FOREX PRO WEEKLY November 25-29, 2013

Sive Morten

Special Consultant to the FPA
Messages
12,867
Monthly
According to Reuters news the euro rose to a four-year peak against the yen and gained for a second straight day against the dollar on Friday as unexpectedly robust German business sentiment data raised the appeal of the euro zone common currency. Comments from Federal Reserve officials saying a reduction in stimulus would be discussed at next month's monetary policy meeting failed to boost the dollar. Analysts said the market has already priced in talk of Fed tapering asset purchases in December, limiting its impact on the greenback.
Germany's Ifo survey of business sentiment rose far more than forecast in November, reaching its highest since April 2012. That added to positive sentiment about growth in Germany, the engine of the euro zone economy. A ZEW survey this week also showed German investor sentiment at its highest in four years, while a purchasing managers index suggested the private sector's expansion was gaining traction. "The enthusiastic IFO report has investors comfortable increasing exposure to the euro this morning, pushing euro/dollar back above $1.3500," said Scott Smith, senior corporate FX trader at Cambridge Mercantile Group in Calgary. He added that the confidence displayed in Germany during November is positive overall, but noted that recovery in the euro zone's largest economy has failed to bolster the rest of the region, especially the peripheral nations.
Currency speculators raised their bets in favor of the U.S. dollar to the highest in more than two months in the latest week, according to data from the Commodity Futures Trading Commission released on Friday. The value of the dollar's net long position rose to $17.10 billion in the week ended Nov. 19, the largest since the week ended Sept. 10. Long dollar bets stood at $14.46 billion the previous week.
The euro was also supported by comments from European Central Bank President Mario Draghi, who played down the possibility of the bank implementing negative deposit rates. Reports that the ECB would start charging banks to park cash with it overnight had pressured the euro on Wednesday, extending its losses after the release of Federal Reserve minutes later that day suggesting that U.S. stimulus could be scaled back earlier than expected. After months of misfires, the Federal Reserve's message is finally getting through to Wall Street: to taper is not to tighten. Traders now do not see the Fed raising short-term borrowing costs until at least July 2015, if not later, based on trading in CME Group's fed funds futures. The euro zone's shared currency also shrugged off comments from ECB Chief Economist Peter Praet that the zone faces deflationary pressures. The dollar showed little reaction to comments from Kansas City Fed President Esther George and Atlanta Fed chief Dennis Lockhart, who both said that the U.S. central bank will discuss scaling back its asset purchases at its December meeting.
Technical
On past week market has shown solid upward reconvery that even could be seen here, on monthly chart. Previously we’ve discussed situation on big quarterly picture trying to understand whether current bearish signs are just retracement or this is starting point of downward trend. Here is our previous conclusions:
As we’ve said at first glance and by looking just at monthly chart we can say – “well, market has hit resistance and Agreement, minor bounce is possible in this case”. Indeed, market has touched 0.618 AB=CD target right at Fib resistance. In this case retracement to 1.32-1.33 area will not be look as curious. And now take a look – market has hit this level, that we could accept as ultimate depth of pullback due respect to target and resistance. Thus, it turns out that price stands at some sort of an edge. If it will move lower, then we will not be able to treat this move as retracement anymore. This riddle probably will be resolved within 1-2 weeks. On passed week, market has not broken it and bounce up. Hence, standing at the edge will continue.
Second scenario, that is closer to my point of view, we could get “222” Sell pattern right from rock hard resistance – major 5/8 Fib level+Agreement and Yearly Pivot resistance 1. Take a look at AB-CD itself. CD leg is rather weak, especially it has become slow down even prior minor 0.618 target. This tells that upward momentum is not strong. CD leg itself is rather choppy with a lot of pullbacks. Currently we have October “Shooting star” pattern that simulteniously looks like W&R on previous swing high. This pattern suggests too deep retracement down that will be not acceptable for breakout of previous tops. In perspective, if November will become long black candle we could get Evening star pattern. And finally, we know that Pivot Resistance 1 holds retracement up if downward trend is still valid, right? That is what we see now. Finally, if you will draw trend lines, you’ll see that in fact, price action since April 2012 looks like rising wedge pattern. If we’re correct with our view, appearing of “222” Sell will lead price at minimum to 1.1950-1.20 area, it’s minor 0.618 extension. Now you can imagine where we could get if this will be Butterfly “Buy”, that we’ve discussed in previous research, dedicated to EUR. That’s right – 1.10. May be this is too pessimistic issue for EUR, and too far view, but anyway, right now I do not see valuable signs of EUR strength.

So, what do we see now? Market has not erased first scenario yet. Our 1.32-1.33 edge has held the price action on the way down, and we are bound to say that this still could be treated as retracement after hitting of minor 0.618 target of large AB-CD up. Whether market will continue to 100% target – that’s another question, but to start speaking about absolute bearish trend here, we need to see more extended downward action on monthly chart. I suppose that till the end of the month our focus will be on lower charts – weekly and daily mostly, where we will try to understand will this bounce up be either small retracement on daily chart or real big upward continuation here, on monthly.



Weekly
Trend is bearish on weekly chart. Two weeks ago we’ve got this bullish engulfing as respect of weekly K-support area and our major concern was whether this pattern will be cancelled by price or it still will reach its target. Currently price behaves so, that it mostly assumes continuation to its target, because market has failed to erase this pattern on past week. And now take a look - all action is absolutely reasonable here. First is – upward big AB=CD. Market has hit its target and now stands with reasonable retracement. Theoretically it even could be greater and still will be reasonable. From that standpoint – recall our monthly analysis. Current action in general not has cancelled yet possibility of upward continuation either to 1.618 of initial AB-CD or forming more recent AB-CD that coincides with butterfly “Sell” target.
Second moment is engulfing itself. Here price again, shows perfect action – after appearing of engulfing price has shown retracement inside it’s body and now starts move to it’s target. As we know, engulfing pattern assumes minimum target that equals to it’s length, so this is around 1.3670-1.37 area. That is our first object to watch for. Because any other pattern are more extended in time and we will focus on them later.

Daily
On coming week our major task is to understand – will engulfing pattern just complete its target and that will be just retracement on daily chart or it will become the starting point of solid upward trend.
Here I’m gravitating to conclusion that market is more bullish rather than bearish. Recall how it has started – erasing of B&B “Sell” setup, no bearish grabber has been formed. On passed week market has moved through all major resistances on intraday chart. It’s a bit curious for bearish market, especially right after retracement and bearish breakout. Within CD leg of possible AB-CD we see acceleration – the starting candles are much faster than AB leg. Interestingly that market has not tested yet MPP that agrees with major 5/8 Fib resistance around 1.3627. Theoretically some small chances still exist that butterfly “buy” still could appear here, but they are outside one probably. Market has come too close to the top of BC leg already and it has happened too fast. So, looks like we have completed the task of previous week – understand the direction. It seems that direction has more upward chances.

4-hour
And here, guys, what we will do on Monday. Minor 0.618 target of our daily AB-CD stands very close to current market, but it still lower than previous highs. It means that market should not touch stops above this high and has chances to show retracement down, as respect of minor target prior upward breakout. So, we need to use some of support levels to take long position. As market should move slightly higher to 0.618 AB-CD target, hence, levels that I’ve drawn here will also drift a bit higher, thus, major 3/8 support probably will coincide with WPP. That’s our primary level to watch for.
As you probably understand already – we will base our trade here on potential B&B “Buy”, since thrust up is acceptable and we count that B&B will not just complete its mininum target (that should let us move stops to breakeven) but will become the trigger of upward continuation.




Conclusion:
On big picture market stands in an area that keeps door open as for solid bullish development as for bearish one. Thus, until market will not pass through key levels, we will focus on smaller targets and minor setups on lower time frames. Particular speaking – daily AB-CD and will try to join with upward action using possible B&B “Buy” on 4-hour chart.

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.
 

Sive Morten

Special Consultant to the FPA
Messages
12,867
EUR/USD Daily Update Tue 26, November 2013

Good morning,
so, the first stage of our trading plan has completed- market has worked with B&B "Buy" on 4-hour chart well, and now we have long position with breakeven stop. So, despite what action we will see, we will not lose.
On daily time frame existing of minor 0.618 target and untouched MPP suggest possible upward continuation. Our ultimate short-term target stands around 1.3684 - AB=CD target and 0.768 Fib resistance Agreement. If market will proceed to MPP this will significantly increase chances on reaching 1.3684 as well, since in this case price will be between targets and market normally does not reverse between them but proceed to next one first.
Trend is bullish on all time frames, and currently, guys, I do not see any signs that could force us to refuse thoughts on possible upward continuation:


On 4-hour chart we see our B&B "Buy" right on 3rd close below 3x3 DMA at major 3/8 Fib support. Perfect B&B. Now it has hit its minor target, so here you can decide - grab profit from scalp trade, hold position with b/e stop or take a comrpomize solution. Because here is the second stage of plan is ready to begin. Recall that we would like to know whether B&B will become something bigger than just scalp trade. Will it become a starting point of upward continuation. Existing of stop grabber and untouched target suggest moving at minimum to previous highs. Invalidation point - is a low of stop grabber.


On hourly chart this action could take the shape of Butterfly, but not neccesary market should reverse down at completion point. It could just trigger some retracement and re-testing of broken highs. Butterfly target stands very close to WPR1 and MPP. So, setup still holds bullish here, at least in short term. Let's see what will happen.
 
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Sive Morten

Special Consultant to the FPA
Messages
12,867
EUR/USD Daily Update, Wed 27, November 2013

Good morning,
EUR is continuing upward action, although doing it slow. Still, currently I can't find any issues that could be a sign of inability of the market to continue move further. I do not see yet any reversal patterns, signs of weakness etc.
At the same time, our minimum target has been accomplished - market has cleaned out previous highs. Now is major concern whether it will go further or turn to the downside.
Upside target is the same - 1.3685 AB-CD completion point, while around 1.3625-1.3631 we have another solid resistance cluster - MPP+WPR1+5/8 Fib resistance.


On 4-hour chart we see that market has hit 0.618 targets as from daily AB=CD as from smaller AB-CD pattern, but has not moved higher yet and continue coiling around. Theoretically, we could get butterfly "sell" that has 1.618 target precisely at the same level as daily AB=CD one - 1.3685. This could be just perfect bulls' deadly combination.


Possible invalidation point for short-term bullish scenario could become the low of 4-hour stop grabber. If market will take it out, then it will move below WPP and too far below current highs. So, it will look more like W&R in this case, instead of upward continuation. So, let's see what will happen...
 
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Sive Morten

Special Consultant to the FPA
Messages
12,867
EUR/USD Daily Update Thu 28, November 2013

Happy Thanksgiving everybody,
Exchange-traded markets are closed today, so FX probably also will be thin and lazy. Thus, today we just will try to understand what to expect tomorrow. On daily chart we see the same picture. Our short-term context is upward AB=CD pattern and right now I see significant moment here. Take a look - although market has hit minor 0.618 target it has not moved right back down but it holds somewhere around it and above broken high. This could become very comfortable oportunity for some W&R or something of that sort, but price does not return lower and stands. This is potentially bullish behavior. If even price will show shy retracement to 5/8 of CD-leg, this is normal after reaching minor 0.618 extension:



On 4 hour chart we see signs of short-term weakness, market has plunged down a bit and now is forming bearish flag pattern, that could suggest a bit deeper retracement. Although we have bullish stop grabber here either, but it does not look very reliable for me. Trend has turned bearish here:



On hourly chart we could get nicely looking AB=CD that creates an Agreement with hourly K-support area and previous highs. So, that could be some kind of re-testing of previous highs resistance. If move will be gradual and AB=CD harmonic, then 1.3530-1.3536 area will be nice one for searching oportunities for long entry.
 
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Sive Morten

Special Consultant to the FPA
Messages
12,867
EUR/USD Daily Update Fri 29, November 2013

Good morning,
Yesterday although market has stand above 0.618 minor target of AB-CD, we have suggested that may be on thin market - EUR will do attempt to show retracement down. But, as you can see this has not happened and price has continued its climbing further.
Today market is approaching to significant resistance cluster that includes WPR1+MPP+5/8 Fib resistance. Bounce is possible. But, as market already stands above 0.618 but has not reached 1.0 AB=CD target yet - it is very probable that any bounce will be just retracement, since price very rare reverses in oposite direction when it stands between targets of AB-CD pattern. Besides, do not forget that in fact our AB-CD is nothing more but bullish engufling pattern on weekly:


Currently I do not see much on intraday charts. On hourly we probably could find butterfly "sell right near reistance and stop grabber that suggests reaching of daily resistance, on 15-min chart butterfly as well, but this is not very interesting for us, since we do not intend to take short position right now. As a result of AB=CD on daily we could get "222" Sell pattern and that will be our pattern.
If you're scalper then no doubts, you can try to take as short position as long again after retracement, but this has little relation to daily update. So, for daily chart major focus is watching for final point of AB=CD and any bearish patterns that could appear there:
 
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FreddyFX

Sergeant
Messages
358
I wonder if the Obama guys also read this and keep messing their politics so that the US$ gets hurt all the time.
 

Barbara IT

Private
Messages
29
Un saluto a tutti, mi chiamo Barbara e sono italiana (Milano), volevo solo complimentarmi con tutti voi per il grandioso supporto che date.
Vi seguo sempre con grande ammirazione, soprattutto a Minimax, che mi tiene compagnia con le sue analisi intraday.


Grazie di cuore a tutti!!!
Barbara
 

Barbara IT

Private
Messages
29
Un saluto a tutti, mi chiamo Barbara e sono italiana (Milano), volevo solo complimentarmi con tutti voi per il grandioso supporto che date.
Vi seguo sempre con grande ammirazione, soprattutto a Minimax, che mi tiene compagnia con le sue analisi intraday.


Grazie di cuore a tutti!!!
Barbara
Dimenticavo....... sono rimasta in trappola sul "Cable" con una posizione corta a 1,59 e vorrei sapere come potrebbe essere l'analisi tecnica di questo cross....

Grazie a tutti i miei guro!!!!!!!! :)
 
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