Forex FOREX PRO WEEKLY, November 25 - 29, 2019

Sive Morten

Special Consultant to the FPA
Messages
12,898
Fundamentals

This week has shown dramatic action, a lot of volatility, but trading range in general was tight and barely impacts on longer-term situation. As last week there are the same driving factors - US/China and statistics.

The week has started on the same mood as previous one - euro enjoyed a small respite on Monday, jumping to an 11-day high versus the U.S. dollar, on expectations that Washington and Beijing can soon sign off on a deal to end a trade war that has been a drag on global economic growth.

Faint optimism for a breakthrough was supported by a report on Sunday from Chinese state news wire Xinhua, which said the two sides had “constructive talks” over the weekend. The export-oriented European economy has suffered from the 16 month long trade dispute between the world’s two largest economies. The tariff war has taken a toll on the world’s manufacturing. Investors injected $3 billion of inflows into European equities over the past two weeks, ending a record run of 85 weeks of persistent outflows, EPFR data showed last week.

“Market participants remain optimistic that a partial U.S.-China trade deal will be signed soon and have welcomed tentative signs of economic improvement outside of the U.S., especially in the euro zone, both of which are eroding the relative appeal of the U.S. dollar,” said Lee Hardman, currency analyst at MUFG.

Sterling was boosted by expectations that the Conservative Party could win a majority in the Dec. 12 election, as well as by British Prime Minister Boris Johnson saying that all Tory candidates in the election have pledged to back his Brexit deal. This could open the door to getting the Brexit deal agreement passed through parliament.

Johnson’s Conservatives have a 14 point lead over the opposition Labour Party, a poll published by Good Morning Britain showed on Monday.

“Anyone firmly believing in a Tory victory can expect further potential in sterling,” said Commerzbank analysts in a note to clients, though they added that “the FX market is still quite sceptical” towards a Tory win.

But later on the day CNBC reported China is pessimistic about agreeing to a deal, which suggests a resolution to perhaps the biggest risk to the global economy remains elusive. Currency traders were also wary of the dollar after U.S. President Donald Trump met U.S. Federal Reserve Chairman Jerome Powell on Monday. Trump has repeatedly criticised the Fed for not lowering interest rates enough.

“Everything was discussed including interest rates, negative interest, low inflation, easing, Dollar strength & its effect on manufacturing, trade with China, E.U. & others, etc.,” Trump tweeted soon after the meeting, calling the session “good & cordial”.

In a statement, the Fed said Powell’s expectations for future policy were not discussed, but Trump has for more than a year said the Fed was undermining his economic policies by keeping interest rates too high.

The dollar edged higher on Wednesday as worsening U.S.-China relations supported demand for the safe-haven greenback even as investors awaited the release of minutes from the Federal Reserve’s October policy meeting for clues to the path of future U.S. interest rates.

Investors, who in recent weeks had grown optimistic that Washington and Beijing would sign a so-called “phase one” deal this month to scale back their 16-month-long trade war, were worried by a hardening of the trade war rhetoric from both sides.

The United States would raise tariffs on Chinese imports if no deal is reached with Beijing to end a trade war, U.S. President Donald Trump said on Tuesday, threatening an escalation of the spat that has damaged economic growth worldwide.

The mood in markets was further soured after the U.S. Senate angered China by passing a bill requiring annual certification of Hong Kong’s autonomy and warning Beijing against suppressing protesters. China demanded the United States stop interfering in its internal affairs and said it would retaliate.

“Today the main focus is the trade talks between China and the U.S. and we are seeing risk aversion,” said Piotr Matys, currency strategist at Rabobank.
Matys said that the U.S. senate’s bill in support of Hong Kong could complicate progress towards a preliminary trade deal.


Markets had hoped that a partial trade deal to end the 16-month U.S.-China trade war could be signed at a summit in Chile, which was scheduled for mid-November. The summit was cancelled, leaving the outlook for a deal unclear.

Adam Cole, chief currency strategist at RBC Capital Markets said that a preliminary “phase one” trade deal could be reached by the end of the year. “The prospect of a broader more all-encompassing deal will drag on well into next year,” he added. “The market is worrying (about) this sort of exogenous shock to the process by the build-up of tension in Hong Kong - I ultimately doubt that either side will allow that to delay the process,” Cole said.

Despite piking on Hong Kong situation, China has invited top U.S. trade negotiators for a new round of face-to-face talks in Beijing amid continued efforts to strike at least a limited deal, the Wall Street Journal reported on Thursday, citing unnamed sources.

“We’re really just waiting to see what happens on the trade front,” said Stephen Gallo, European head of currency strategy at BMO Financial Group in London.
“The shift in sentiment is warranted, a lot of good news had been in the price and some of that has been taken out.”


Gallo said the outlook for the dollar had not shifted that much moving into 2020, with currency markets likely to remain beholden to trade, Brexit and political headlines. Strategists at Citigroup expect the dollar index to weaken by more than 2% over the next year to around 94.

For others, a pause in U.S. Federal Reserve interest-rate cuts was positive for the dollar outlook.

“Over the past year or so there have been times where negative headlines on trade have been negative for the dollar because they have reinforced Fed easing expectations,” said Fritz Louw, a currency strategist at MUFG. “But if you don’t expect the Fed to cut rates further, the negative trade sentiment impact would probably drive the dollar a bit higher from a safe-haven perspective.”

Minutes released on Wednesday showed that the Fed, which hit pause in its easing cycle following a rate cut in October, is in no hurry to reassess the path of interest rates.

On Friday, The euro turned negative and touched a weekly low after euro zone flash PMI data fell short of expectations. Markets were unmoved by Christine Lagarde’s first policy speech as president of the European Central Bank.

German third quarter GDP data held no surprises, showing that exports, state spending and consumers helped the German economy avoid a recession.

“Unless global uncertainties are lifted, which are weighing down on the manufacturing sector, it is only a question of when, not if, the weakness in manufacturing spreads to the rest of the economy,” Daria Parkhomenko, forex strategy associate at RBC Capital Markets, wrote in a note to clients.

Closer to the end of the session, the U.S. dollar shook off early weakness to advance against a basket of currencies on Friday, after data showed U.S. factory and services activity quickened in November in a sign of the continued resilience of the U.S. economy.

IHS Markit said its “flash” purchasing managers index (PMI) for manufacturing rose to 52.2 in November from a final reading of 51.3 in October, while its preliminary services PMI increased to 51.6 this month from 50.6 last month.

Helping the dollar’s strength was a survey which showed euro zone business growth almost ground to a halt this month as activity in the bloc’s dominant services industry increased at a much weaker pace than expected and among manufacturers it contracted again.

“That combination is what is pulling the dollar a little higher,” said Vassili Serebriakov, an FX strategist at UBS in New York. “The dollar is relatively expensive but I think the market is really looking for signs of a stronger global growth rebound to revive interest in some of the currencies outside of the U.S. but the messages that we are getting are still a bit mixed, both in terms of the PMIs and the news on trade,” said Serebriakov.

Bethany Beckett, assistant economist at Capital Economics said the flash PMIs for November provide further evidence of a stabilization in the industrial sector.
“But with labor markets on the cusp of a marked slowdown, overall economic growth is likely to remain subdued for a while yet,” Beckett said in a note.


The pound dived on Friday and was on pace for a weekly loss after surveys showed British business suffered its deepest downturn since mid-2016, with caution rising before a Dec. 12 general election.

Speaking on CFTC data - it mostly confirms the view that recent upside action on EUR is a retracement. Net short position shows growth four weeks in a row. Although this growth is not too strong but it is stable, which doesn't corresponds to idea of bullish reversal:

1574501123059.png

Source: cftc.gov
Charting by Investing.com


In general, speculators raised their net long bets on the U.S. dollar in the latest week to a five-week high, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Friday. The value of the net long dollar position was $18.36 billion in the week ended Nov. 19. The net long dollar position had stood at $15.70 billion last week.

In a wider measure of dollar positioning that includes net contracts on the New Zealand dollar, Mexican peso, Brazilian real and Russian ruble, the U.S. dollar posted a net long position valued at $17.01 billion, up from $14.32 billion a week earlier.

This week Fathom consulting released update on US/China situation as this topic stands in focus rather long-time already:

Since 2018, the effective tariff rate on US imports from China and vice versa has steadily increased, resulting in a reduction in economic links. According to Chinese figures, gross imports and exports between the world’s two largest economies totalled $556 billion in the twelve months to October. That was down from a figure of $642 billion in the twelve months to October 2018, and below the October 2015 figure as well. Moreover, trade tensions have coincided with a notable slowdown in the economic growth rates of both countries and uncertainty around the future trading relationship has had an impact on asset prices. Fathom’s China Exposure Index, which tracks the relative stock market performance of US-listed firms with significant revenue exposure to China, has tended to ebb and flow with developments surrounding Sino–US trade talks. Signs of recent progress towards a so-called ’Phase 1’ deal have boosted the equity prices of these firms, and supported risk assets more generally. Nevertheless, the mooted agreement is more likely to prevent a further escalation in tariff rates, rather than return the trading relationship to the old normal. Indeed, Sino–US relations have entered an era of strategic competition. Investors will have to adjust.
1574501578320.png


This week is a great example how EUR/USD rate reacts on US statistics. As we've said previously, EU economy is grounded and hardly could become worse as overall situation there is pity and stands at the eve of recession. ECB has limited tools to support economy - rate is already at zero level and all that they could do is next QE programme. Automobile sector stands under scare of possible US tariffs. Thus, EUR/USD balance totally depends on US statistics and economy conditions. Recent PMI data, Retail Sales and last NFP data tells that situation is stabilized for awhile, which supports US dollar in short-term perspective.

US/Sino driving factor mostly discredit itself turning to soap opera which brings no real results and clarity. Inform agencies just shake the boat in favor of big speculators who need volatility on the market but all market swings that are based on US/China news reversed back very fast. This factor brings a lot of discomfort to us, because it provides no real effect but adds a lot of noise in price action. For serious consideration of this factor we need clear results of Agreement or no-Agreement decision. Until this will happen - it seems we will have to place more extended stops on our trades to avoid impact of this noise.

Technicals
Monthly


This week price action was in tight range and barely impacts on monthly picture. The only thing that is important here is the bottom of reversal month. While it stands valid - EUR keeps chances on upside continuation. As we said, we've got reversal month by October's close. November stands inside one by far, showing retracement back in October's body. In general this is not something uncommon and absolutely natural process. At the same time, taking broader view - forming of reversal bar doesn't make any impact on major tendency by far, as EUR still keeps LH-LL trend. Reversal bar will complete its mission if it will lead to breaking of this tendency.

In general recent changes here were in favor of EUR due US statistics and more dovish Fed policy, at least in short-term. But this week data has improved and new achievement of US/China negotiations stands on horizon. It stops for awhile EUR appreciation. Now we need to keep close eye on key technical levels that are vital for longer-term tendency. Market should not erase October rally as it was in June. Otherwise EUR continues to drift lower to 1.03 area.

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.

That's being said the major intrigue stands around fundamental background now - 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_25_11_19.png


Weekly

Performance of few next weeks will hold tight relation to weekly reversal candle momentum, which still stands in focus here. As we said previously, when reversal week just has been formed - "If nothing outstanding will happen, it seems that we should forget about bullish tendency, at least for a few weeks". Downside reversal is sharp and engulfs three previous weeks (almost month). Now it seems that momentum starts to work and push EUR lower.

By taking a look at other issues here - downside reversal happens in the middle of the range and not at some resistance area, which looks bearish as well. Finally, here we could recognize bearish dynamic pressure - price is falling while MACD shows uptrend.

Currently we still treat it as retracement inside monthly upside reversal, but to be honest, the signs that we see here promise nothing good to bulls and easily could erase October rally. In general, we talked about this last week and agreed to treat upside action just a retracement. It seems that now time is come to look south...

eur_w_25_11_19.png


Daily

So, in daily confrontation bears won as EUR wasn't able to break strong resistance that we've discussed in our daily updates. As a result, our B&B "Sell" LAL trade that we've mentioned is done. As we've said - B&B could become a real downside continuation pattern, if we consider it in a context of weekly setup.

Weekly reversal candle could trigger continuation of different depth. As we do not know the final destination, first we focus on nearest target around 1.0980. This is COP which agrees with the same major 5/8 Fib level area. OP stands at ~1.09, beyond Oversold area and too deep to consider it right now.

At the same time we should recall that EUR failed to pass through WPR1 last week, which tells that it was a retracement in a longer bearish trend. Thinking about it in this way - it seems that chances are good that we will see EUR at OP target sooner rather than later...

eur_d_25_11_19.png


Intraday

Hourly 1.27 H&S that we've discussed on Friday has done perfect, but its XOP already is completed. Thus, it makes sense to book the profit and start preparation to another short entry. As market is not at oversold and already has broken major 5/8 Fib support here - we do not expect too deep retracement and would consider either 1.1034 or 1.1045 K-area as potential levels where EUR could turn down again. To make entry process easier - we could split position in two parts for entry on both levels, because it is possible that retracement will be very small. Our first target is daily COP.

eur_1h_25_11_19.png


Conclusion:

Conclusion today the same as last week - currently fundamental background stands stable and lets market to be driven by its own factors. Major events should happen in December and this keeps long-term charts intact. Thus, we keep up with our trading plan and continue trading setups that we have on daily/intraday frames.
 

sveckar22

Private, 1st Class
Messages
59
Hello guys, we have interesting things going on this week in my COT Analysis.

GOLD:

As Mr. Sive pointed out in his GOLD analysis, Net Positions have increased from the previous week. Non-Commercial traders have increased their Long positions and decreased Short positions.


24.11. GOLD COT.JPG


US DOLLAR and EURO:

On the USD we can see a trend of Non-Commercial traders decreasing their Long positions while the changes in Short positions are not so ‘’significant’’. Net Long positions are decreasing week by week from mid-September 2019.

Last week Non-Commercial traders decreased both their Long and Short positions, the decrease in Shorts was lesser which led to increasing in Net Short positions, overall the ratio between Longs and Shorts is staying almost unchanged for the past five weeks.

24.11. DXY COT.JPG



24.11. EUR COT.JPG


AUD:

We can see a small increase in Long positions and a much bigger increase in Short positions, while the ratio stays unchanged, Net Short positions have increased.

24.11. AUD COT.JPG



CAD:

Non-Commercial traders have increased their Long positions and decreased their Short positions, overall Net positions are still negative and the ratio is bearish. A few weeks ago I was looking for a short opportunity but got stopped out on it.

24.11. CAD.JPG


This is what I am now looking at on the Daily chart.

24.11. CAD D.JPG


CHF:

A very small decrease in Longs and slightly bigger decrease in Short which has been going on for the past few weeks, overall the Net Long positions are increasing and the ratio is in bullish territory.

24.11. CHF.JPG


GBP:

First time from mid-September 2019 we see an increase in Short positions again on GBP, the Longs, on the other hand, were decreased slightly, which led to an increase in Net Short positions again after ten weeks, let's see if this will continue throughout next weeks.

24.11. GBP COT.JPG


JPY:

A small increase in both Long and Short positions, but overall Net Positions have still increased.

24.11. JPY.JPG


This is what I am looking at on the daily chart, the market is slow at moving past COP, but is at the same time making higher highs and higher lows and the retracements are not even to 0.382 FIB retracement.

24.11. JPY D.JPG


NZD:

We can see both a decrease in Longs as well as Shorts on NZD. Net Short positions have decreased only slightly.
 

Sive Morten

Special Consultant to the FPA
Messages
12,898
Morning guys,

Yesterday price action has not shown outstanding performance and mostly we're at the same point as on Monday. It means that our trading plan that we've discussed in weekend is valid. We still watch for reaching of COP target and Agreement area around 1.0980 level. Those who have short positions could keep them, new short entry is possible on intraday charts. Those who would like to go long has to wait until market will hit the target.
EUR Daily Chart

On 4H chart we do not have something specific. Those who would like to take scalp short trade here could watch, say, for bearish grabber at minor pullback. In fact, market stands in "free space" as it has not barriers on a way down, no support areas. As it is not at oversold either - any retracement should be small:

EUR 4H Chart

On 1H chart we have no clear patterns by far. The only thing that we could recognize is potential bearish dynamic pressure as MACD trend stands bullish but price action is not. By using simple MACD indicator you could recognize bullish divergence, whic also should not be trusted.

And the last one. If you take a look at 4H DXY chart, you'll see that XOP target still has not been hit yet, while EUR has reached it last week. This also supports idea of some downside continuation on EUR.
 

Sive Morten

Special Consultant to the FPA
Messages
12,898
Morning everybody,

While EUR is creeping to our target, we could consider situation on GBP. It is not as simple as it seems at first glance. By brief look it we could suggest that it is bearish as we have two grabbers on top, which suggest downside continuation. But here we have to be careful to details. Take a look that upside rally stands for 7 bars, while consolidation is three times longer. Despite this - GBP was not able to reach even nearest major 3/8 support level. This is bullish sign. Second - consolidation stands above broken K-area but not below it. This is often happens on stock market, before upside continuation.

These two moments make me search for something else, beyond the flag pattern that we have:
gbp_d_27_11_19.png


The thing that I've found is reverse H&S pattern, with right arm bottom around 1.28 area. This level is confirmed by minor XOP target and potential butterfly "Buy" pattern. Thus, it could happen that upside action could start a bit earlier than 1.27 K-support area.
gbp_4h_27_11_19.png


If this will not happen - it doesn't mean that market turns to downside action. Inside the flag we have wide AB=CD pattern with OP target at 1.2740 (not shown here) and Agreement with 1.27 K-support. This is "second chance" target, where GBP could turn up.

If you have bearish view - it would be better to not take short position, until market breaks 1.27 K-area.
 

RogerTC

Corporal
Messages
115
Some good signals from the scanner dashboards that you might like to keep an eye on them .

Thrusting pairs;

thrust.PNG


Stop Grabbers;

STOP GRABBER.PNG


Dinapoli Macd Trend Statuses; I use it when I use standart Trade Plan.

Ex: GBPUSD => Monthly up, Weekly up and Daily is down. So we can look to fade daily sell signal against weekly and monthly buy in good support zone.

SCANNER trend.PNG
 

RogerTC

Corporal
Messages
115
Just for information, there is black friday sale on the indicators that i mentioned under 'fibtree indicator' thread. If you havent checked it out yet it will last in 2 days.
 

Sive Morten

Special Consultant to the FPA
Messages
12,898
Morning guys,

Happy Thanksgiving to all our North Americans ;) Actually, I'm not sure that you will read it today, but still... ;)

Now we stand at thin market which could bring surprises, as you know. Currently, we still follow our weekend scenario and watching for COP target been hit. In most cases, when target stands slightly beyond the level market tends to hit it by some spike or short term level penetration. But now, scenario could be different.
eur_d_28_11_19.png


On 4H chart we have grabbers and take a look - recent low is higher than previous one. This is potential situaiton for daily butterfly pattern. Because grabbers suggest upside bounce. This bounce, in turn, could become a part of reverse H&S pattern here, which could trigger even greater pullback, which, in turn, will become the right wing of daily pattern:
eur_4h_28_11_19.png


If still market follows to our initial scenario - most probable we will get 3-Drive "Buy" pattern here which should complete daily COP as well:
eur_1h_28_11_19.png


As upside drives look rather choppy and care no signs of upside thrust - I suggest, that our weekly scenario is still valid. But maybe choppiness stands due holiday. Anyway, if you look for chance to go long - wait for COP and 3-Drive completion or, alternitavely, if price will move directly to recent top (between 1st and 2nd drives) - watch for appearing of right arm bottom to take position based on reverse H&S pattern...
 

Sive Morten

Special Consultant to the FPA
Messages
12,898
Morning guys,

Markets stand anemic, no activity - so we could cover as EUR as GBP today. On EUR we still keep watching for daily COP target. Reverse H&S pattern on 4H chart, that we've discussed as alternative scenario has not been formed, at least yet:
eur_4h_29_11_19.png


This lets us to keep an eye on our 3Drive and butterfly patterns as well. In general market stands in downside channel, acompanied by divergence, as this usually happens. But upside action stands too slow and choppy and doesn't contradict to suggestion of another leg down. So, lets see what will happen on Monday.
eur_1h_29_11_19.png



On GBP our suggestion that market could turn up a bit earlier looks like was correct. This day has become bullish reversal session as well. Then price action stagnates due Thanksgiving, I suppose.
gbp_d_28_11_19.png


The only risk that we have here is missed XOP target. Upside action has started not just earlier on daily chart, but even earlier than we've suggested, as we thought that it should happen from xop. Anyway, if you were able to catch this trade, you're not upset, I suppose ;). Within few hours we could get bullish grabber here, which would be welcome in current situation.

gbp_4h_28_11_19.png


On 1H chart market stands at K-support. So, if you keep longs, you could move stops just below K-area. If our scenario is correct, GBP should stay above it.
gbp_1h_28_11_19.png
 
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