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Forex FOREX PRO WEEKLY, November 19 - 23, 2018

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Nov 17, 2018.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Fundamentals

    Last week, slowly but stubbornly EUR has broken bearish sentiment and turned north, at least on short-term picture. I have suspicion that this story will not finish simply. Depending on what we will see next week, EUR could appoint more extended upside targets.

    Meantime, as Reuters reports - The dollar fell broadly on Friday in the wake of cautious comments from two U.S. Federal Reserve officials about global economic growth, while sterling rose following losses tied to fears about a Brexit deal.

    The greenback fell to one-week lows versus the euro and a two-week trough against the yen following comments from Fed Vice Chair Richard Clarida, who told CNBC television he saw some evidence that global growth was cooling.

    Clarida also noted key U.S. short-term borrowing rates are close to neutral and said being at neutral “makes sense.”

    Traders perceived his comments to mean the No. 2 Fed official may be open for the Fed to pause its rate-hike campaign sooner than previously thought.

    “You have seen a dovish tilt from some Fed officials. That put pressure on the dollar,” said Chuck Tomes, senior investment analyst at Manulife Asset Management in Boston.

    Separately, Dallas Federal Reserve President Robert Kaplan said on Fox Business that global growth will be a bit of a headwind, which may spread to the United States.

    Chicago Fed President Charles Evans acknowledged some economic risks ahead but he also raised the probability the Fed could raise rates above what would be neutral if U.S. data come in stronger than forecast.

    The pound briefly recovered against the euro following its worst day versus the single currency in about 25 months, as U.K. Prime Minister Theresa May clinched backing from some key Brexit supporters with her draft plan for Britain to leave the European Union in March.

    A string of cabinet ministers quit on Thursday in protest over the terms in May’s Brexit proposal. The resignations sent the pound reeling.

    The euro was also bolstered by hopes that Italian Prime Minister Giuseppe Conte was looking to work with the EU over his government’s 2019 budget, which has been rejected by Brussels.

    Meanwhile, currency traders are monitoring signs that Washington and Beijing are seeking to de-escalate their trade dispute.

    U.S. President Trump said he might not impose more tariffs on Chinese imports if China comes up with terms that he and Beijing could agree on.

    It seems that Fed officials speech has made sense. Indeed, investors chilled their expectations on rate increase in December once again. Now they stand slightly above 60% while last week it was near 80%:

    upload_2018-11-17_14-16-49.
    Source: cmegroup.com

    COT report brings nothing drastic, open interest mostly has not changed while net short speculation position slightly has dropped. At the same time hedgers increased longs a bit. Sentiment mostly stands neutral this week and it means that market will be driven by technical factors, events and statistics releases. The fact that we do not see any big shifts in positions means that no major trend shift has happened yet. Thus, investors keep what they have now.

    upload_2018-11-17_14-20-8.

    upload_2018-11-17_14-21-57.
    Source: cftc.gov
    Charting by Investing.com


    We do not have very important statistics next week. On Thursday - ECB minutes will be published.

    Here is interesting view on relation of UK weather and GDP growth by Fathom consulting:

    Data published last week showed that the UK economy expanded by 0.6% in the third quarter. The quarterly series, which stretches back to 1955, suggests a marked pickup in growth through 2018. However, the monthly series, which has been published since the summer of this year, is able to shed more light on the picture. It shows that, although growth was strong in July, output was broadly unchanged through August and September. Analysis carried out by Fathom suggests that unusual weather patterns have a significant impact on UK economic activity. Specifically, when the weather is unseasonably warm, growth tends to be strong, and when the weather is unseasonably cold the converse holds true. In our judgement, the apparent pickup in growth through 2018 is almost entirely a consequence of weather patterns. After a slightly colder-than-usual start, the UK experienced unseasonably warm weather for six months in a row. Were the UK to have experienced weather in line with the seasonal norms in each month of this year, we estimate that growth would have been 0.2% in each of the first, second and third quarters. This figure of 0.2% is perhaps closer to an estimate of the underlying pace of UK economic growth so far this year.
    [​IMG]

    So, as fundamental data this week doesn't bring a lot of clarity on situation, it seems that technical factors come on first stage.

    Technical analysis
    Monthly


    As we talked in our previous reports, monthly picture is the one about 1.13 lows. They have very important technical meaning for monthly chart. Now we see that despite recent break of these lows, EUR doesn't move lower but turned up again. Logical question that we have to ask here - could it be W&R. In this case situation could change at 180 degree. Although monthly chart is rather long-term, it needs more time to get confirmation of this idea - EUR needs to move above 1.15 top, but if now we indeed see upside reversal, it will have extreme importance for long-term perspective.

    Because, in general, EUR doesn't look strong in recent months. As we've mentioned, EUR - hangs upon 1.14-1.15 support area. After strong drop and spike down - no meaningful upside action has followed. This is not good sign for bulls. It's already 5 months of laying upon this area. As longer EUR will stand here as greater chances on downside breakout will be.
    This is indirect sign of weakness, when market can't jump out from strong support area. It means that strong level could support price from collapse but its effort is not sufficient to start bullish action. Day by day buyers will be washed out around this level and EUR could break it, if nothing will change. So, let's keep this issue in mind. It is not vital by far, but still first warning signs already exist. And now this hypothesis will be checked.

    In general 1.14-1.15 is important not just because of YPP. Take a look - this is upper border of former 1.05-1.14 consolidation. If price will drop back inside it - it will open road to the bottom of 1.05 area. Also this is monthly 50% support area. Price has problems with breaking borders of any consolidation, but it has no barriers inside and could freely move from up to bottom.

    Now - take a look what progress we have around it. 1.14 lows is the first test of rectangle and monthly support. After small bounce price returns back to it. So, this is the crucial border and now it seems that EUR has very good chances to break it. Once it will happen - free space to YPS1 around 1.08 will be opened. It will mean return back in rectangle. Next our target here will be 1.03 AB-CD COP extension right around major lows, if nothing will change now.
    It seems that we will not bore till the end of the year. Don't forget also that trend is bearish on monthly chart...
    eur_m_19_11_18.

    Weekly

    Our target on last week has been hit very fast - on Monday. Market has dropped and completed weekly grabber target. The rest of the week action mostly was to upside. The scale of upside action now is too small still, to make impact on weekly chart. Reversal candle also has not been formed.

    The only thing that could suggest more or less definitely here - upside harmonic retracement. Minimum harmonic swing points on 1.1509 area. And the last one - bullish divergence with MACD.
    eur_w_19_11_18.

    Daily

    Daily trend has turned bullish. Upward action shows good pace, but market is coming to very important area - K-resistance and daily Overbought. Daily upside harmonic swing mostly is completed. This area will become very good indicator to understand what to expect. Breaking of this area and action above 1.15 could bring a lot of different bullish scenarios. First of all - this will be upside reversal swing and breaking lower lows-lower highs tendency.
    Second - reaching of 1.15 area could become a starting point of reverse H&S pattern as well. This will be key moment that should clarify medium-term perspective on EUR. Right now, while bearish tendency is still valid, this action still has features of retracement.
    eur_d_19_11_18.

    Intraday

    Taking in consideration that market has broken all important resistance levels, including K-resistance and shows nice acceleration right now - it is difficult to keep bearish view. Here we have AB-CD pattern in place. XOP stands slightly above daily K-resistance but still relatively close to it. Market has not bad chances to complete it.
    Trading plan for beginning of the week is relatively simple. If you would like to sell - wait for reaching of daily resistance and Overbought area, XOP completion here and keep an eye on bearish reversal patterns on hourly chart.
    If you have long positions, probably you could hold them, just tight stops to breakeven at least.
    For long entry we will watch for pullback down from daily K-resistance area and see what patterns will be formed. H&S could become nice setup for this purpose, but this will happen later in the week.
    eur_4h_19_11_18.

    Conclusion:

    EUR shows the action that could be the sign of sentiment changing on the market. As strong resistance ahead - we're mostly interested in pullback out from it and the way how this pullback will happen and whether any bullish patterns will be formed around.



    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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  2. Deltoid88

    Deltoid88 Corporal

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    Update on EUR.

    Bullish action from 1.1214 is just ABC correction which is about to end very soon which suggest my wave count. My bearish view is intact as long as 1.15 resistance holds.

    Short entry: 1.14-1.1435, TP - 1.1155-1.12 zone, SL=1.1501

    Weekly chart. Here I expect 1.150 resistance to hold and drop to 1.1154-1.12 to occur. Would not be surprised if drop be little deeper to 1.0940-1.1060. I see rectangle zone as bouncing zone where 5 waves to the upside could happen to complete bullish blue wave C and bigger, red wave B in 1.19-1.21 zone.

    EURUSDkWeekly.

    Daily chart.

    EURUSDkDaily.

    4H chart.

    EURUSDkH4.

    1H chart. Here you can see why I expect bullish move to be over very soon and downside action to continue. We already printed 5 waves in blue wave C to upside. Even 1.618 target is very near, XOP=1.1432.

    EURUSDkH1.
     
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  3. Stag

    Stag Sergeant

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    Price action supports my count so far, so no changes till now. The Euro is above the base channels of three consecutive degrees - a clear bullish sign alone, without any wave count, if we apply the KCT technique properly. Furthermore, we had a bullish slingshot that often accompanies fourth wave corrections - another bullish sign one could spot a few hours ago.

    Prices remain headed towards 1.148x as long as 1.1429 holds as support.

    EU_181119.
     
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  4. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Morning guys,

    Thanks Stag and Deltoid for updates. We mostly have similar view. Actually price action stands with scenario that we've mentioned in weekly report. Our strong resistance area on daily chart is touched - this is K-resistance and daily overbought. It means that this is not good area to taking any long position, depsite that EUR shows very good upside pace.

    There are just few moments that we would like to mention here. If you use your imagination - you easily could recognize huge bullish engulfing pattern. It means that action that we have has good chances on second leg, a kind of AB-CD action up.
    Second - this second leg action and overall price shape could take reverse H&S form. It means that somewhere 1.15 chances on downside deep retracement are solid:
    eur_d_20_11_18.

    On 4H chart we have our major XOP target around 1.1486. Theoretically, as soon as it will be hit, retracement should start. But, if you think about scalp short entry - wait for clear bearish reversal pattern on hourly chart after XOP will be reached. Currently we have nothing.
    eur_4h_20_11_18.

    That's being said, bulls would be better to wait major retracement somewhere to 1.13 area (by harmonic swings). Target will be more definite as soon as retracement will start. For bears - scalp short is possible but after reaching of XOP and appearing clear bearish pattern. Currently we do not have this.
     
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  5. Stag

    Stag Sergeant

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    Now we have the advance complete at 1.1472. Keep an eye on 1.1394.

    EU_181120.
     
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  6. Robban68

    Robban68 Private, 1st Class

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    Damm, I had a short pending at 1.1472. The highest today is 1.14719:(. I was targeting 1.1313. Lets see If there will be a new opportunity tomorrow...
     

    Attached Files:

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  7. Deltoid88

    Deltoid88 Corporal

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    Update on EUR.

    Stag provided great wave count, nailed it in the center where upside retracement could finish. Congrats, Stag!

    I strongly believe that ABC correction is finished at 1.1472. Main mission now is to open short positions against 1.1472 top.

    I believe that we are currently in wave 5 of wave 1 of bearish wave C which is about to end very soon, and retracement to upside in wave 2 could start, and that wave 2 could provide last chance for short entry.

    How to trade this?

    Scalp long, entry zone 1.1350-1.1370, SL zone=1.1295-1.1340, TP zone 1.1404-1.1440
    Short entry zone 1.1404-1.1440, SL1=1.1472, SL2=1.1501, TP zone 1.1154-1.120

    EURUSDkH1.
     
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  8. Deltoid88

    Deltoid88 Corporal

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    Update on EUR.

    Probably we are now in wave 4, this looks like bear flag to me. That means one more push lower in wave 5 before ABC retracement to upside can begin. Target for wave 5 is 1.1310-1.1330.

    EURUSDkM15.

    How to trade this?

    Short entry in zone 1.1370-1.1390, SL1=1.1415, SL2=1.1472, TP zone = 1.1310-1.1330
     
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  9. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Yeah. Personally I'm tending to bearish view more. H&S pattern and deep retracement corresponds to strong previous bearish momentum on the market.
    Reversal was rather sharp either.
     
  10. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Morning guys,

    So, yesterday we've caught the reversal area - indeed this is strong resistance and EUR has formed bearish reversal session there. When "R" session was forming, in most cases it leads to continuation and 2-leg action on lower time frames.
    In general this corresponds to our daily view as we're watching for reverse H&S here and retracement to ~1.13 lows. After that major upside AB=CD should start.
    eur_d_21_11_18.

    Here is one tricky moment exists still. This is our untouched XOP target, which creates discomfort for bearish positions. I would prefer to see hit it first and drop second, but we have what we have.
    Sharp upside reversal here stands irrational and hardly could be combined with recent drop and reversal session on daily chart. That's why i suspect different solution:
    eur_4h_21_11_18.

    Here is on 1H chart I put approx. shape of price that I would watch for. First stage is upside bounce from reversal action. It would be great, if we get, say, "222" Sell there. Second - downside continuation of reversal daily session. It should lead us precisely to the bottom of right arm potential H&S pattern.
    Take a look that it's target stands above "C" point of 4H AB-CD. It means that 4H AB-CD will be valid. Hence, XOP could be hit automatically when market will start action with daily H&S AB=CD. This solution looks more logical in current circumstances. Thus, bears could wait for upside pullback and "222" Sell for scalp short to ~1.13 area, while bulls should wait when this large retracement will be over.
    eur_1h_21_11_18.
     
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