FOREX PRO Weekly October 15-19, 2012

[fxshark]

Dear Sive,

Thank you for your excellent analysis. No question, you're one of the best and please keep us teaching as long as you can.

But, if you don't mind I'd like to add my view, because I think a short from this level is not really a good action.

If we draw a triangle around current consolidation on the daily chart and not a flag as you suggested that changes the picture in my opinion.
Also, because the last Thu&Fri closes are above 1.2920 which was an important resistance at the left leg of the double bottom consolidation.

Of course we can't ignore the short potential to 1.27, 1.26 and finally to 1.2430-1.25, but I think the current momentum is quite bullish when you consider that on top of the above the last week was only an inside week after the bullish engulfing candle from the week before.

So, I think the best is probably to wait for the breakout or at least enter short a bit higher. It can be reasonable 1.3030-1.3050 at the top border once the gap is filled from last week.

Looking a bit further a rally above 1.32 is also reasonable. I trade naked, looking only supply & demand. As you will see on the chart the 1.618 fibo extension (1.3260 ish) of the last swing is in the same range as the next important supply zone (1.3230-1.3280).

I'm far not as experienced as you are, but when your harmonic pattern targets or entries are matching the supply / demand zones I'm trading, I found this scenarios quite high probability trade setups.

Could you comment?

Thnx

 

[Sive Morten]

Hi Mr Sive thanks for your brilliant analysis. But I have a question? On my chart both monthly and weekly time frames show bullish trend by 3 x 3 SMA whereas in your chart both are bearish? Am I doing something wrong? Please reply. Thanks and best regards.

Hi Pramod,
that's because 3x3 DMA is not for trend estimating but only for identification of directional pattern. Trend is based on MACD (according to DiNapoli framework, of cause).

Dear Sive,

Thank you for your excellent analysis. No question, you're one of the best and please keep us teaching as long as you can.

But, if you don't mind I'd like to add my view, because I think a short from this level is not really a good action.

If we draw a triangle around current consolidation on the daily chart and not a flag as you suggested that changes the picture in my opinion....

Hi FX Shark,
that's perfect that you post your own view. Actually this part of forum particularly for that purpose (finally we have some development).
Unfortunately I do not quite understand what demand and supply zones are. Personally I'm not quite agree that we have double bottom, second, if even this is a triangle on daily - on weekly time frame - there is no difference between flag or pennant (that triangle is). Both of them have the same properties and are bullish continuation patterns.
As we've discussed I'm absolutely not exclude potential move up. Probably you didn't catch a bit nuance of short-term analysis. The focus of it - we stand at very comfortable level, very close to the edge of bearish context. If market will not hold below this level (1.30) and break it up - that significantly put probability in favor of upward continuation. That's the core. When you stand so close to this crucial points, usually they give you tremendous risk/reward ratios.
Besides, as I said on daily and lower charts I do not see bullish patterns for 1-2 nearest day's trading. On weekly - yes, no doubt that we have bullish picture. But we have to trade day by day, at least create view on market.
I do not see much contradiction in your point of view. May be you watch somehow between my short-term view and medium term view. Because you look at triangle on daily per se, but I mostly have to look inside of it to create trading plan for particular day. IT could lead to situation when your scenario will work, but before that we can get some trades in shorter-time perspective.

 

[fxshark]

Thank you Sive. It looks that price movement already confirmed your short view by the time we wake up.

Supply & demand zones are where price is clearly showed that either bears or bulls took the control. With other words, it's the footprint of the institutional players.
If you look at the chart I posted, you'll see how price reversed from the zones where ealier moves were initiated.

 

[Sive Morten]

Thank you Sive. It looks that price movement already confirmed your short view by the time we wake up.

Supply & demand zones are where price is clearly showed that either bears or bulls took the control. With other words, it's the footprint of the institutional players.
If you look at the chart I posted, you'll see how price reversed from the zones where ealier moves were initiated.

Will I be wrong if I call supply and demand zones as just classical support resistance areas? And how you separate - where is supply and where is demand area? Just by whether it stands above or below the market?

 

[fxshark]

You're close, but also very far at the same time. Supply should act as resistance, while demand should be support as in the classical term, but
quite frequently supply and demand zones have nothing to do with classical support & resistance levels.

Supply and demand zones where institutional players buy or sell!

Where price took litle action and then there is a strong price move either up or down we know that supply exceeds demand or demand exceeds supply and most likely it was created by institutions, because small players like me don't have the account size to create such moves.

And because most of the times institutions can't fill all their needs when the initial price action happens price tends to gravitates back to these levels.

As you can see on the chart below, today's price action seams to confirm my worries about a potential short.
We had fresh demand levels just below, while supply above was most likely consumed. That means that in case price reverse from demand, as it did, we have
less chances that the supply above will hold and our stop would be in danger, there isn't much fresh supply until 1.3050-1.3060.
That's why I thought it is probably better to wait with the short until price action shows some hints at the upper border of the triangle (or flag, I agree doesn't matter how we call it).
Even I see this as a potential bull trap, because it is currently around the same level as the unfilled gap, while I see supply level only above.

ps: You can find more about supply & demand if you Google for Sam Seiden

 

[Anu]

Hi Sive,

Thanks for the great analysis. Do you still see hold bearish view.. This morning market seems to be climbing up slowly and steadily.

 

[MidnightRun]

Triantus,
How are things with your system?

 

[ochills]

Hi Sive,
Great analysis as usual. Big thanks for your priceless analysis & time.
Pls am sorry to ask this trivial question, though I asked you last week but your reply does not
Answer my question. Pls my question is how can I draw trend line the way you drew your
AB=CD without extending beyond the AB=CD levels.
I use MT4 and if I draw trend line, it often extend beyond the area I want it and it does not make
my chart appear neat, pls I have attached a chart so you can see the AB=CD and flag I drew
PLS IF ANYONE IN THE HOUSE CAN HELP, IT WILL BE HIGHLY APPRECIATED.
Thanks

 

[Severianus]

1. Double click on the line, then when the line selected (by shown some dots on line)
2. Right click, select tab 'parameters', and deselect 'Ray'
Or for no:
1. Right click on empty space in chart, select 'object list', then select the line you want to trim, select 'edit' then continue with no2 above

 

[MidnightRun]

Hi Sive,
Great analysis as usual. Big thanks for your priceless analysis & time.
Pls am sorry to ask this trivial question, though I asked you last week but your reply does not
Answer my question. Pls my question is how can I draw trend line the way you drew your
AB=CD without extending beyond the AB=CD levels.
I use MT4 and if I draw trend line, it often extend beyond the area I want it and it does not make
my chart appear neat, pls I have attached a chart so you can see the AB=CD and flag I drew
PLS IF ANYONE IN THE HOUSE CAN HELP, IT WILL BE HIGHLY APPRECIATED.
Thanks

In the trendline properties tab uncheck the "Ray" window