Forex FOREX PRO WEEKLY, October 14 - 18, 2019

Sive Morten

Special Consultant to the FPA

This week markets were moving mostly by political news. As usual they have come surprisingly and made strong impact on FX, especially on GBP. In fact, we have two major group of events - progress in US/China negotiations and rumors around Brexit agreement. Since these factors make impact on all currency pairs, we try to cover these events in one report.

Week has started with rumors around positive progress in US/China deal. Aussie dollar has shown positive reaction on these press release. By the end of the week, on Friday, U.S. President Donald Trump outlined the first phase of a deal to end a trade war with China and suspended a threatened tariff hike, but officials on both sides said much more work needed to be done before an accord could be agreed.

The emerging deal, covering agriculture, currency and some aspects of intellectual property protections, would represent the biggest step by the two countries in 15 months to end a tariff tit-for-tat that has whipsawed financial markets and slowed global growth.

But Friday’s announcement did not include many details and Trump said it could take up to five weeks to get a pact written.

He acknowledged the agreement could fall apart during that period, though he expressed confidence that it would not.

In an editorial published online by the state-run People’s Daily newspaper on Saturday, China called the latest round of talks constructive, frank and efficient and noted that while the two sides were moving toward a resolution, “it is impossible to resolve the problem by putting arbitrary pressure on the Chinese side.”

Trump, who is eager to show farmers in political swing states that he has their backs, lauded China for agreeing to buy as much as $50 billion in agricultural products. But he left tariffs on hundreds of billions of dollars of Chinese products in place.

Recall what we've talked about pork price in China last week and bingo - "On Thursday, the U.S. Department of Agriculture confirmed net sales of 142,172 tonnes of U.S. pork to China in the week ended Oct. 3, the largest weekly sale to the world’s top pork market on record."

At the same time this "new turn" in negotiations do not touch existed tariffs, they will not be cancelled. Maybe they will not be increased from 25% to 30% level, as S. Mnuchin has suggested, but 25% fee definitely stands in place by far.

Second - The status of China’s Huawei Technologies Co Ltd, the world’s biggest telecoms gear maker, which has been put on a U.S. trade blacklist since May, was not part of the deal, Lighthizer said.

Trump said some IP issues would be left for later phases of the talks. He said talks over a second phase would begin as soon as the first phase agreement was signed and said a third phase might be necessary, too.

That's why we agree with Liang Haiming, Hong Kong-based chairman of think-tank China Silk Road iValley Research Institute, who called the agreement “anesthetic, pain relief, not an antidote.”

Edward Moya, senior market analyst at OANDA in New York, said the dollar’s moves after Trump’s announcement were in line with the typical “buy the rumour, sell the news” reaction.

“We pretty much got what many people were expecting about a partial deal,” said Moya. “But it doesn’t necessarily provide optimism that in the short run a broader deal will be reached because there are greater issues. It’s still positive though.”

So, it seems that some progress exists, this progress in favor of US, which just should continue to twist China's arms until they grind down everything that they need. EU - standby.

Next topic is Brexit, of course. Sterling took a wild ride on Friday after top EU official Donald Tusk said that the “time is practically up” for Britain to reach a Brexit deal.

It had been lifted on Thursday after British Prime Minister Boris Johnson and his Irish counterpart Leo Varadkar had said they saw “a pathway to a possible deal”. In a joint statement, the British and Irish leaders said they could “see a pathway to a possible deal”. Varadkar also later told reporters that the meeting was “very positive”.

EU Brexit negotiator Michel Barnier said on Friday that he’d had a “constructive” meeting with his British counterpart, Stephen Barclay, and the 27 countries in the EU gave him the go-ahead to try and agree withdrawal arrangements before the Oct. 31 deadline.

Barnier told member states that Britain has changed its position and now accepts that there cannot be the customs border on the island of Ireland, two EU sources said.

“If the meeting doesn’t go too badly you may get a further pop (higher in sterling) but it will be a matter of hours for the ERG and DUP to opine on it,” said Tim Graf, head of macro strategy at Slate Street Global Advisors, referring to the pro-Brexit faction of the British Conservative party and the Northern Irish party which supports the UK government.

“If there’s an endorsement the rally can continue,” Graf added. “But the reality is the extreme Brexit camp seem to be coming to the view that no-deal is the way forward and whatever deal is passed won’t be good enough for them.”

Despite the flurry of activity, it remains uncertain on what terms the UK will leave, when, and even whether it will do so at all.

Sounding a more cautious tone, top EU official Donald Tusk said “time is practically up” for Britain to reach a Brexit deal. That hurt the pound temporarily.

One dealer in London attributed price swings to “algos” - or computer-generated trading algorithms - in a headline-driven market.

Hopes are that a meeting between British and EU negotiators will pave the way for a Brexit transition deal at an Oct. 17-18 summit.. But some doubt Johnson will get the agreement past Britain’s parliament.

But this is not all yet guys. On the back of these large events, the one thing has happened that mostly passed unsigned. But, this is important issue which could make impact on the markets in long-term perspective.

In the United States, the Federal Reserve announced Friday it will start buying about $60 billion per month in Treasury bills to ensure “ample reserves” in the banking system. It emphasized though that the new programme does not mark a change in monetary policy.

“This allays some of the funding concerns and removes some of the upside risks of the squeeze on funding that we saw at month- and quarter-end,” said Shaun Osborne, chief FX strategist at Scotiabank in Toronto.

The U.S. Federal Reserve’s quick pivot from shrinking its balance sheet by around $50 billion per month to now expanding by $60 billion monthly, has shown both the difficulty the Fed has faced under a shifting political environment, as well as the risks of experimenting with market-sensitive systems in real time.

The process of paring the balance sheet from its crisis-era levels of more than $4 trillion in assets, effectively “unwinding” some of the stimulus put in place to battle the worst financial crisis in a century, was agonized over for years by policymakers who were under sometimes intense pressure from Republicans on Capitol Hill who wanted a smaller central bank not so deeply engrained in private markets.

The careful shedding of $50 billion a month was lauded by those lawmakers as the Fed rolled it out in 2017, and was intended, as former Chair Janet Yellen said, to be so boring and non-disruptive it would be “like watching paint dry.”

And so it was, until President Donald Trump took notice near the end of his second year in office, chucked standing Republican concerns over the size of the Fed’s asset holdings, and criticized central bankers for doing what leading members of his party had demanded.

“Stop with the 50 B’s,” Trump tweeted in December.

By July, the $50 billion monthly rundown had ended. Two months later, the Fed confronted a new problem, one which had nothing to do with Trump and everything to do with its new system for managing interest rates.

That system depended on the Fed knowing roughly how much banks would demand in deposits at the central bank, which financial institutions may want to hold for a variety of reasons.

As Northern Trust economist Carl Tannenbaum said, the new operation should definitely be considered under the umbrella of monetary policy. “Monetary policy is implemented with a combination of steps,” he explained. “The steps taken recently by the Fed are part of monetary policy, and have to be considered that.”

Not so, said Dallas Fed President Robert Kaplan.

“It is not intended to create more accommodation or create more stimulus,” told reporters after a talk at the Commonwealth Club in San Francisco. “This is not intended to have any impact on monetary policy. It’s not designed that way.”

The two interest rate reductions passed by the Fed this year have also been characterized as “insurance cuts” meant to extend the recovery and protect an economy that is in a “good place.”

But regardless of the intention, the steps taken this year to reduce rates and now to expand the balance sheet may amount to an unwinding of the monetary policy adjustments made last year, some investors say. If the Fed reduces interest rates twice more this year, it would completely undo the four interest rate hikes passed in 2018.

“It’s effectively quantitative easing. Investors should look at this as yes, a complete reversal of Fed policy from a year ago,” said Chad Morganlander, senior portfolio manager at Washington Crossing Advisors in Florham Park, New Jersey. “It confirms to investors that the Fed has their back. They’ll do whatever it takes to keep the U.S. financial system calm.”

Minneapolis Federal Reserve Bank President Neel Kashkari echoed that message in New York Friday morning. He said that the central bank would be operating with a large balance sheet “for the foreseeable future.”

And he was careful to point out that purchases of short-term Treasury bills are different from purchases of long-term bonds.

“QE was designed to also move long rates by us buying long- term assets,” he said. “If the Fed is buying short-term bills just to provide liquidity to the system, there is nothing QE about that.”

So, guys, a lot of stuff to think about. Speaking on China - this is most clear and certain situation among all other factors. We talked about it many times already - US will press China and twist its arms until they will get what they want. US economy and social sphere more stable and has greater margin of safety compares to China, which already shows slowdown of economy and problems with toxic assets on PBoC balance. The progress that we see in US/China relations means one thing - US will get what they want, and EU will be the next who will feel the heavy arm of US tariffs. Here we see clear domination of US.

Now let's turn to Brexit news. The rally on GBP was great and outstanding, but somehow I tend to more balanced and careful attitude. It is a lot of emotions in recent reaction which doesn't match to the content. This is an example when appearances are deceiving. Now only event traders and persons who do not understand the problem of the Brexit could buy GBP.

In 2018 we've explained why this is dead way situation for UK. Here I briefly remind you. The stumbling rock in Brexit UK/EU agreement is the border that will split economical zones of UK and EU. This border could be either between Republic of Ireland and Northern Ireland, or in the Ireland Sea between Ireland island and Great Britain island.

First case, when "hard" border will split Ireland in two parts is unacceptable, because everybody keeps memories of conflicts in 70-80's and carry on Belfast agreement (Good Friday agreement of 1998) which reduce tensions. Besides, here is tricky moment exists, that Conservative cub gets in dependency from N. Ireland unionists. They have just 10 seats, but they in particular provide necessary majority in parlament.

And as we see in recent news - this way was denied as unacceptable. It means that last scenario is possible to split economy space. In this case, the border will be in Ireland Sea - this is a nightmare for all Brits and for Democratic unionists in particular. Because in this case single economic space of Great Britain will be split in two parts.

And now we ask - what particular thing we could celebrate by GBP rally? Nothing was achieved yet. T. May has retired just because neither first way nor second one are acceptable for UK. The fact that B. Johnson excludes the first way is not the reason for optimism yet. Besides, nobody saw any signed Agreements on paper but it is just two weeks till the deadline. Nobody knows what final points will be in this Agreement. It is not necessary to mention here general negative impact when Brexit will happen as for GB as for EU. Problems in UK economy are still stand as well. Thus, we do not see any subject of rejoicing.

Positive rhetoric from EU means that UK accepts concession. Of course, Irish Prime Minister, Leo Varadkar, is happy because UK leaves along his country away from Brexit turmoil and they keep the union of two Ireland.

That's being said, we skeptically look at positive reaction on GBP, have doubts on its durability and do not exclude that it could become good chance to sell GBP.

Drastic change in Fed balance sheet policy tells that Fed adds more dovish measures. At some degree, increasing of a balance works in the same manner as rate cut. In fact, this is the same QE programme. Maybe Fed doesn't want to reverse previous hawkish rate cycle to avoid panic on market but still could add more stimulus using its balance tool. Anyway, other things being equal, this measure makes US dollar weaker.

It will interesting to watch how CFTC positions will change next week. This week we see only EUR net short position increasing, despite good upside performance. On GBP net position stands short without any big changes. But CFTC releases data on Wed, thus, major Friday events are not in this numbers yet:


Charting by


In this report we take a look at EUR, but as we try to cover both our major currencies in one report, I mean EUR and GBP - a few words on the latter as well. On GBP we have major weekly K-resistance at 1.2840-1.2880 area. On daily chart we have upside AB=CD with approx. the same OP target. It means that GBP will be interesting on next week or even in two weeks when it will reach major resistance area. Right now, with one white candle pillar on the chart - nothing to discuss. Anyway, sell chances will appear around weekly resistance. Our doubts on buying GBP we've discussed above.

Speaking on EUR - here overall upside action was shyer compares to GBP. We do not see any drastic changes on monthly chart by far October starts with slow pullback. It makes no impact on overall picture, because it is still an inside session.

Technically it could be treated as continuing reaction on Yearly Pivot Support 1. As we've mentioned earlier - market right now stands at crucial area from technical point of view. This is the middle of the range and YPS1. Once EUR will break it - road to the bottom of the range around 1.03 area will be opened.

Overall tendency still stands moderately bearish, as by price action as by MACD trend. In September EUR forms new low, keeping "lower top - lower bottom" sequence.

As we've said earlier, here we could recognize downside narrow channel and market stands accurately inside of it.

Neither big support nor oversold levels stand around and it is free space till 1.03 lows. The only support is YPS1 and middle of the range. That's major technical support here.

Now the major intrigue stands around fundamentals background - it is changing. It is interesting whether its change will be strong enough to make impact on monthly chart and long lasting tendency here.


We do not see big impact on weekly chart as well. The upper border of the channel stands around 1.1260 right now and until price stands below it - any action will be just a retracement with no impact on major tendency. The only new thing that could appear soon - is flirting with MACDP line and appearing of the grabber.

Market has to break out from current range to add something new as to monthly as to weekly time frames. As we've said last week, "acceleration" in any direction will have vital impact on the market. Usually when market tests the tension of the bulls, creeping slowly down - it lasts till the first signs of acceleration. Starting to the downside - It will be fatal for EUR and become the harbinger of collapse. Conversely upside acceleration easily could push EUR to the upper border of the channel.

EUR has pretty much room to fluctuate inside the channel. To break the bearish context EUR has to climb above 1.14 top.



By the end of the week, EUR is completed best-case scenario - OP target has been reached. Market stands near major daily resistance, which includes K-level, daily OB and OP itself. Next XOP target stands at 1.1137, but it is barely interesting on next week.

In fact, here we have "222" sell pattern here, which suggests at least 3/8 retracement.


On 4H chart we have another Fib level that agrees with OP target. Also we keep an eye on possible large reverse H&S pattern as well.

In the beginning of the week, we will keep an eye on market reaction on OP target. Potentially EUR could form H&S pattern and reach K-support area around 1.0980 area. In general, this is solid support area, that includes former consolidation, and two pivot lines. Besides, daily "222" pattern also suggests 3/8 retracement.
If no H&S pattern will be formed, we probably are going to major daily resistance and XOP target around 1.11-1.1140



Fundamental background changes rapidly and it is unclear by far how new Fed initiatives will impact on the market. Fed meeting by the end of the month should provide more clarity on perspective. Still, as currently EUR keeps the upside tendency we follow it.


This FPA Investment Research is for information and education purposes only. Any decision to make any trade on the market has to be made solely by the reader. Information that is presented in research or its update is not an offer or call to make the trade on the financial markets and expresses just a personal opinion of the author who is might be wrong. Reader has to make decision on any trade solely and care all responsibility for results of this trade.

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.


Greetings guys, this time let me show you a couple of USDEUR charts... (the opposite of the Euro) which shows a very similar pattern we have in the Dollar index...

...Though the sequence seems to be incomplete and allows higher into the green target zone, there is serious bearish potential here.. By breaking below the blue corrective price channel we could see a swift decline down through 0.90, and much more...
Greetings guys, my last "naughty" forecast for the USDEUR has started proving itself: prices hit a new high at 0.9192 followed by a break below the lower boundary of our blue corrective price channel. The sequence to the upside seems to be complete and now prices are approaching our critical key level at 0.9001.


Compared to the Dollar Index below, we are close to our critical key level at 97.61 (0.9001 in the USDEUR and 1.1109 in the EURUSD) but this is a dangerous area to consider picking a tradeable low even if prices may stage a corrective pullback from this level.

If a pullback starts from nearby levels, a decisive break below 97.61 would hint aggressively that the corrective bounce is complete and either the larger degree downtrend has resumed (bearish scenario) or we see the first leg of a deep correction back to the 93.6 - 90.5 area as an option (bullish scenario, bearish temporarily).

So we'll stick with the downtrend in the Dollar Index unless price action gives us reason to consider otherwise - only a break above 99.33 would postpone the reversal.

Good luck.

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Hello everyone, I would like to start my post a little bit different today. Another very underrated YouTube channel that I found some time ago is TFNN Corp. YouTube Channel ( )

Larry Pesavento co-author of the book Trade What You See (, has a show every day at 9 AM Eastern time / 13:00 UTC. Larry us a trader with more than 30 years of experience, he uses technical analysis to trade. In his book, he talks about Fibonacci Ratios, AB=CD Pattern, Gartley 222, Butterflies, Three Drive Patterns, Double Bottoms and other stuff. Larry trades mostly Commodities and Stock Indexes, but he takes a look at some currencies as well.

This week on his show on Wednesday 9th October (
), at 15:13 he talks about Joe Di Napoli, and how Mr. Joe was his student back in 1973.

Joe DiNapoli wrote his book Trading With DiNapoli Levels in 1998. Here is a very interesting interview with Mr. Joe (

Reading both of these books really helped me a lot. They use a slightly different approach to technical analysis, Mr. Larry uses the stuff that I mentioned above, Mr Joe does as well, but there are differences in approach to some Fibonacci Ratios, Mr Joe also uses overbought and oversold levels, leading indicators, moving averages, MACD, double repo and more.

I just wanted to share this with everyone, who maybe doesn’t know the origins of all the stuff we talk about on this forum, although Mr Sive points out that his analysis is part of Joe Di Napolis methods every time.

Now to the usual part of my analysis. I would like to point out that we had a lot of impactful fundamental event in the second half of the week, which could affect the positions, so next week we will have more clarity looking at the COT report and seeing positions from this weeks Wednesday.


Looking at GOLD positions we see an increase in both Long and Short positions, overall the sentiment remains bullish, and Net Positions Increased again.



Net positions are a little bit more bullish than the previous week, as wee see Non-Commercial traders closing some long positions on the Dollar.



Non-Commercial traders decreased their Long positions, but I agree with Sive's technical outlook.


CAD and JPY:

The outlook remains more or less neutral as far as my COT Analysis is concerned since I like to see % of Long or Shorts positions above 65, before taking any longer-term positions.




We had a massive almost 500 pips move to the upside on GBP/USD on Thursday and Friday, so I am really curious to see what the positions will look like on the next COT report.


Now on a little bit more interesting part and continuation from my last week's analysis of AUD and NZD.


Looking at the COT report, the sentiment still remains bearish but less so, we saw some decrease in both Long and Short positions. We have CPI data on Tuesday, which could let to completion of the Head and Shoulders pattern I posted last week.


The COP target has almost been hit, just a few pips missing, while the XOP target coincides nicely with the 0.382 FIB from the high at 0.69400 from March this year.

13.10 NZD D.JPG

13.10 COT NZD 2.JPG


We see a nice decrease in Shorts, the ratio still remains the same, but Net Positions have diminished a bit.


Looking at the weekly chart, another Bullish grabber was formed this week and taking out of the previous top could suggest hitting the 0.618 FIB from the previous swing.

13.10 AUD W.JPG

Looking on the daily chart we have that double bottom from last week, and the
market almost perfectly completed this AB=CD to the 0.618 FIB which is Gartleys 222 pattern for Sell.

13.10 AUD D.JPG

So this is what I will be looking at for this week, which would coincide with 222 Pattern on the daily, Double Bottom on the daily (but probably to extended target for this week), as well with two bullish grabbers we have on Weekly chart.

13.10 AUD D2.JPG

Market is keeping great symmetry on the intraday charts as well.

13.10 AUD 4H.JPG

Sive Morten

Special Consultant to the FPA
Hello everyone, I would like to start my post a little bit different today.
Hi mate,
It is my two table books. I also recommend them every time, when somebody asks what to read.
It's great that you do updates on Pacific currencies - NZD, AUD. We quite rare talk about them. They probably should get some support
from US/China progress, at least temporary, while sentiment is positive.


Hi mate,
It is my two table books. I also recommend them every time, when somebody asks what to read.
It's great that you do updates on Pacific currencies - NZD, AUD. We quite rare talk about them. They probably should get some support
from US/China progress, at least temporary, while sentiment is positive.
Despite EUR and GBP, these two currencies provide the clearest setups at the moment I think. On CAD and CHF I would like to see a clearer break out of the current zone and some nicer swings on the daily chart because I think price action looks choppy on both of them.

Really good books indeed, I was drawn into trading by pure coincidence, but when I found out about Mr. Larry, Mr. Joe and you, It really gave me the confidence that consistency can be achieved.

Could you give us some tips on trading psychology, I need to work on it some more. I was reading books from Mark Douglas and watched his videos. Coming from a country where this profession is mostly unknown It sometimes seems unreal it is possible to make a living from trading currencies, especially when I see other people struggle in life, and I am becoming better and better at trading, the amount of money that can be earned seems unreal sometimes. Did you ever have the same feelings/problem and what helped you overcome them? I would really appreciate some of your insights if this is not a too personal question of course.

Sive Morten

Special Consultant to the FPA
Could you give us some tips on trading psychology, I need to work on it some more. I was reading books from Mark Douglas and watched his videos. Coming from a country where this profession is mostly unknown It sometimes seems unreal it is possible to make a living from trading currencies, especially when I see other people struggle in life, and I am becoming better and better at trading, the amount of money that can be earned seems unreal sometimes. Did you ever have the same feelings/problem and what helped you overcome them? I would really appreciate some of your insights if this is not a too personal question of course.
Yes, I know this book as well. It is really good. Indeed this question is worthy to read something. By the way in Jouflas/Pessavento book there is also some information on pshychology and money management. At the same time - the mind of a human being is a very thin and personal sphere. I suppose it can't be
standardized. These books on trading pshychology could give you some ideas and overall direction to work with your mentality. Because as many traders I saw - as many different ways of "mind work" exists. My personal experience stands on time - how long you deal with the markets. As longer you deal with them - as less psychological question remains. But, as I said this is unique for every person. There is no some one-size-fits-all method. That's the conclusion that I come to.

Sive Morten

Special Consultant to the FPA
Morning guys,

While EUR still stands in Friday's range - and we didn't pay enough attention to GBP on weekend, as it deserves to, we take a look at it today. Potentially journey should be absolutely tremendous.

As we've said - first thing that should be achieved is reaching of 1.2840-1.2880 area. This is K-resistance on weekly chart. Daily chart shows that this is also AB=CD target ,which creates Agreement as well. Also we dare to suggest that this should be Overbought area as well, as market is strongly OB right now.

Price stands above MPR1 and in general, strong explosive thrust tells that it is really small odds that OP will be missed. This is first step.

But second one is more interesting. It is Brexit deadline in two weeks and we have rock hard resistance on weekly chart. As we saw it many times previously - technical strong areas or patterns, especially on weekly/monthly time frames could predict impact of external driving factors. We do not know what it will be, but we suggest that it should have some relation to Brexit and it should be negative for GBP as strong resistance area suggests at least pullback, or ultimately major bearish reversal. We could suggest that Agreement will not be achieved, Brexit will be postponed or something of that sort. But definitely something should happen, when GBP will reach our major resistance area:

Meantime we're under way to 1.2840. On 4H chart B&B "Buy" was perfect but its done already, price has formed bullish grabber that agrees with daily scenario and suggests upside continuation. Here we need to keep an eye on two things. If "G" lows will stand intact, market will keep coiling in tight range, forming pennant/triangle consolidation - this will be bullish sign. It will be preparation to breakout. Right now GBP can't continue upside action immediately - it is strongly overbought on daily. It needs some relief.

Conversely, if "G" lows will be broken - then we will watch for some different scenario, first is reaching of K-support here:

Those who wants to trade all this stuff - could consider butterfly pattern here and try to buy GBP as close to "G" lows as possible. Risk in this case will be small, but potential is around 200 pips. Butterfly, btw, could finalize upside action and daily OP target. Its 1.618 extension stands at 1.2824, while OP is 1.2818. As you understand butterfly scenario is valid only if "G" lows will hold. Otherwise, deeper retracement down will start on 4H chart.


1st Lieutenant
Well, I think we do not have time for some sofisticated retracements, so I belive push up should continue more or less directly to 161.8 ABCD.
Last time my count was wxy instead abc as this time, where target of x is 50% of w as minimum, and this minimum was not established yet, my bad, sorry, but I said that potential was big..



1st Lieutenant
It does not look so impossible anymore to enter in zone of one of two lows on the left, either 1,12156 or 1,13009... It mostly depends on gold, will it drop to 1375 or not.. Euro is so good, it stays, so far(!), in its daily range meanwhile cable is able to ignore its daily range. We will se what happens now, when euro entered daily LH, will it go above current HH today and how we should count the structure..