FOREX PRO Weekly November 28- December 02, 2011

Sive Morten

Special Consultant to the FPA
Messages
12,854
Monthly
In the beginning of our research I would like to refresh quarterly chart of US Dollar Index. We will return to it from time to time, since it contains our long-term forecast, that we’ve discussed in details here:
http://www.forexpeacearmy.com/forex-forum/sives-analysis-archive/17534-forex-pro-weekly-october-31-november-04-2011-a.html

Now we see that this forecast starts to work. In fact it has started to work right after discussion, but this is very long term chart, so to see some effect we need some time to pass. This discussion will be mostly useful for positional traders. We will try to make analogy with EUR/USD chart, since dollar index includes in calculation EUR as much as 56% and relation between Dollar index and EUR is significant (see research mentioned above).
So, here we see nothing more but Gartley “222” buy that coincides with two bullish stop grabbers. Red line is DiNapoli MACD Predictor indicator that shows trend. Currently quarterly trend on dollar index is bullish. Application of simple Fib extensions gives us three targets – 0.618 at 84.012, 1.0 – 91.006 and 1.618 – 102.322. Since this move has started from stop grabbers – they suggest take out of previous highs, that’s why 0.618 extension does not quite suitable for us. Most probable target is Agreement with 0.382 Fib resistance and 91.006 1.0 extension target of AB=CD pattern. Extended target is also an Agreement with 102.322 and 0.618 Fib resistance, but we can’t definitely say anything about it. Possible it could be reached, but we need to see how price action will develop, while target around 91.00 should be reached based on patterns that already have been formed. What level on EUR/USD is matched to 91.00 on dollar index?



Since market should take out previous highs on Index – it means that it should take previous lows at EUR/USD and the nearest targets that stand below it are – 1.1482 and 1.1657. We can call it as 1.15 area. Still, if we will apply the Fib extension in the same way as on quarterly dollar index, then we will get 1.0 extension target around 1.10. This lets us to make long-term forecast, that we will adjust from time to time based on price action on lower time frames. This forecast is 1.10-1.15 area. So, if you are positional trader and hold positions long-term – that is your nearest destination.

Now let’s focus directly on monthly chart. Trend is bearish, current bar down looks impressive – opens at the high and stands now at the low. Currently we have to be very careful, since we are approaching to monthly Agreement at 1.2905-1.3040 area. Market stands neither on oversold nor at overbought.


Weekly
Weekly trend is strongly bearish. We can see how bearish dynamic pressure works. Initially price action does not support trend shifting – next it accelerated down and should take out previous lows. Our major focus in medium-term perspective is most recent AB=CD pattern with target at 1.2830 and weekly oversold – very close to monthly Agreement.


Also I would like to show you a bit different picture – once we already had a look of it. This is not quite H&S pattern, because it looks too skewed and disharmonic. Still, it has something from H&S. It’s nearest target is 1.2458, I suppose:


Daily
Daily trend is strongly bearish. Market is not at oversold and theoretically could continue move down, in fact without any barriers. Take a look that weekly AB-CD target stands very close to smaller daily AB-CD 1.618 that we’ve traded during previous couple of weeks. Currently market has hit 1.0 extension of this recent AB-CD at 1.3242, but there are no signs of retracement yet. Will it happen or not – it’s quite difficult to say, especially based on daily time frame. CD leg is strongly bearish, since market has shown just 0.382 retracement or even smaller. Right to 1.3242 target there are two consecutive solid bars down. This sign tells that there will not be any retracement or it will be shallow.

 

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Sive Morten

Special Consultant to the FPA
Messages
12,854
CONTINUATION


Pivot points will help us to estimate the depth of potential retracement. There are just two cases are possible. First is pivot point at 1.3340 and pivot resistance 1 at 1.3468. The logic is here that when market stands with solid trend down it acts either as “touch pivot and go” or retraces to pivot resistance 1. You can clearly see it on example of AB leg. If market accelerates to pivot resistance 2 or even higher – this is a signal of changing in tendency.
So, our advantage here is that as pivot as resistance 1 coincide with Fib levels - former with 1.3366, while latter with Confluence resistance 1.3460-1.3467. So, if you are day trader and want to enter short – you may try to do it from first level and place stop above the second one. If market intends to continue move down it should not take out second resistance and pivot resistance 1. If it will do it – then move up will continue and your stop will safe you a lot of money.


4-hour
Trend is bearish, here you can see that 1.618 Butterfly “Buy” pattern has failed – market accelerates through 1.618 level - trading of harmonic patterns against major context is unsafe adventure. We’ve talked about it on Friday. So, what’s next? On 4-hour time frame I do not see any clues currently. May be most recent AB-CD pattern (find it by yourself) with target at 1.3162, but this is also not a decision.


Hourly
There is also not much information on hourly. Again we have two contradictive patterns – Dynamic pressure and bullish stop grabber. But this is not sufficient to make a decision. Some of you, guys, discussed on forum DRPO LAL pattern, but this is not DRPO – this is completed B&B “Sell”, since market has reached 0.382 resistance level from recent swing down. Looks, like that the first part of Monday we will spend on understanding – will market show retracement or not. If there will appear some patterns – W&R, Butterfly “Buy”, then retracement probably will happen. If market will fall like a stone, then we will have to search for another context to enter short.


Conclusion:
Long-term bias looks solidly bearish. It makes sense to hold long-term bearish positions.
In short term market has reasons for retracement up, but will it happen or not – it’s hard to say, since there are no patterns yet that could point on it. Still, if even it will happen – it will should not be too deep and has to be used for enter short by day traders.


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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papao

Private, 1st Class
Messages
74
Thank you sive for the analisys. There should be some problems in the first post, because links to attachment doesn't work ("Invalid Attachment specified. If you followed a valid link, please notify the administrator").
 

Jyotiprakash Pal

Sergeant
Messages
225
ufffffff can't think about "Confluence resistance 1.3460-1.3467" u mentioned sive sir :rolleyes: rubbing my hands ..

sir can we have a lesson on DPRO and Breadandbutter ... confused with both ..
both need same creatraia ..
8-10 force bars below/above 3x3 .. :confused:so to judge which is going to be Bread and butter which is going 2 be DPRO..i just see u allready help me on this matter sir .. i get the idea on STOPS .. but still confused ....

Sir if market give 8-10 foreced bar below 3x3 and go 61.8 of whole wave down (for that it need 2 close above 3x3) then i trade with target 61.8 of whole retracement up.. thats DRPO ..

if candle close below 3x3 again and continue with trend that Bread and Butter .. !
read the whole book still struglling :( as the examples on the books r not so good :(
 

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Stag

Sergeant
Messages
202
Thanx Papao,
I've fixed it (probably)
To see the pics one must be logged in, otherwise the name of the pic is visible only and when it is clicked, "You are not logged in or you do not have permission to access this page." message appears along with a logon page.
 

Sive Morten

Special Consultant to the FPA
Messages
12,854
ufffffff can't think about "Confluence resistance 1.3460-1.3467" u mentioned sive sir :rolleyes: rubbing my hands ..

sir can we have a lesson on DPRO and Breadandbutter ... confused with both ..
both need same creatraia ..
8-10 force bars below/above 3x3 .. :confused:so to judge which is going to be Bread and butter which is going 2 be DPRO
Well, I'm not sure, since as B&B as DRPO are registered DiNapoli signals, and FPA does not have copyrights for his book. It will be much better, if you will read it in book directly.
I just can tell, that DRPO is reversal pattern and it should not reach any significant Fib levels during penetrations of 3x3. B&B is continuation pattern and it has to reach some significant level - usually 0.382 or 0.5, may be Confluence.
 

Venelin

Master Sergeant
Messages
394
Hey Sive! As always firstly thanks for the effort to provide us with your great analysis! I have a practical question for you-I have noticed that during last week price action, we had numerous B&B`s on smaller time frames(on wednesday,thursday, friday)! From your experience is it normal for market to make one B&B after another at reversal zones or it`s just continuation of the bigger trend and is typical to see such a price action,since B&B is continuation pattern? And what patterns from Dinapoli`s arsenal we should expect to see a bigger reversal, maybe RRT on daily or something else? And also regarding DRPO- you said it should not reach any significant Fib levels during penetrations of 3x3! Do you mean at penetration bar that validates the pattern(after the second close above 3x3),and(or)maximum 2 more bars or as a whole the pattern should end before reaching any significant Fib levels in the context of the time frame we are looking? I hope I made myself clear! Thank you!
 
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ameba

Recruit
Messages
8
I spent two hours on the analysis today. The result is anxiety :rolleyes:
After ten minutes of reading It. I feel confident :cool:
 
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