Sive Morten
Special Consultant to the FPA
- Messages
- 18,564
Monthly
So, we have rather difficult trading week, mostly by decision making procedure. In the beginning of research I would like to make light comments on Spain austerity plan and France budget economy. Shortly speaking I think that Spain will call for aid within 2 weeks of October. Until that will happen, ECB hands are tight and it can’t cooperate with reducing debt cost for Spain. If Spain will ask EU help – ECB will start buyout Spain debt, by holding its rate at low levels, while Spain could start borrowing at low cost. I think that this is unavoidable. If the will not do this – by rising taxes, freezing wages and saving on social policy Spain will reduce economic activity and GDP. As a result, they will able to safe spending in very short-term, but in a bit longer perspective, tighten tax loop they will make a barrier for economic activity – although tax rate will be higher, but taxation object will fall significantly and that will not give any tangible result.
Now about the France - the major thing here is wealth taxation. Now rich people will have to pay more taxes. I’m not sure, may be I’m wrong, but I suggest that this will lead to significant capital outflow and changing place of domicile of private companies, other methods of concealment of income. May be in a bit other circumstances that could not happen. But now people understand that they will have to pay not only for France, but for other trouble countries. That adds some other colors in France social policy and not everybody I suppose, will be happy to accept it. So, Thursday euphoria was too early, I suppose.
From these two events, particularly when Spain will call for aid, take a look at gold. It was mentioned that on US QE I gold has shown 30% growth, on QEII – 15%. Now we have QE III in US, but we also will have unlimited QE from ECB, that not has been launched yet at full throttle.
Now is about technical analysis. September is finished. On monthly chart we see how market response on monthly Confluence resistance area. And now just imagine, what could be if we have no idea about its existence. It’s few that we can add to strategic picture. We are at monthly resistance and now in a stage of market’s respect of it. So, mostly we will talk about tactic in current research.
Weekly
Well, most detailed comments about Stretch pattern I’ve made in previous research, so if you want to recall it – read weekly part there. Here I just will remind you major moments. Market has shown solid upward bullish swing, right in respect of Butterfly “Buy” completement pattern. But now price has two different forces that press on it. First is a bearish momentum of the trend that has started in March 2011 and lasts more than a year already. Second is combination of weekly major 3/8 Fib resistance and weekly overbought – that is a Stretch pattern per se. Here we can’t say anything definitely and have no choice but just dealing with odds. They suggest that such combination of factors should lead to deep retracement, and I still keep this thought. In most cases, after first bullish swing on market, price shows AB=CD retracement. That stands in a row with theoretical way of Stretch trading – it’s target usually is zero level of Detrended Oscillator - approximately around 1.25 area. But this is also 5/8 Fib support, i.e. potential deep retracement target.
Another important moment here is new monthly pivot levels. Take a look that market will open right at MPP=1.2844. MPS1 stands at 1.2517 – presicely around DOSC zero level and Fib support. Currently it is difficult to say will it be AB=CD or market will show downward continuation right to 1.25. But I suppose that more gradual AB=CD is more probable. That’s why I still hope to see BC leg – the pullback up on daily. This move we can use to trade on Long side, and then try to take position in favor of this weekly AB=CD to 1.25 area. Also keep in mind that trend is bullish on weekly time frame, hence this expected downmove currently is treated as just retracement. We can’t exclude that by this move to 1.25 we can get later greater upward AB=CD to 1.3830 target.
Daily
It is difficult to speak about daily time frame now, particularly about B&B and other stuff – we hashed this question interminably within whole week. Definitely we can’t call it as B&B any more, since it demands fulfillment of particular conditions that were already broken. All that we could discuss currently is whether bullish momentum will make some impact on current market or not. With relation to weekly analysis we could a bit re-phrase it: will we see AB=CD retracement, particularly BC leg or not. Odds suggest that it should.
Speaking about B&B, I suppose we still underestimate the value of weekly overbought. It appears greater impact on daily. Although we’ve discussed it often on previous week, still, this was insufficient, since market has returned right back to 1.2840 area.
Well, on daily chart bullish engulfing still holds, since market has not taken its low. Market definitely feels some support at 50% of upward swing, since it has turned to overlapping bars after downward move. Price is not at oversold on daily now. So, we have to understand chances of upward move. Also make note of new weekly pivots.
But before we will turn to intraday analysis, I would like to show you GBP daily chart:
What do you think about it now? Will bounce up on EUR happen or not? This picture makes analysis very sophisticated, hasn’t it? Very difficult to join potential confirmed DRPO “Sell” and W&R on Cable with bounce up on EUR. If, of cause, we will get DRPO “Failure” pattern, otherwise this will lead GBP to 1.6030 at minimum.
4-hour
Here we have interesting picture, and even by solid move down, I can’t tell at 100% that upward move has been cancelled. We see that downward trend has shifted to range price action and we’ve got a rectangle. Upper border is 3/8 Fib resistance and WPR1, WPP stands precisely in the middle of it. Trend holds bullish and take a look – we have bullish stop grabber pattern. Another important factor is that price has left previous lows intact. The one negative moment for upward perpsectives is a way how downward moves happen – much faster move than upward retracement. Unfortunately, I do not see any other patterns, except stop grabber. Scalptraders probably can try to trade it with stops right below it, but that is more an add-on, rather than determinating pattern.
1-hour
This chart does not add much. One thing that probably is worthy to note here – keep eyes open on appearing some reversal pattern here. One of them could be double bottom that could lead to upward breakout of rectangle. In this case target of Double bottom will be slightly higher than 1.3040 – major 5/8 Fib resistance.
Conclusion:
I still think that in medium term perspective we should see deep retracement, at least to 1.25 area. At least currently I do not see any action that suggests opposite. So, strategic picture is relatively clear, but we can’t tell the same about tactics.
In short-term perspective situation is blur. We have some hints here and there, but nothing that allows us to say “upward move has started”. Situation seems even more complex due contradictive directional pattern on GBP. All that we can do in such circumstances is to wait clear patterns. All that we have currently is – support, sideways action, 4-hour stop grabber and some action on hourly chart that does not contradict with Double Bottom possibility. That’s all.
Just as small add-on – we’ve said already couple words about gold. Also take a look at 4-hour NASDAQ, you will find there clear H&S pattern, that makes possible to look at EUR/USD with another angle.
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.
So, we have rather difficult trading week, mostly by decision making procedure. In the beginning of research I would like to make light comments on Spain austerity plan and France budget economy. Shortly speaking I think that Spain will call for aid within 2 weeks of October. Until that will happen, ECB hands are tight and it can’t cooperate with reducing debt cost for Spain. If Spain will ask EU help – ECB will start buyout Spain debt, by holding its rate at low levels, while Spain could start borrowing at low cost. I think that this is unavoidable. If the will not do this – by rising taxes, freezing wages and saving on social policy Spain will reduce economic activity and GDP. As a result, they will able to safe spending in very short-term, but in a bit longer perspective, tighten tax loop they will make a barrier for economic activity – although tax rate will be higher, but taxation object will fall significantly and that will not give any tangible result.
Now about the France - the major thing here is wealth taxation. Now rich people will have to pay more taxes. I’m not sure, may be I’m wrong, but I suggest that this will lead to significant capital outflow and changing place of domicile of private companies, other methods of concealment of income. May be in a bit other circumstances that could not happen. But now people understand that they will have to pay not only for France, but for other trouble countries. That adds some other colors in France social policy and not everybody I suppose, will be happy to accept it. So, Thursday euphoria was too early, I suppose.
From these two events, particularly when Spain will call for aid, take a look at gold. It was mentioned that on US QE I gold has shown 30% growth, on QEII – 15%. Now we have QE III in US, but we also will have unlimited QE from ECB, that not has been launched yet at full throttle.
Now is about technical analysis. September is finished. On monthly chart we see how market response on monthly Confluence resistance area. And now just imagine, what could be if we have no idea about its existence. It’s few that we can add to strategic picture. We are at monthly resistance and now in a stage of market’s respect of it. So, mostly we will talk about tactic in current research.
Weekly
Well, most detailed comments about Stretch pattern I’ve made in previous research, so if you want to recall it – read weekly part there. Here I just will remind you major moments. Market has shown solid upward bullish swing, right in respect of Butterfly “Buy” completement pattern. But now price has two different forces that press on it. First is a bearish momentum of the trend that has started in March 2011 and lasts more than a year already. Second is combination of weekly major 3/8 Fib resistance and weekly overbought – that is a Stretch pattern per se. Here we can’t say anything definitely and have no choice but just dealing with odds. They suggest that such combination of factors should lead to deep retracement, and I still keep this thought. In most cases, after first bullish swing on market, price shows AB=CD retracement. That stands in a row with theoretical way of Stretch trading – it’s target usually is zero level of Detrended Oscillator - approximately around 1.25 area. But this is also 5/8 Fib support, i.e. potential deep retracement target.
Another important moment here is new monthly pivot levels. Take a look that market will open right at MPP=1.2844. MPS1 stands at 1.2517 – presicely around DOSC zero level and Fib support. Currently it is difficult to say will it be AB=CD or market will show downward continuation right to 1.25. But I suppose that more gradual AB=CD is more probable. That’s why I still hope to see BC leg – the pullback up on daily. This move we can use to trade on Long side, and then try to take position in favor of this weekly AB=CD to 1.25 area. Also keep in mind that trend is bullish on weekly time frame, hence this expected downmove currently is treated as just retracement. We can’t exclude that by this move to 1.25 we can get later greater upward AB=CD to 1.3830 target.
Daily
It is difficult to speak about daily time frame now, particularly about B&B and other stuff – we hashed this question interminably within whole week. Definitely we can’t call it as B&B any more, since it demands fulfillment of particular conditions that were already broken. All that we could discuss currently is whether bullish momentum will make some impact on current market or not. With relation to weekly analysis we could a bit re-phrase it: will we see AB=CD retracement, particularly BC leg or not. Odds suggest that it should.
Speaking about B&B, I suppose we still underestimate the value of weekly overbought. It appears greater impact on daily. Although we’ve discussed it often on previous week, still, this was insufficient, since market has returned right back to 1.2840 area.
Well, on daily chart bullish engulfing still holds, since market has not taken its low. Market definitely feels some support at 50% of upward swing, since it has turned to overlapping bars after downward move. Price is not at oversold on daily now. So, we have to understand chances of upward move. Also make note of new weekly pivots.
But before we will turn to intraday analysis, I would like to show you GBP daily chart:
What do you think about it now? Will bounce up on EUR happen or not? This picture makes analysis very sophisticated, hasn’t it? Very difficult to join potential confirmed DRPO “Sell” and W&R on Cable with bounce up on EUR. If, of cause, we will get DRPO “Failure” pattern, otherwise this will lead GBP to 1.6030 at minimum.
4-hour
Here we have interesting picture, and even by solid move down, I can’t tell at 100% that upward move has been cancelled. We see that downward trend has shifted to range price action and we’ve got a rectangle. Upper border is 3/8 Fib resistance and WPR1, WPP stands precisely in the middle of it. Trend holds bullish and take a look – we have bullish stop grabber pattern. Another important factor is that price has left previous lows intact. The one negative moment for upward perpsectives is a way how downward moves happen – much faster move than upward retracement. Unfortunately, I do not see any other patterns, except stop grabber. Scalptraders probably can try to trade it with stops right below it, but that is more an add-on, rather than determinating pattern.
1-hour
This chart does not add much. One thing that probably is worthy to note here – keep eyes open on appearing some reversal pattern here. One of them could be double bottom that could lead to upward breakout of rectangle. In this case target of Double bottom will be slightly higher than 1.3040 – major 5/8 Fib resistance.
Conclusion:
I still think that in medium term perspective we should see deep retracement, at least to 1.25 area. At least currently I do not see any action that suggests opposite. So, strategic picture is relatively clear, but we can’t tell the same about tactics.
In short-term perspective situation is blur. We have some hints here and there, but nothing that allows us to say “upward move has started”. Situation seems even more complex due contradictive directional pattern on GBP. All that we can do in such circumstances is to wait clear patterns. All that we have currently is – support, sideways action, 4-hour stop grabber and some action on hourly chart that does not contradict with Double Bottom possibility. That’s all.
Just as small add-on – we’ve said already couple words about gold. Also take a look at 4-hour NASDAQ, you will find there clear H&S pattern, that makes possible to look at EUR/USD with another angle.
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.