FOREX PRO WEEKLY, October 04-08, 2010

[Sive Morten]

NZD/USD Possition point of view

Good morning,

I think that NZD has very interesting price action from position point of view.

On the monthly chart we see MACD Predictor failure pattern during 3 months, trend is bullish. Usually it leads to the previous highs that should be taken out by the price - market can clear 7605 area. Also we can see, that 0.786 Fib resistance has been touched once already, so this level is not so strong.
On weekly time frame we see very symmetrical AB-CD pattern with target around 7730 that almost agrees with 0.88 resistance. AB and CD legs very harmonic at least until now and if this harmony holds it can lead to strong resistance in D point and 0.88 resistance level. Weekly trend is also bullish.
On daily time frame market is moving in parrallel chanel and you can see how weekly pivot resistances 1 (short dash lines) hold the rallies inside the channel.
Now market has reached weekly and monthly pivot resistance 1 and upper border of the channel. The most suitable level for entering on the long side is a nearest Fib support 7348 that is coincides with weekly pivot point and lower border of the channel. I do not want to see deep retracement, below 7250 area - because it will destroy harmony in AB-CD pattern, and market will break channell. In this case our context will be under question. So, shallow retracement is a main factor that we should track.
So, that's being said, I expect that market will reach 7730 area. Possible enter 7340 area. We should exit if market will start to show deep retracement - below 7250 level.

 

[Sive Morten]

GBP/USD Daily Update, Thu 07, October 2010

Good morning,

It's difficult to find something interesting on intraday charts currently, so I've decided to take a look at larger time frames. And Cable shows some really interesting issues...
On the weekly time frame you can see, that previous move up has been stopped by 0.168 Fib resistance and monthly pivot resistance 1. So, this can happen again - October' s monthly pivot resistance 1 at Fib resistance again. But, Fib resistance itself has become weaker, since market has already touched it once. Also, take a note that October monthly pivot has not been touched yet...
So, I expect two possible scenarios of upper breakout. First - there can be another pullback, after second possible attempt, but this pullback will be not so deep, as after first attempt. I expect that monthly pivot will hold the market. If not - then is something wrong.
Second scenario - market will break this level at current attempt. Anyway I expect that in longer term picture Cable can reach 0.618 expansion target around 1.63. And some confidence to this expectation comes from shallow retracement from on BC leg- just 0.382. THis is the sign of strength. So, market should reach 1.63 as minimum target.

 

[MidnightRun]

Eurusd

Sive, Does your pa
st EURUSD analysis still hold? (i.e. you expected the pair to go up to somewhere around 1.4030 and then correct down).
Thanks

 

[Sive Morten]

Sive, Does your pa
st EURUSD analysis still hold? (i.e. you expected the pair to go up to somewhere around 1.4030 and then correct down).
Thanks

Hi,
Yes, I'm waiting definitely this price action. But will it come true, this is a question...

 

[Mandrake]

Hi Sive & Comrades,

Well.. that retracement last night was super shallow, its moving up still; further into overbought now. The past 1month is so bad on price action and technicals and price movement are hopelessly erractic I am starting to lose faith in forex.

I thought coming out of the summer is gonna be good for trading but I was wrong. I wonder what is going on ? Is this normal in Forex ?

 

[Sive Morten]

GBP/USD Daily Update, Fri 08, October 2010

Well,
Cable has shown nice W&R yesterday and establish new highs, that is what we've talked about yesterday. On 8-hour chart this pattern is W&R in a way of RRT and the target of this pattern - length of the bars itself. So, I suspect that cable should reach 1.5650 area daily confluence support + monthly pivot.
Also take a look at circle on the 8-hour chart - this was a reverse H&S pattern. I expect that market should show something like that.

I just want to give you couple of warnings If you intend to take this Sell signal with target at 1.5650
1. Try to establish position so that will not be killed by the market during NFP Doom&Gloom
2. Do not place stop above previous highs. If this is really a rejection of price - we do not want to see deep retracement into the body of the pattern. So, retracement should be shallow.

At the same time, remember, that I've talked about Cable yesterday. In longer term, I think that market is strong and this will be just retracement lower

 

[Sive Morten]

Hi Sive & Comrades,

Well.. that retracement last night was super shallow, its moving up still; further into overbought now. The past 1month is so bad on price action and technicals and price movement are hopelessly erractic I am starting to lose faith in forex.

I thought coming out of the summer is gonna be good for trading but I was wrong. I wonder what is going on ? Is this normal in Forex ?

Hi Mandrake,
Concerning the Euro, first, it has not quite reach the target at 1.4046 for few pips. I expect that it should to, so, personally, I will not intend to open any short positions fast. Second - market is like a big ship - it very rare turns with "V" shapes. So, be prepare for many retracements and choppy price action.
Try to trade only directional signals, like B&B and DRPO's. I think that EUR has not bad chances to show something like that in near term.

 

[Mandrake]

Hi Sive,

Thanks for reply. I was actually refering to forex market as a whole not just EUR. I had taken a huge hit in the past 3 weeks. Signals came; went for the kill just to have the price move back sharply, even if it did move down more I hardly get more than 50pips which messed up my SL and TP ratio. There are a lot more signals that did not have a follow through on crosses as well. It is seriously looking like a gambling table nowadays.

I actually managed to get my account about 150% through summer period about 3 months which some people say was not tradeable; just to throw it all away within 3 weeks. I find it hard to grasp what is going on recently. All those problem about Ireland and Spain but EUR still kept going higher and higher into overbought. I can't seems to understand why all this is happening. Are the big players not playing anymore ? Why is there no follow through on technicals ? Or too many newbies came on board all of the sudden and mess up the market haha ? Or does forex act like this every now and than ?(this is a scary one)

 

[Sive Morten]

Hi Sive,

Thanks for reply. I was actually refering to forex market as a whole not just EUR. I had taken a huge hit in the past 3 weeks. Signals came; went for the kill just to have the price move back sharply, even if it did move down more I hardly get more than 50pips which messed up my SL and TP ratio. There are a lot more signals that did not have a follow through on crosses as well. It is seriously looking like a gambling table nowadays.

I actually managed to get my account about 150% through summer period about 3 months which some people say was not tradeable; just to throw it all away within 3 weeks. I find it hard to grasp what is going on recently. All those problem about Ireland and Spain but EUR still kept going higher and higher into overbought. I can't seems to understand why all this is happening. Are the big players not playing anymore ? Why is there no follow through on technicals ? Or too many newbies came on board all of the sudden and mess up the market haha ? Or does forex act like this every now and than ?(this is a scary one)

Mandrake, the main reason is a rate difference, i.e. carry. And FOMC policy also - they will hold QE program for solid time and may be even increase it...

 

[Mandrake]

Mandrake, the main reason is a rate difference, i.e. carry. And FOMC policy also - they will hold QE program for solid time and may be even increase it...

OK Hmm... I do follow bloomberg news daily but I ddin't feel that it is a good reason for erractic movement; unless all this meant that alot of big players are sitting out of the market hence there is no strong technical movements ! Or does this mean alot of big players are just buying it up non stop ?

I think I would take it that certain times the forex market would be like that due to such events and just have to sit out until market is moving normally again ! I will be more careful next time. Thanks for clearing my thoughts Sive.