Forex FOREX PRO WEEKLY, November 04 - 08, 2019

Sive Morten

Special Consultant to the FPA
Fundamentals

This week we've got few events of fundamental content, but all of them brought mixed results. First, we've got GDP release. Despite that major number was better than expected (1.9% vs. 1.6%) - additional ratios have shown weaker meanings.

As Reuters reports - Gross domestic product increased at a 1.9% annualized rate in the third quarter, as declining business investment was offset by resilient consumer spending and a rebound in exports, the government said in its advance estimate of GDP.

The data “pointed to below trend growth, but still relatively steady and pretty solid growth in the context of
what’s going on in the rest of the world,” said Erik Nelson, a currency strategist at Wells Fargo in New York.

Other data showed that U.S. private employers added 125,000 jobs in October, slightly above economists' expectations.

It is good that we've got 1.9% GDP in III Q, but at the same time we've got slowdown in Sales from 3% in IIQ to 2%, PCE Prices also has dropped to 1.5% from 2.4%, and real consumer spending also decreased 1.5 times. These indicators that we've mentioned are not primary and attract less investors' attention, but they show real background, splitting GDP indicator into parts. And they show that US economy is slowing and can't holds the pace that was in the beginning of the year, despite all Fed efforts to act in advance.

Next day the dollar fell to a 10-day low against a basket of major currencies as investors evaluated whether the Federal Reserve would continue to cut rates, and after European data beat expectations.

The Fed on Wednesday lowered its policy rate by a quarter of a percentage point to a target range of 1.50% to 1.75%.

It also dropped a previous reference in its policy statement that it would “act as appropriate” to sustain the economic expansion - language that was considered a sign of future rate cuts.

Market participants remain concerned about a slowdown in the U.S. economy as the trade war between the United States and China continues, however, which could force the Fed’s hand.

“The new, slightly shorter, statement tries to keep their options open and puts them back into a data-dependent mode, but circumstances could mean that they have less optionality than they think,” said Tim Foster, portfolio manager at Fidelity International in London.

Speculators have been cutting their long dollar bets as the U.S. currency holds near historically high levels. Any improvement in global data may weigh on the dollar as investors bet on improving growth in Europe and other regions.

There is a view “that the dollar is expensive and as the global economy might be able to rebound next year, then the bias is to sell the dollar,” said Vassili Serebriakov, an FX strategist at UBS in New York.

Data released on Thursday showed euro zone economic growth was unchanged in the third quarter, beating market expectations that it would slow.

In the United States, consumer spending rose in September while wages were unchanged, which could cast doubt on whether consumers would continue to drive the economy.

The dollar dropped on Friday after data showed a mixed view on the economy, and as optimism that the United States and China will reach a deal to end their trade war reduced safe-haven demand for the greenback.

The dollar initially gained after U.S. jobs growth slowed less than expected in October, while wages gained and hiring in the prior two months was stronger than previously estimated.

“The data is much better than expected. Markets were braced, certainly in headline terms, for some much weaker numbers given the expected impact from the GM strike and the census hiring. So very good data in that context,” said Shaun Osborne, chief foreign exchange strategist at Scotiabank in Toronto.

Striking workers who do not receive a paycheck during the payrolls survey period are treated as unemployed. The strike by about 46,000 workers at GM plants in Michigan and Kentucky ended last Friday.

Temporary census workers also left their jobs during the month.

The U.S. currency was unable to hold onto the gains, however, and was further dented after the Institute for Supply Management (ISM) said the manufacturing sector contracted for the third consecutive month in October.

Concerns about a slowing American economy is weighing on the greenback, however, with the U.S. central bank expected to resume rate cuts if the economic data worsens.

“There is a bit more vulnerability starting to feed into the dollar, with perhaps the U.S. economy slowing down,” Osborne said.

Fed Vice Chair Richard Clarida said on Friday that the rate cuts put into effect leave the U.S. economy better armed to withstand the risks of a global slowdown.

Safe-haven flows into the U.S. currency have also weakened on optimism that the United States and China are close to reaching a deal to end their trade war, which has been blamed for slowing global growth.

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin made progress on a variety of issues during a telephone call on Friday with China’s Vice Premier Liu He about an interim trade agreement, USTR said in a statement on Friday.

The euro held its gains against the dollar on Friday as investors sold the U.S. currency, expecting the United States will soon join the global economic slowdown.

The dollar and the Japanese yen, both seen as safe-haven investments, appreciated equally each time the United States looked deadlocked in its trade dispute with China.

But the dollar is losing that status, after poor U.S. economic data. Investors do not share the Federal Reserve’s confidence in the economic outlook because of the risks posed by the trade war, which contributed to declines by the dollar and U.S. Treasury yields.

Therefore, “momentum is there for further short-term gains if we see a downside surprise” in U.S. non-farm payrolls on Friday, said MUFG analysts in a note to clients.

“Fed Chair (Jerome) Powell justified much of his optimism this week on a strong jobs market and continued strong consumer spending ...(so) risks are building of a sharper slowdown that would seriously question current market pricing of just one rate cut over the coming twelve months,” the analysts said.


Money markets are pricing in a 25-basis-point cut by June 2020, Refinitiv data showed.

“Following the Fed rate meeting, the market not only feels confirmed in its rate cut expectations, it has even raised them,” Commerzbank analysts said in a note to clients, citing the reports of Chinese doubts about a trade deal.

“The ISM index and the U.S. labour market report today will be decisive for whether the economic pessimism about the U.S. and thus the rate cut expectations as well as dollar weakness will continue short term,” the analysts said.


Data showed a mixed view on the economy, and as optimism that the United States and China will reach a deal to end their trade war reduced safe-haven demand for the greenback.

The dollar initially gained after U.S. jobs growth slowed less than expected in October, while wages gained and hiring in the prior two months was stronger than previously estimated.

“The data is much better than expected. Markets were braced, certainly in headline terms, for some much weaker numbers given the expected impact from the GM strike and the census hiring. So very good data in that context,” said Shaun Osborne, chief foreign exchange strategist at Scotiabank in Toronto.


The U.S. currency was unable to hold onto the gains, however, and was further dented after the Institute for Supply Management (ISM) said the manufacturing sector contracted for the third consecutive month in October.

The dollar has weakened since the Federal Reserve on Wednesday cut interest rates for the third time this year, and indicated that further reductions may not be forthcoming.

Concerns about a slowing American economy is weighing on the greenback, however, with the U.S. central bank expected to resume rate cuts if the economic data worsens.

“There is a bit more vulnerability starting to feed into the dollar, with perhaps the U.S. economy slowing down,” Osborne said.

Among other events we could mention long lasting opera on D. Trump impeachment and continuation of US/Sino trade tariffs negotiations. Speaking on the latter, U.S. President Donald Trump on Friday suggested he could sign a long-awaited trade agreement with China in the farm state of Iowa, which has been hard hit by tariffs in a nearly 16-month trade war between the world’s largest economies.

“We’re looking at a different couple of locations. It could even be in Iowa,” he told reporters at the White House. “We’re discussing locations, but I like to get deals done first.”

Trump and Xi had been expected to ink the agreement at the Asia Pacific Economic Cooperation summit in Santiago, Chile from Nov. 16-17, but those plans were thrown into disarray on Wednesday when Chile withdrew as host of the meeting.

Trump said he would prefer to sign the agreement in the United States. “I would do it in the U.S.,” he said. Asked if Xi would too, Trump said: “He would too.”

He said Iowa, a key state in the 2020 presidential election in early February, would be a good location.

“We’re thinking about Iowa, you know why, because it would be the largest order in history for farmers. So to me, Iowa makes sense. I love Iowa. It’s a possibility,” Trump said.

Concerning impeachment rush, President Donald Trump said on Friday he believed an “angry majority” of American voters will support him against an impeachment inquiry as he sought to rally his supporters to voice their opposition to the Democratic attempt to oust him.

“The American people are fed up with Democrat lies, hoaxes and extremism,” said Trump. The Democrats, he said, “have created an angry majority that will vote many do-nothing Democrats out of office in 2020.”

A Washington Post-ABC News poll released on Friday said Americans are sharply divided on impeachment, with 49 percent saying Trump should be impeached and removed from office, while 47 percent saying he should not.

Trump also voiced confidence that he will be able to defeat any Democrat who he ends up opposing in the November 2020 election.

“We’re kicking their ass,” he said.

For the truth sake, neither impeachment rush nor possible Iowa meeting have no significant impact on the market, because investors already in habit with these soap operas and discount any news that appear on these subjects.

Last week we also do not see big changes in Net positions. Thus CFTC shows that EUR net position stands short and almost at the same level as week before:
upload_2019-11-2_14-42-57.png
Source: cftc.gov
Charting by Investing.com


At the same time net short position on GBP has dropped two times within two weeks, which shows that investors keep positive look on Brexit finish.

At the same time, political news aside, economy situation in UK stands far from perfect. As recent Fathom Consulting research shows -

Fathom’s UK Economic Sentiment Indicator (ESI) was -0.2% in September, unchanged from the figure for August. It has not registered such a low reading since the tail end of the 2008/09 recession. Our UK ESI provides a useful indicator of the underlying pace of economic activity, and tends to be less volatile than the official measure of GDP growth. With the date of the UK’s departure from the EU now further postponed, and with the prospect of a general election within the next few months, the risks to UK economic sentiment and to economic growth lie to the downside.


While investors calm down a bit recently, as finally Brexit process is controlled by its "master" B. Johnson. This has provided some order at least, in this procedure that was looking chaotic in T. May premiership. Still fundamental problems are yet to come on surface and it is difficult to suggest how divorce will hit as UK as EU in longer term perspective.

Thus, this week's events tell one thing. The trend of US economy weakness that has started 1-2 months ago
continues and we've got new data that confirm it. It means that fundamental background of more EUR appreciation stands valid by far.

Technicals
Monthly


Last week we've talked about possible reversal month, suggesting more dovish Fed comments. As October candle is closed - now we could say that indeed, we've got it. In fact we celebrate every candle on monthly chart because it is long-term and brings changes not too often. Second - because it has more relation to fundamentals and changes on monthly chart as a rule reflects changes in fundamental background.

As it is started in September, it is totally formed in October and monthly chart confirms EU/US economy balance change. Bullish reversal candle has to have minor continuation at least. It means that on daily chart we should get moderate upward action in November-December. Sometimes reversal candles become starting point of major reversals on the market.

Now we come closer to the end of the year and second issue that might be interesting on EUR is YPS1. If EUR, by the end of the year will be able to hold above YPS1 - 2019 action could be treated as retracement of 2016 - 2017 rally. And EUR will keep chances on extension in 2020.

The major intrigue stands around fundamental background - it is changing. It is interesting whether its change will be strong enough to make impact on monthly chart and long lasting tendency here. As economy in EU hardly will improve soon - the major driving factor depends on US - how better/worse situation will be there.
eur_m_04_11_19.png

Weekly

Trend stands bullish on weekly chart. Price shows strength as it totally reversed last retracement. All the rest situation stands the same. Technically, the nearest barrier here is 1.12-1.1235 area. It includes Fib level ( actually this is daily K-resistance), and upper border of the channel. Market is not overbought here. Next level is stronger and it stands at K-resistance of 1.1450-1.1520 area, and accompanied by OB level.

Thus, next week our major destination objective is 1.1235 area:

eur_w_04_11_19.png

Daily

On Friday it was limited performance here as trading range almost equals to the Thursday. Still here we have indirect bullish signs. First is, we've got two side by side bullish grabbers which suggest upside continuation. Trend stands bullish here and market is not at overbought.

Second moment that seems important and lets us suggest that there should not be deeper retracement - tight standing near the top. Take a look that Thu-Fri action stands in tight range and EUR doesn't drop lower. Normally, when AB-CD action stands in progress - downside action at "C" point comes faster. Here we have opposite type of action. This makes me think that if all other things will stand equal - next week we should get upside continuation.
eur_d_04_11_19.png

Intraday

In short-term perspective we have upside butterfly and its objective points agree with daily K-area. Price action is forming bullish flag right under previous top, which is bullish sign. Once 1.1235 area will be hit, odds suggest moderate pullback. It means that daily traders should wait for this pullback and do not hurry with position taking.
eur_4h_04_11_19.png

Conclusion:

Data and news that we've got this week confirms our fundamental view. Changing of US/EU economy balance already finds reflection in EUR/USD price level. We suggest that this tendency should continue in medium-term perspective.
 

sveckar22

Private, 1st Class
Hello, everybody, it’s for my COT report analysis again. I would like to point out that we had some important events and statistical releases on Wednesday, Thursday, and Friday which could have an impact on the COT analysis, although investors were expecting a rate cut from FED they go into a much deeper analysis of the FED statement, job reports, etc. What I am trying to say is that I am not much of fundamental traders. I have a general idea I think, about what is going on in the world and in the markets but my trading decisions are never based on my fundamental understanding of the markets, that’s why most of the time I will decrease my trading activity around such events, and usually wait for another week to see the impact on the COT report before jumping to any conclusions.


GOLD:


On GOLD we see an increase in Longs and a decrease in Shorts, the ratio changed for just 1% from the previous week, but overall Net Positions have increased.


3.11.19 GOLD.JPG



US DOLLAR:


There was a decrease in both Long and Short positions this week, but overall Net Positions have been decreasing over the past five weeks.

3.11.19 DXY.JPG


EURO:


A little bit of a decrease in Longs and almost no change in Short positions, still overall all ratio remained the same as last week. I would like to see the report next week, I am curious about the relationship between DXY and EURO.


3.11.19 EURO.JPG


AUD:


Very interesting situation on AUD, although we see a small decrease in Longs, the decrease in Shorts was greater. As we see AUD/USD making a retracement in the last 5 weeks, the Net Short Positions have been decreasing, and the ratio between Longs and Shorts remained the same.


3.11.19 AUD.JPG



3.11.19 AUD D.JPG


The market hit a 0,618 FIB resistance on the Daily chart, but I would suggest upward action to continue at least to XOP target this week, then we can see if the market will form some deep retracement after the first reversal and then maybe complete the double bottom pattern we have on the weekly chart, and we also have a bullish reversal candle on the monthly chart.



3.11.19 AUD D.JPG



CAD:


I have talked about this before, but it looks we are getting ready for a nice Bearish setup on USD/CAD. Both COT analysis and technical picture coincide with this pair.


Looking at the COT report we see almost no change in Longs, but Shorts have been increasing substantially in the last to week, as we see the Ratio moving into the bearish territory ( in my analysis above 65%), and Net short positions increasing sharply in last three weeks.


3.11.19 CAD.JPG

On the technical picture on the Daily chart, as the market completed this ABC COP target, we saw a retracement, but the market couldn’t pass through the 0,38 FIB resistance, and we see some big tails on the upside, which could indicate sellers stepping in. I will be looking to sell this pair this week.


3.11.19 CAD D.JPG

GBP:


As Non-Commercial traders have increased their Longs, the amount of Longs positions moved above 13 periods average. Shorts are decreasing now for the past 8 weeks and are well below 13 periods average. Net shorts positions have been decreasing.



3.11.19 GBP.JPG


Looking at the chart I can see a flag pattern, which is a bullish continuation pattern, but we could also get DRP Sell on the daily chart. I am personally not trading GBP for a few weeks now, and I am looking to see what will happen when price moves above 1.3000 or below 1.28000.


3.11.19 GBP D.JPG
 

sveckar22

Private, 1st Class
Part II


JPY:

Nothing really interesting to talk about on JPY as far as the COT report is concerned.

3.11.19 JPY.JPG


NZD:

The same could be said for NZD.

3.11.19 NZD.JPG

On the technical picture, I would treat this recent upward action as a retracement and this ABC XOP coincides nicely with 0.382 FIB from the previous swing down, and I probably where I will be looking for a potential sell opportunity on Daily and lower time frames.


3.11.19 NZD D.JPG
 

Sive Morten

Special Consultant to the FPA
Morning guys,

Despite positive mood on the market EUR was not able to proceed higher immediately and erased both grabbers that were formed last week. In fact, yesterday we've got Reversal session, trend has turned bearish here.

As EUR has not broken yet any strong support area we still keep bullish scenario and potential upside butterfly pattern with the same 1.1207-1.1235 destination area. Friendly scenario suggests minor downside continuation. If one of the major daily supports will be broken - this will be quite another tune.

eur_d_05_11_19.png

Right now we need to be sure that market will hold above recent lows to keep butterfly valid. The only target that we have till this low is XOP on 4H chart. Now market stands around major 5/8 support area. Once retracement up will be over - it is good chances that EUR will proceed to XOP and WPS1.
Fans of candlestick patterns could recognize here "3 black crows"...
eur_4h_05_11_19.png

Speaking on upside pullback - it seems that it should be somewhere to WPP and K-resistance area. Here we have DRPO "Buy" LAL, which is also could take the shape of reverse H&S pattern on 15-min chart very soon.
eur_1h_05_11_19.png

That's being said our suggestion for 1-2 session here is upward action to 1.1135-1.1140 then drop to 1.11 area.
 

RogerTC

Corporal
Folks, Below are some signals that i got from thrust scanner dashboard. Keep an eye on GBP/CAD, USD/JPY, CADJPY

thrust.PNG

USDJPY => 4Hr Up Thrust

USDJPYH4.png

GBP/CAD => 4hr Down Thrust and Daily Stop Grabber Sell

GBPCADH4.png

GBPCADDaily.png

CAD/JPY => Daily B&B buy has played out and we booked our profits. Watch as we have decent thrust patterns in 30m/1hr and 4hr TFs. Looks strong

CADJPYDaily.png

USD/CAD => We can move our stop to breakeven. This market is likely to reach its target too.

USDCADDaily.png

Even if you are not mastered dinapoli trade methods you can make serious money by trading only B&B patterns. It is simple and very high probability. By putting a bit effort you can start trading markets using thrust plan instead of just waiting for B&B opportunities also.
 

RogerTC

Corporal
06/11/2019

Stop Grabber Dashboard

Stop Grabber DASH.PNG

Macd Trend Scanner Dashboard

Trend Scanner Dash.PNG

AUDNZD

4hr Trend push with strong up thrust.

audnzd.png

Daily stop grabber buy in play. Trend is up in Monthly, Weekly and Daily Timeframes. That is when you expect lower timeframe supports to hold and long the market

AUDNZDDaily.png
 

Sive Morten

Special Consultant to the FPA
Morning guys,

Let's keep up with the EUR. Yesterday in the morning technical setup perfectly has predicted changes of fundamental kind later in the session - US/China stands close to signing of first part of let's call it as "anti tariffs" agreement. Now China tries to get more relief and call US to cancel more tariffs that were imposed earlier.
This has changed sentiment on the market and demand for risky assets has increased.

Our conservative target that we've said around 1.11 area was exceeded as EUR has dropped deeper. Thus, as reversal session as "3 black crows" on 4H chart have done perfect. What's next?

First is, we have to increase retracement scale as EUR has dropped below recent lows. It means that no butterfly is possible any more. Market right now stands at support - Fib level and MPP, but not at Obought.
eur_d_06_11_19.png

On 4H chart now we have to consider greater AB-CD pattern. Now price stands at OP Agreement area. But, taking in consideration strong acceleration of CD leg we should be ready for deeper action to next Agreement area of XOP @ 1.10:
eur_4h_06_11_19.png

Meantime, as market stands at Agreement support, upside bounce should happen first. Here we suggest that retracement will reach either first level of 1.1090 or 1.11 K-resistance. After that EUR should make an attempt to go lower in XOP direction.
eur_1h_06_11_19.png

Today again we expect the same shape of price action as yesterday - minor upside action then downside continuation of larger scale.
 

Sive Morten

Special Consultant to the FPA
Morning guys,

EUR shows slow motion and keeps our scenario that we've discussed yesterday. In addition to yesterday's comments, I would like to say that deep retracement currently is not something outstanding. It is natural. Take a look that actually EUR has formed bullish reversal swing and every time when momentum breaks direction it is accompanied by deep retracement.

In fact, we were waiting for deep retracement earlier, when we've talked about reverse H&S pattern here. But then EUR has moved higher due change in Fed policy and Brexit turmoil. Thus, even drop to major 5/8 Fib level will not become a tragedy. The negative moment will be if the whole upside action will be erased. Because we have monthly reversal candle and its erasing will be negative sign.
eur_d_07_11_19.png

On 4H chart we've got our 3/8 retracement after OP target and now market stands in downside continuation. So, if you've taken short position - move stops to b/e:
eur_4h_07_11_19.png

THe only tricky moment exists here - bullish divergence on 1H chart that could confuse somebody. This divergence is not very reliable. If you take a look at DXY chart - you'll see that divergence stands after 3/8 level, so it has been formed neither at Fib level nor at OP target - reaction on OP is over already. Besides price action on 4H chart is flirting with MACD and stands at the eve of grabber forming. Thus, we suggest that it would be better to ignore this divergence and do not take long position.
At the same time, if you've missed to go short yesterday - it would be better to wait for final clarity on divergence. For example, when downside action continues but not take short position right now.
eur_1h_07_11_19.png
 

sveckar22

Private, 1st Class
Thank you.


The first picture is what I was looking at yesterday night, but could we consider the daily chart as the formation of a double top pattern? Which if completed could take us below the 0,618 FIB and for now oversold line stands in his way, IMO this is a less probable scenario but is it still worth considering?

6.11.19 ED 4H.JPG



7.11.19 ED D.JPG


And this is what I am looking at on GBP/USD right now. It looks like the market is now bouncing from the COP target, which stands higher from the previous low, If we get a bullish reversal on this 4H candle in about two hours, maybe DBRP on the daily chart will fail.


7.11.19 GBP USD 4H.JPG
 

netbusinessman

Private, 1st Class
Morning guys

THe only tricky moment exists here - bullish divergence on 1H chart that could confuse somebody. This divergence is not very reliable. If you take a look at DXY chart - you'll see that divergence stands after 3/8 level, so it has been formed neither at Fib level nor at OP target - reaction on OP is over already. Besides price action on 4H chart is flirting with MACD and stands at the eve of grabber forming. Thus, we suggest that it would be better to ignore this divergence and do not take long position.
At the same time, if you've missed to go short yesterday - it would be better to wait for final clarity on divergence. For example, when downside action continues but not take short position right now.
View attachment 45255
may because of Elliot wave (chart copy paste)
7627E740-8267-4A6D-9617-836207288BEC.png
 
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