personally I still think that reaching of 1.2480 is more probable.
     

    Attached Files:

    #5 Sive Morten, May 19, 2012
    Last edited: May 25, 2012
  6. cercamon

    cercamon Private, 1st Class

    Joined:
    Jan 6, 2011
    Messages:
    40
    Likes Received:
    14
    Hello Sive, much appreciated your view on the week ahead.

    Price action just crossed below weekly trendline (Jun'10 - Jan '12).
    How strong do you see this trendline to hold price, and prevent it hitting 1.29 Sell Point?
     
  7. FreddyFX

    FreddyFX Sergeant

    Joined:
    Oct 3, 2007
    Messages:
    353
    Likes Received:
    147
    Always impressed on how you make a complicated market looking SOOO easy.
     
  8. rashidin5178

    rashidin5178 Sergeant

    Joined:
    Oct 10, 2007
    Messages:
    244
    Likes Received:
    1
    Hi Sive,
    Thanks a lot Sir for your great analysis, as usual.
    Absolutely I do agree with your analysis. From my understanding reading your this week analysis, I can say that market tend to reach its monthly target around 1.16 area and shouldn't show deep retracement. However just one thing bother me, gap around 1.3080 area. Is it normal for market to leave the gap open for a long period? From market mechanics point of view considering current strong daily bearish trend, any possibilities that market will penetrate .618 retracement and then fill the gap without invalidate daily B&B Sell?
    Have a good weekend and good rest, Sir.
    Thanks and Best Regards,
    Rashidin.
     
    #8 rashidin5178, May 19, 2012
    Last edited: May 19, 2012
  9. JimmyNg

    JimmyNg Recruit

    Joined:
    May 14, 2012
    Messages:
    7
    Likes Received:
    0
    Hi Master Siva, with my limited understanding of Forex. I need some advise from you : D

    Currently I have one EurUsd sell at 1.2658. From the Hourly chart it was a bullish, would you agree with me if I open a buy and take profit at 1.29 and sell again at 1.29 and take profit at 1.26 since the daily & monthly chart is a bearish trend.

    Thanks and Best Regards,
    Jimmy
     
  10. Sive Morten

    Sive Morten Special Consultant to the FPA

    Joined:
    Aug 28, 2009
    Messages:
    12,528
    Likes Received:
    18,090
    Hi Rashidin,
    well on some markets - stocks, commodities, gaps stand open for years. So, I do not see any problem with existing of small gap on Forex.
    Currently I do not see any hints on such possible deep move up, as you've said. Still totally we can't exclude it, everything is possible, but since we have no signs of it, I can't say anything definite, since I have no foundation to do that.
    About B&B... Yes, this is possible - if market will show move to 0.618 for 1-3 periods. In this case B&B will be valid, but here we will have another complication - some worry about to trade it or not, if market will show such drastical reversal.

    Hi Jimmy,
    It all depends on your context - why have you entered long at 1.2650 and why you indend to enter short at 1.29. IF you trade on daily time frame you have no reason to enter long, while if you trade on 15-min chart - you have no reason to enter short. This is all about the context.
    I suggest you to pass through our Forex Military School, particular read chapters, dedicated to trading plan.
     

Share This Page