Sive Morten
Special Consultant to the FPA
- Messages
- 18,664
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.
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.
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.
4-hour
Trend is bullish here. We see bullish divergence right from support area. More significant information is on hourly chart…
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.
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.
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.
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.
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.
4-hour
Trend is bullish here. We see bullish divergence right from support area. More significant information is on hourly chart…
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.
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.