Forex FOREX PRO WEEKLY, October 15-19, 2018

[Sive Morten]

Morning guys,

Although price shape has not changed significantly we need to make some notes on the price action that stands right now.

First of all, yesterday market has formed W&R action. In general, this is bearish sign and market mostly keeps valid our scenario with retracement to 1.15.
But, EUR is coming to the moment when time will play against the setup. Well known '3-period" rule tells that if market has not started action due the pattern or setup that has been formed within 3 periods, it could mean that opposite action is near. There 2 sessions have passed and nearest 1-2 days will be critical. If no downside action will start - it will start to look more as bullish dynamic pressure and under level consolidation.

On 4H chart recent spike brings nothing bad, actually we've got another bearish grabber here:

Our setup is still working well, actually. Speaking on yesterday spike... try to follow two simple rules - move stops to breakeven asap and stop placement in excess of harmonic swing. On EUR harmonic swing is 37-40 pips. Optimal stop distance for EUR is approx. 50 pips. When "222" Sell" completed our 3/8 retracement and we called to go short - downward action has happened for 20-25 pips. This is enough to protect position with b/e stops. Placing stop in excess of harmonic swing will let you to avoid occasional fluctuations impact and this kind of W&R action.

Now - let's keep watching, bearish setup is still valid, 2 sessions will be critical. Still, it is possible to take shorts on pullbacks and any bearish continuation patterns. Say, today we could get "222" Sell on a slope of second top...

 

[Stag]

So far so good, the target zone is slightly adjusted a bit higher. At this stage a rally above 1.1571 would signal wave (c) bottomed and a new rally is underway.

Guys, I forget to mention the alternate bearish scenario. If prices would start accelerating beneath 1.1534, that would give credence to the bearish scenario below (partial labeling shown). Small retracement from that level is still possible before the real decline starts.

As Sive said, next few sessions will be critical.

 

[Stag]

So far so good, the target zone is slightly adjusted a bit higher. At this stage a rally above 1.1571 would signal wave (c) bottomed and a new rally is underway.

It is still to early to say the decline from 1.1621 is complete but this bullish scenario has reached its limit. A swift move up through 1.1577 will signal wave (c) is in place at nearby levels and circle wave 2 correction ended. That would be good for the immediate bullish view.

If the rally attempt should stall after 3 waves (and well below 1.1621), by breakaing recent lows will have to consider the alternate bearish scenario may be unfolding.

 

[Deltoid88]

Short targets hit. Rebound expected on EUR/USD. This could be opportunity for bigger profits I believe.

 

[Sive Morten]

Good morning,

So, market comes to its own and finally has shown action that we are expected to see. B&B LAL trade is completed, what's next?

I think, guys, that since we have so good position already, why we should close it totally? Usually when I see that bearish background still lasts and there some other reasons exist that market could drop a bit more - I split position 70/30. 70 is profit taking and closed, while 1/3 is kept for better result with breakeven stop or, now it is possible to have profit stop...

Why we think that downside action could continue a bit more. First of all, recall our weekly report. In fact, on daily we have bearish grabber, that suggests drop below 1.1425 lows. Recent drop has good momentum and tail close. Yes, market is flirting with MACD right now, but it is not the fact yet that we will get bullish grabber here.

On 4H chart B&B target has been hit, grabbers are completed:

On 1H chart we have more reasons to suspect further drop. In fact, here we're dealing with Double Top pattern, and its target coincides with WPS1 around 1.1450. On the slope of this pattern we have AB-CD, with XOP in the same area. OP already has been passed.
Market forms very accurate upside retracements now, so, it means that putting its all together - drop should re-established somewhere from 1.1511 and next target is 1.1458. This is the action that we will watch today.
But - taking whole profit of B&B is also a good decision

 

[Stag]

It is still to early to say the decline from 1.1621 is complete but this bullish scenario has reached its limit. A swift move up through 1.1577 will signal wave (c) is in place at nearby levels and circle wave 2 correction ended. That would be good for the immediate bullish view.

If the rally attempt should stall after 3 waves (and well below 1.1621), by breakaing recent lows will have to consider the alternate bearish scenario may be unfolding.

We can see the first signs of a potential reversal supported by serious bullish divergence in RSI and MACD. Note that at this stage both bullish/bearish scenarios are valid and both can build a similar bullish structure.

Zooming in on the advance from 1.1481 it does look impulse in nature. A corrective setback followed by an impulsive swift move up through 1.1547 would be good for the immediate bullish scenario.

As long as 1.1481 stays intact against a pullback, I will keep the focus on higher to complete five waves.

 

[Deltoid88]

Short targets hit. Rebound expected on EUR/USD. This could be opportunity for bigger profits I believe.

View attachment 39982
View attachment 39983

Potential scenario how everything can develop on EUR/USD. True impulse way 3 could start after ABC completion in rectangle zone.

 

[Stag]

We can see the first signs of a potential reversal supported by serious bullish divergence in RSI and MACD. Note that at this stage both bullish/bearish scenarios are valid and both can build a similar bullish structure.

Zooming in on the advance from 1.1481 it does look impulse in nature. A corrective setback followed by an impulsive swift move up through 1.1547 would be good for the immediate bullish scenario.

As long as 1.1481 stays intact against a pullback, I will keep the focus on higher to complete five waves.

Guys, just a quick update: the Euro is tricky like hell. Just noticed that we had possibly an expanded flat, a typical formation in a wave 4 position. The bullish reversal still remains valid if prices keep advancing higher and 1.1527 breaks impulsively, no new lows are allowed then.

At this stage pink wave (c) could have bottomed, but we need evidence. Breaking above 1.1527 would signal it is completed.

 

[Deltoid88]

Guys, just a quick update: the Euro is tricky like hell. Just noticed that we had possibly an expanded flat, a typical formation in a wave 4 position. The bullish reversal still remains valid if prices keep advancing higher and 1.1527 breaks impulsively, no new lows are allowed then.

At this stage pink wave (c) could have bottomed, but we need evidence. Breaking above 1.1527 would signal it is completed.

View attachment 39998

Hey Stag, it looks like your wave count was better then mine, as usual I expect rebound here for EUR/USD still, nothing has changed as long as 1.1432 support holds. Do you agree?

Also, can you share your thoughts on GBP/USD? I see minor rebound here to the upside, and possibly something greater.

Sive, if you see this would like to hear your opinion too?

 

[Stag]

Hey Stag, it looks like your wave count was better then mine, as usual I expect rebound here for EUR/USD still, nothing has changed as long as 1.1432 support holds. Do you agree?

Yes, 1.1432 is the ultimate boundary. The decline from 1.1621 looks impulsive and terminal, but still lacking evidence a bottom is in place. If 1.1432 breaks we have to conclude the rise over the past few days was a correction within a renewed bear trend (see my alternate scenario). In this case any rally attempt will stall after three waves.