Sive Morten
Special Consultant to the FPA
- Messages
- 18,644
Monthly
Currently there are a lot of talks and rumors stand around Greece. Will it remain with EU or it will out? Some traders talk that it could support EUR. I still think that both ways will not stop EUR depreciation, because this event will not be able improve overall problems with huge budget burden. Greece is just a top of the iceberg, but underwater problems are huge and much greater than the top - Spain and Italy just to call any. So, what will happen if Greece will out? Although this possibly will save some money for EU, this will have another solid and huge impact – precedent of EU Zone destruction. This precedent will tell – EU is liquid substance – countries could “in” and “out”. So, in such circumstances how to believe in EUR? What is Union currency in this case? Since EUR is a second World Reserve currency, think what collapse could happen, would you be ready to trust any national currency, if country itself could be freely separated and fractioned?
Second moment is breaking of union economy with Greece and breaking of union trading space. But we’ve talked about it. So, we come to conclusion that for EUR it will be much better if Greece will stay. Fast printing of EUR could lead to it’s depreciation but it will safe the core. That’s what most important. Hence, if Greece will stay it could lead to some EUR support and upward move on EUR/USD. But will it be trend change and reverse? Hardly. Appreciation will be equal to eliminating of Greece’s possible out risks. So, it probably will be just a retracement. Indeed, is it possible that just Greece remaining within EU will justify and trigger EUR growth against dollar? This is impossible. That’s why in long-term perspective we still count on dollar appreciation.
Monthly time frame shows continuation of downward trend that is rather strong. Market shows solid downward thrusting candles and small retracement. After hitting 0.618 target market has shown just 0.382 retracement. Now we see fast continuation. I’ve redrawn resistance levels, since market shows new low. As you remember, we spoke much about weekly target around 1.2480-1.2530 area and possible retracement. Monthly chart also has reached although minor but still 0.786 support. Long-term target still at 1.16-1.1680
Weekly
So, market has reached our target that we’ve specified on previous week – 0.618 Fib extension of most recent AB=CD move. That is also some kind of Agreement with monthly 0.786 Fib support. Logically, some respect of this area should follow, at least shallow one. The fact that market moves below previous low and holds there tells that probably this is true breakout. Honestly speaking, taking into account EU problems and US improvement, makes me feel comfortable with downward move on EUR/USD. This is such kind of trend that supported by clear fundamentals that are perfect for long-term traders. Especially if we will take into consideration possible rate hike in US in 2014.
Still on weekly time frame we can’t understand is there any sign of possible retracement or not. Let’s take a look at daily time frame.
Daily
On daily time frame we also see that market has hit daily oversold level by reversed hammer pattern. There are, in fact, no other signs or hints on potential retracement. We know that when market retraces during solid bear trend it usually retraces to weekly pivot resistance 1. For coming week this level stands at 1.2728. That is also 1.2700-1.2713 K-resistance level, and, take a look – trend will hold bearish only till that area. So, if we talk about perfect level as retracement final point, this level is very attractive. If retracement will stop there, this will be nice, since market also will remain below previous swing low. But again, that is just assumption of possible scenario. Since retracement has not started yet - it’s difficult to point any target of it. So we have to wait and sit on our hands and do not try to anticipate it.
4-hour
Trend turns bullish, market has reached 1.618 extension of previous retracement up. Also there is small stop grabber. The only one thing that I see here is slowdown of downward move – no significant patterns. As we’ve discussed in video, theoretically reverse H&S pattern could happen, since 1.618 ratio is very typical for that pattern and now we stand right at the bottom of the possible head. Still, as I’ve said higher, it’s better to wait for some market response and get some signs of retracement before counting on it.
Hourly
Trend turns bearish, market has reached first extension of our Friday’s Butterfly “Buy”. Theoretically it still could proceed to 1.618 around 1.2450. From another point of view, market has reached already targets and levels of higher time frames so there are not many reasons to proceed lower – only if there will not be any retracement at all.
The safer way is to wait thrusting move up as retracement will start and join it at nearest deep. Aggressive way to enter is trade current butterfly. Retracement (if any) probably will start by this pattern, trading it will give you better entry point and may be tighter stop. Major risk of this tactic is some sort of catching of falling knife, because we have solid bearish trend. How you will act – this choice is up to you.
Conclusion:
Long-term traders should start to search an opportunity to join bearish trend, since monthly chart shows that it continues (at least now it looks so).
In short term perspective situation a bit blur. In fact in current research we could make only assumption why retracement could happen and what level it could reach. But since we have no clear signs yet, but have strong bearish trend, we can’t act in a way like retracement has started again.
You may stick with intraday reversal pattern with hope that retracement could start by it, but with overall strong bearish trend this will be not safe game to play.
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.
Currently there are a lot of talks and rumors stand around Greece. Will it remain with EU or it will out? Some traders talk that it could support EUR. I still think that both ways will not stop EUR depreciation, because this event will not be able improve overall problems with huge budget burden. Greece is just a top of the iceberg, but underwater problems are huge and much greater than the top - Spain and Italy just to call any. So, what will happen if Greece will out? Although this possibly will save some money for EU, this will have another solid and huge impact – precedent of EU Zone destruction. This precedent will tell – EU is liquid substance – countries could “in” and “out”. So, in such circumstances how to believe in EUR? What is Union currency in this case? Since EUR is a second World Reserve currency, think what collapse could happen, would you be ready to trust any national currency, if country itself could be freely separated and fractioned?
Second moment is breaking of union economy with Greece and breaking of union trading space. But we’ve talked about it. So, we come to conclusion that for EUR it will be much better if Greece will stay. Fast printing of EUR could lead to it’s depreciation but it will safe the core. That’s what most important. Hence, if Greece will stay it could lead to some EUR support and upward move on EUR/USD. But will it be trend change and reverse? Hardly. Appreciation will be equal to eliminating of Greece’s possible out risks. So, it probably will be just a retracement. Indeed, is it possible that just Greece remaining within EU will justify and trigger EUR growth against dollar? This is impossible. That’s why in long-term perspective we still count on dollar appreciation.
Monthly time frame shows continuation of downward trend that is rather strong. Market shows solid downward thrusting candles and small retracement. After hitting 0.618 target market has shown just 0.382 retracement. Now we see fast continuation. I’ve redrawn resistance levels, since market shows new low. As you remember, we spoke much about weekly target around 1.2480-1.2530 area and possible retracement. Monthly chart also has reached although minor but still 0.786 support. Long-term target still at 1.16-1.1680
Weekly
So, market has reached our target that we’ve specified on previous week – 0.618 Fib extension of most recent AB=CD move. That is also some kind of Agreement with monthly 0.786 Fib support. Logically, some respect of this area should follow, at least shallow one. The fact that market moves below previous low and holds there tells that probably this is true breakout. Honestly speaking, taking into account EU problems and US improvement, makes me feel comfortable with downward move on EUR/USD. This is such kind of trend that supported by clear fundamentals that are perfect for long-term traders. Especially if we will take into consideration possible rate hike in US in 2014.
Still on weekly time frame we can’t understand is there any sign of possible retracement or not. Let’s take a look at daily time frame.
Daily
On daily time frame we also see that market has hit daily oversold level by reversed hammer pattern. There are, in fact, no other signs or hints on potential retracement. We know that when market retraces during solid bear trend it usually retraces to weekly pivot resistance 1. For coming week this level stands at 1.2728. That is also 1.2700-1.2713 K-resistance level, and, take a look – trend will hold bearish only till that area. So, if we talk about perfect level as retracement final point, this level is very attractive. If retracement will stop there, this will be nice, since market also will remain below previous swing low. But again, that is just assumption of possible scenario. Since retracement has not started yet - it’s difficult to point any target of it. So we have to wait and sit on our hands and do not try to anticipate it.
4-hour
Trend turns bullish, market has reached 1.618 extension of previous retracement up. Also there is small stop grabber. The only one thing that I see here is slowdown of downward move – no significant patterns. As we’ve discussed in video, theoretically reverse H&S pattern could happen, since 1.618 ratio is very typical for that pattern and now we stand right at the bottom of the possible head. Still, as I’ve said higher, it’s better to wait for some market response and get some signs of retracement before counting on it.
Hourly
Trend turns bearish, market has reached first extension of our Friday’s Butterfly “Buy”. Theoretically it still could proceed to 1.618 around 1.2450. From another point of view, market has reached already targets and levels of higher time frames so there are not many reasons to proceed lower – only if there will not be any retracement at all.
The safer way is to wait thrusting move up as retracement will start and join it at nearest deep. Aggressive way to enter is trade current butterfly. Retracement (if any) probably will start by this pattern, trading it will give you better entry point and may be tighter stop. Major risk of this tactic is some sort of catching of falling knife, because we have solid bearish trend. How you will act – this choice is up to you.
Conclusion:
Long-term traders should start to search an opportunity to join bearish trend, since monthly chart shows that it continues (at least now it looks so).
In short term perspective situation a bit blur. In fact in current research we could make only assumption why retracement could happen and what level it could reach. But since we have no clear signs yet, but have strong bearish trend, we can’t act in a way like retracement has started again.
You may stick with intraday reversal pattern with hope that retracement could start by it, but with overall strong bearish trend this will be not safe game to play.
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.
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