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FOREX PRO Weekly November 26-30, 2012

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Nov 24, 2012.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Monthly
    As you can see on monthly chart situation has changed drastically again. That is particular important, since we’re entering in final November’s week. Just on previous week we’ve discussed potential bearish stop grabber here, if market will close lower than 1.2762, but now we have no sign of it. Market has returned right back inside of 1.2934-1.3149 area K-resistance. That is significantly sophisticates overall picture, so that we even could get lightning bolt AB-CD right to 1.38 Agreement. Probably intrigue will hold right to November close – market still has time to return right back again. It does tell us that currently it’s not the time for long-term position. We need to get clarity – will K-resistance finally stop retracement up or not. Unfortunately monthly chart can’t help much us now.

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    Weekly
    This time frame gives us really tough picture, and major question, will we have enough courage to accept these possible drastical changes. And should we accept it? May be it’s too early? Now let’s go right to the point.
    Within previous month we’ve announced some suspicions, that it could be retracement right to 1.38, but in recent time all signs of it have turned to the zero. Now this prespective is reborning and on previous week we’ve told about it – by mentioning exceptional role of 25x5 on weekly chart. On first chart - that is a larger picture, we see a lot of bullish signs. If you will scroll all EUR weekly chart, you’ll see that there was never failure breakout of 25x5, when market breaks it, holds higher (or lower) and then immediately returns right back. Always breakout leads to continuation in the same direction. Very often this happens after re-testing of 25x5 from another side. May be one day failure breakout will happen, but currently it looks as previously – breakout and retesting. That’s bullish, no doubt. Second, is – we have rather bullish Gartley “222” pattern. Why it’s bullish – because AB-CD retracement has finished right at 0.382 support level – minimum possible retracement. Next is MPP, market has reached it and touched at first time within the month, and simultaneously has approached to upper border of parallel channel. On second chart, take a look, how market re-establish bullish trend again. That a kind of hybrid of stop grabber and dynamic pressure, since within two weeks market went against the trend. Very often such action leads to further upward acceleration.
    Well, it’s all clear if this bullish development will take place. We have upward AB=CD with 0.618 extension targets higher than previous top, by the way, so that top will not hold anyway. Potential target is Agreement with 1.3883 area. That is also 1.27 extension of previous swing low – recall butterfly “Buy”.
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    Still, by some unknown reason I feel some worring about cloudness of current scenario. I always look with suspicion at some obvious stuff on the market. Conservative tactic will be, probably, to wait breakout of previous highs. In this case market will prove its bullish ambitions. Another moment, that I do not like is a situation on JPY:
    [​IMG]
    EUR could grow by itself, not just due dollar weaken, but what the reasons for that now? Kicking and pushing among EU leaders for new EU budget? From the techincal point of view market has a lot of reasons and possiblities to reverse down on weekly. May be this is just retracement after hitting of 1.27 target (look at 2nd weekly chart), or this is just testing of MPP? What if market will hit just WPR1 at 1.3129 (around the same nearest Fib resistance) and will turn down again? A lot of if, if, if even without addling brains with fundamental and political variables. In such environment best decision is sticking with patterns, that stand in agreement with major trend, and trade precise close targets, not hold for gaint steps. Start from small pattern, take it, and if you will lucky and market will show greater move than you’ve extected or even give you more facts of bullishness, you can keep position. That is what I itend to offer you in the beginning of the week.

    Daily
    What pure technical approach does give us on daily? Weekly and daily trends are bullish, price action is bullish on daily chart, market has shown nice acceleration from daily K-support area. Now market stands at resistance – 5/8 major Fib resistance + MPP. Daily 90% overbought stands close as well. Since we do not have any bearish directional patterns here yet and we have a bullish trend that accompanied by bullish price action, hence, probably we can try to catch some deep to buy into.
    Although current thrust a bit small, but still, we can try to look at this daily thrust for B&B “Buy” Look-alike probably. It could give us just more assistance with catching right point to enter. Still, the same procedure could be accomplished just by watching on trends on multiple time frames and using some intraday patterns.
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    4-hour
    If you do not like much thrust on daily, here is another one, more pretty. I prefer to get B&B rather that DRPO here. If this will be B&B, first level to watch for is nearest support – 1.2893 that is WPP=1.29 as well. Next support is Confluence area – 1.2833-1.2864, that also includes 50% support of recent thrust. On hourly chart I do not see any singificant add-on to current picture.
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    Conclusion:
    Although market is showing thrilling changes on long-term charts, and potentially they are very attractive, overall situation is very difficult and it’s quite uneasy to take into consideration all parts of puzzle. In such sort of environment, may be we should move with direction of these changes, but controlling our risk by sticking with particular patterns on lower time frames. That should let us flow with the market and take advantage with unexpected possible acceleration.

    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.
     
  2. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Tue 27, 2012

    Good morning,
    Yestarday's price action was not very impressive, so, in fact we're at the same point as on Monday, but still some differences have appeared.
    First, by 2 more trading sessions price has added neccesary amount of bars to daily thrust up. And market still stands here at resistance. Here our trading plan is the same - we need deep to buy, but this deep should give us relatively safer entry, at least from probability standpoint. That could be by B&B "Buy" pattern.
    Recall that all trends are bullish - daily and weekly, as well as price action, and we do not have any bearish directionals. One barrier that we have is 5/8 Fib resistance+MPP.

    4-hour time frame could help us much with entry. Take a look that here we have another nice thrust up, and price action is more suitable for DRPO "Sell", although we do not have confirmation yet. If this will be really the case, then we should count on retracement to 3/8-1/2 support area that is DRPO min target and WPP. 1.2870-1.2905. Harmonic retracement swings also point on the same area approximately.

    Hourly chart tells that our suspicions about possible pullback have some reasons - bearish Divergence accompanied with W&R right at daily resistance. Your imagination probably will let you to guess here 1.27 Butterfly "Sell" as well.
    If you're scalper, you may try to trade bearish move as well, stick to butterfly to anticipate of DRPO. I give you just a hints, that is a bit beyond the scope of update, since its daily oriented, and on daily we have bullish context and have to search possibility to buy.
    That's what I personally will be watching within current session. Hope that on current week we will be better than on previous one...
     

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    #2 Sive Morten, Nov 24, 2012
    Last edited: Nov 27, 2012
  3. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Tue 28,

    Good morning,
    Today we will continue to track our trading plan, that we've created yesterday. On daily Time frame only single level is of our particular interest - 1.2875 support, as a level of potential start of B&B Buy trade.
    Most important for us is intraday time frame.

    4-hour chart has shown us excellent DRPO "Sell", we've discussed it yesterday already. I prefer to use as target of DRPO - 50% of its thrust. That is around 1.2870. Right above this area stands WPP=1.29 and nearest 3/8 support 1.2904. Where market will stop we can understand only by hourly time frame.

    Here we have two different patterns. First one is AB=CD. It's 1.0 target coincides with 1.27 extension of potential Butterfly and creates an Agreement with WPP+3/8 Fib support. Strong level.
    1.27 extension of AB-CD coincides, in turn, with 1.618 target of butterfly and, that is important - with daily 3/8 support.
    Also, you can see here nice example of bearish dynamic pressure in black circle. Trend holds bullish, but price action is not. That confirms possibility for a bit deeper retracement.
    So, now we know that support will come in 1.2875-1.29 area. How is better to enter? Well, if you intend to base your trade on the same patterns, you can apply gradual enter - partially at 1.27, partially at 1.618 of butterfly. That will not increase your risk too much, and let you to not miss entry. May be you will find some better solution.
    Anyway, current situation is worthy to be monitored.
    IF you have short position by DRPO - think about profit taking around the same area.
     

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    #3 Sive Morten, Nov 24, 2012
    Last edited: Nov 28, 2012
  4. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Thu 29, November 2012

    Good morning,
    so our trading plan that we've created in weekend was completed within 3 days. It was rather active first part of the week and it's much more successful compares to previous one.

    Currently market just has completed B&B, and has not created any other patterns yet, so today we can discuss potential perspectives. But first, I would like to say that we've made two nice trades in 3 days, so it will not be bad if you will take some rest and spend some time with your friends, relatives and family. Trader needs rest, many people undervalue its importance.
    Ok, first of all, let's take a look at daily time frame. Do we have B&B at all? Price action does not correspond with conditions - no close below 3x3 DMA... But I suppose "yes", that was B&B. The point is that 3x3 is just a tool, that makes identification of B&B easier, but this is just external indicator, the surface. The core is a market mechanics and it shows that this was a momentum trade (that is B&B as well). After thrust we have deep retracement to solid support and thrusting attempt to continue move up. That's the nature of B&B.
    What we can expect now? First of all, if you have bearish view, it's probably to take profit here, at 1.2960, since that is B&B target. If you suspect that market can continue further - very well, but take 50% profit here and protect your position with b/e stop loss.

    By taking a look at 4-hour time frame, I see that potential upward continuation could be in a way of butterfly "Sell", if we suggest that currently we see the left wing of it. If we will be lucky and it will be indeed so, then your stop right around lows of 1.2875 will be precisely in the point of Buterfly Failure. Very good stop, and you will loose nothing, if this idea will fail.

    On hourly chart we see that 1.2960 area is also 1.27 extension of butterfly up and classical support/resistance zone. So, chances of butterfly are not bad.

    That's being said - our major task now is to manage position - take profit and protect the rest of it. But how it will turn - will it be Butterfly, or not, will see. It is two more days ahead.
     

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    #4 Sive Morten, Nov 24, 2012
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  5. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Fri 30, 2012

    Good morning,
    actually it's not much to comment here. Currently we can say that our suggestion and medium term plan - search patterns in a row with weekly situation works in general. So we will continue to follow it on next week as well.

    On daily time frame there is no new patterns, trend holds bullish, but market not at overbought. Theoretically there is no barrier to continue move up, since 5/8 level has been broken. Still today I want to give a caution for those of you who still hold bullish position.

    On 4-hour chart we see possibility for Double Top pattern. This pattern in recent time very often is accompanied by two moments - Divergence, and W&R on second top. Both of them we have now. If this will be indeed Double Top (DT), then it could trigger deep retracement to 1.2750 area.

    So, if you hold bullish position - manage it accordingly. If you're scalper - you may try to stick with this DT. Price currently stands very close to invalidation point, so if even you will be wrong, you should not loose much. But I hope that you understand all risks, since this pattern contradicts with daily trend.
     

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    #5 Sive Morten, Nov 24, 2012
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  6. sardinian

    sardinian Private, 1st Class

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    very mysterious week...

    I think that all the puzzle will be understandable next friday night (11.30.12) , at the close of the month.
     
  7. LeonPetrus

    LeonPetrus Recruit

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    Great analysis as always. You always cover all the bases which does not make it any easier to make the right choices. Last Wednesday was my worse day ever. Had done so well up to then. When I heard the news and saw the market tank after they announced that there was still no agreement on Greece I piled in. Not for one moment did I think there was a chance the Euro could recover from that anytime soon. So secure in the knowledge I could not loose I let it ride, switched off my FX platform and got on with my work. Waow did that ever go wrong. Four hours later I had lost most of my net gains of the past 2 months. Then Friday I got hit again. In the past week there were plenty of 'experts' from major financial institutions that predict a Euro at 1.39 by year's end. That is beyond me. I have said it here before, under my old account that does not seem to work anymore, and strongly believe that, the Euro was made to be on a par with the USD. These days though it seems that no matter what news comes out it is always given a spin that makes it positive for the EUR. That makes no sense. The Eurozone is in a deep economical crisis, other places are doing better. The economies of both the US, under Clinton, and the Eurozone before 2008, were doing well to very well and that was also the time when their currencies were at or near their highest levels ever. So now the US economy shows some signs of recovery but the USD does not gain on the EUR. No the EUR gains on the USD, go figure. And this while the Eurozone has so many structural and fundamental problems to solve it is hard to imagine they (all 27 countries, governments) can come up with a, any, comprehensible solution that is exceptable to all soon. There is talk of France being in trouble and the UK thinking of leaving the EU. You would think this can only mean one thing a EUR tanking. Japan has a moribound economy but the Yen barely budges, still relatively close to its historic high against the USD when compared with not that long ago when it stood 110 even 120 JPY/USD. How can one make sense out of all this.
    One last thing I wanted to get of my chest. A while back you mentioned the moves of the USD as related to the price of gold. In that respect you are still spot on. The Euro climbs and there is Gold right on its tail, or vice versa. Still in my opinion that also does not make sense. If gold really is considered a buffer against inflation or a store of value then gold should keep on rising no matter what both in USD and EUR terms. Heck it should rise against all major currencies at the moment as almost all are finding ways to 'ease'. Basically print money and flood the market in the hope of devaluating their own currency against that of everybody else. As it is it can not have much effect since the biggest economies, bar China (but its currency is not publicly and openly traded on the FX markets) are trying to do the same. So it only follows that with everyone racing to the bottom Gold can only go up. Which in itself would be an exercise in printing money. Since gold can be dug up. More gold more money.
    Sorry for the long story just had to get it off my chest.
    Let's see what this week brings.
     
    #7 LeonPetrus, Nov 25, 2012
    Last edited: Nov 25, 2012
  8. gpeter991

    gpeter991 Private

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    Totally agree with your poin LeonPetrus - it is so hard to combine the current fx ratios with the fundamentals of the economies involved. Some currencies are overvalued some undervalued with respect to their economies performance. Actually I would recommend to all fpa members to read the following article from the economist that deals with the big picture:

    Currencies: The weak shall inherit the earth | The Economist

    Additionally there is a printing money procedure both in the US and EU in different bailout approach. When US implemented their QE program, USD decreased in value - EURUSD climbed from 1,18 until today. EU and the ECB program also governs the price stability and overpowers the EU with their mechanisms.

    So we have some major market participants that influence the EURUSD rate with various strenghts and timing...

    And there is politics too. Both sides want to forter their economies. So maybe sometimes it is good to have low value currencie against your counterparties, so that the exports are cheap. So to improve exports and the account balance and trigger economy it is good for the us fo example to have high eurusd. and it is equally good for the EU to have low EURUSD.

    With all the crisis aspects and different objectives of the involved parties one should not be surprised that the old economics do not work in an imperfect environment....
     
  9. mjunkyard

    mjunkyard Private, 1st Class

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    Hi Dear Sive;
    Thank you very much for bringing up the yen. I just didn't get what were you trying to say about the yen. Are you trying to say that if the Yen is about to go up it contradicts the eur/usd going to 1.38?
    I love what you wrote about the "I always look with suspicion at some obvious stuff on the market." I think that that's the reason for our miserable failure on Wednesday. You were 100% right with your brilliant analysis. The problem was that it was too obvious. I always like checking what the retail traders are doing. On wednesday all retail traders went short.
    sincerely
    Mjunkyard
     
  10. forexjosa

    forexjosa Private, 1st Class

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    Hey mjunkyard.
    Where you check that: "I always like checking what the retail traders are doing. On wednesday all retail traders went short." ?
     

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