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FOREX PRO WEEKLY, October 18-22, 2010

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Oct 16, 2010.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Monthly
    Situation has not changed much on this time frame. Couple of things though exists that I would like to talk about. First of all – market has erased all Fib resistances except the last one – 5/8 at 1.4416 from an all time high. Unconfirmed trend has turned bullish – price is above the red line that is MACD Predictor. It shows us that market needs to close below 1.3460 in October to shift trend bearish again and show MACD failure signal.
    The most important thing on the monthly chart is a reaching of Monthly overbought level at 1.3960 precisely at 50% Fib resistance. It means that current moment is absolutely non-suitable for establishing any long positions. We need to search some signals on the lower time frame that can justify opening of short positions.
    [​IMG]

    Weekly
    Weekly trend is bullish. During the recent week market has reached 50% Fib resistance, monthly pivot resistance 1, 100% Fib expansion target at 1.4046 and hit weekly overbought. Let me guess, would you like to buy right here?
    So, personally, I expect retracement to the downside, and think that one of the most probable nearest target is 1.3447-1.3546. The point is that very often when market has disrespected strong Fib resistance area (and this was a strong resistance – weekly Confluence resistance and Agreement with 0.618 Fib expansion target) it revisits it when start a retracement. When and IF retracement will start, we will be able to estimate the target with more precision.
    #1
    [​IMG]

    Now, let’s look at chart #2 to estimate additional support levels. In general, situation with possible retracement is a bit tricky. We’ve said that monthly trend remains bullish until 1.3460 area holds. It means that if market will move and close below this area in October - monthly MACDP will show MACD failure pattern. But as you will see later, I expect that this retracement should not be very deep.
    Just below our disrespected area is a strong area of support. 1.3186-1.3333 includes weekly 1.3186-1.3284 Confluence support, monthly pivot point at 1.3318 and previous highs at 1.3333. I expect that this area should hold the market. Moreover, I think that if even market will reach 1.3186 area – this reaching will be just short-term touch. The major price action should be concentrated in 1.3250-1.34 area. Let me explain some reasons to think in this way on a #3 chart, where we will estimate the weekly targets.
    #2
    [​IMG]

    Look, how market accelerates from 61.8% expansion to 100% expansion without any respect to the strong area of resistance that we’ve just discussed. Usually, when market shows such acceleration and reaching weekly overbought it should show retracement lower before it will continue its move to the 1.618 target. But this retracement should not be very deep if bulls are still in charge – not lower than 5/8 Fib support at 1.3186. That’s why I think that this area 1.3250-1.3350 should hold the market. It is possible, that market can even bog down in 1.3440-1.3540 area… At the same time, 1.618 expansion target is too far and beyond weekly overbought, then it’s not “logical” right now. But 1.272 expansion at 1.4443 makes an Agreement with monthly 1.4416 Fib support, the monthly pivot resistance 2 is also there and this area is the next weekly target.
    #3
    [​IMG]

    Daily
    Gradually, we move to the most interesting stuff. Look at the #1 chart. It’s very simple but contains some important moments that you, possibly, do not pay sufficient attention to. The green line is a 3x3 MA that is very good for thrust identification. We have really perfect thrust – not just a single penetration of 3x3. Look, how gradual move is - no one meaningful retracement to the downside. It means that those people how hold “Long” position currently has not fixed profits yet. And their stops somewhere near the market. I suspect that they are just below 1.3750 level. If market will break this level for awhile, then stops will add fuel and all this stuff will explode and fall apart like card-castle. Market can show very fast falling.
    Second, as you remember on the previous week we’ve discussed the possibility of Double Repo reverse pattern. This pattern needs close below green line, then above and then below again. So, it seems that we just need to second close below 3x3 MA to confirm it. But this is not quite so. Look at the bar in the circle. It has closed above 3x3 still for 13 pips. But I still think that if market will show close below 3x3 MA we can treat this pattern as Double Repo. Joe DiNapoli calls such kind of not quite perfect patterns like “LAL” – Look-Alike. Context allows us to do this, I think. If this is not suitable for you, to take LAL patterns – do not trade it, but don’t stay against it also. For confirmation of DRPO LAL we need market close below 1.3914 on Monday.
    #1
    [​IMG]

    On the second chart I see couple important moments. Red line is MACD Predictor. First one is a negative dynamic pressure. Price continues to move up, but can’t shift trend to bullish again. Second, that is more important – MACD failure pattern during Thu and Fri. Look, market has tried to shift trend to bullish and failed. It means that previous lows should be taken out by the price.
    I do not have Fib supports here, because they are very shallow, market did not show any solid retracement. I suppose, that pivot points will be more suitable. Usually, when market starts the retracement lower during the rally, it retraces to the weekly pivot support 1 that is at 1.3763 and for a few pips below previous low. If market will reach it, this even will trigger stop orders and move can become very strong. So, I think that the nearest target of retracement is our disrespected 1.3446-1.3544 area. It’s look logical, because daily oversold is at 1.3526.
    #2
    [​IMG]

    Hourly
    First of all, I should warn you that short-term scenario is suitable for aggressive traders. For others is a better way to enter is wait for confirmation of DRPO on a daily time frame. Pattern will be confirmed it market will close below 1.3914 on Monday.
    Ok, what do we have here? Hourly trend is bullish and confirms daily price action. We see strong sell-off on Friday. Since price action on Thu and Fri is a Wash and Rinse we do not want to see deep retracement, moreover move above the highs. Also note, that hourly trend will remain bearish till 1.4064 area. I prefer that hourly trend is on my side to enter short. All this stuff means that we can place stop somewhere between 1.4070, that is 5/8 Fib resistance and 1.4150 that is weekly pivot resistance 1. To place stops above the highs make no sense for me.
    Second, I suppose that the base area to enter is 1.40-1.4040. Because it has two Fib resistances and previous lows at 1.40. I think that if bears are strong, they should hold this area. Once we’ve entered, we should control couple of things:
    - market should move below weekly pivot at 1.3959;
    - It will be preferable if market will confirm DRPO pattern on Monday by closing below 1.3914.
    [​IMG]

    Conclusion:
    Long-term.
    Currently this is not a situation where we should establish any “Long” positions. At the same time, after retracement I can’t exclude move to 1.4440 first, and then even to 1.4950.
    Short term
    In one word, I expect first move to 1.3763 and then to 1.3440-1.3540 area due to Double Repo LAL pattern. If you’re do not trade non perfect patterns – stay flat, but do not stay against this pattern. For position traders is better to wait for confirmation – market should close below 3x3 MA that is 1.3914 on Monday. This level is below weekly pivot 1.3959 also. Then you can enter on the short side of the market with stop above 0.618 Fib resistance from the whole move down.
    For aggressive traders, may enter short from 1.40-1.4040 area with stop somewhere in 1.41 - 1.4150 area, just keep an eye on two events – market should move below weekly pivot and market should confirm DRPO LAL pattern.
    Aggressive position has as advantages so as disadvantages. Advantages – tighter stop, better price. Disadvantages – greater probability of loss, because market has not closed below weekly pivot and not confirmed yet DRPO pattern.


    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.
     
  2. makun

    makun Recruit

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    Where to enter

    Thank you very much for the analysis. Please i want to know the best positions to enter long and short . What is weekly pivot point?
     
  3. cosmos

    cosmos Sergeant

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    Thank you, Sive. On longer time frame, do you expect the pair will hit a reversal pattern at 1.618 expansion target of1.4948 and make new lows below 1.1874?
     
    #3 cosmos, Oct 16, 2010
    Last edited: Oct 16, 2010
  4. PistolDave

    PistolDave Corporal

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    Thanks for the great analysis, Sive. It does help me to understand the market conditions and possible setups. :D
     
  5. TOURADA

    TOURADA Recruit

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    Nice contributions like always God bless you Sive
     
  6. olukayodeoshiariyo

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    oshiariyo james

    I doff my cap for Sive's analysis,action remains in traders' court.
     
  7. georgeta

    georgeta Sergeant

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    signal provider

    Mister Sive Morten, I watch your annalisys every day for quite a while now. I am sure I can trust my money to someone like you, a true proffesional. Is there a possibility that you are a signal provider or a money manager? Thank you.
     
  8. Paul McConnell

    Paul McConnell Private, 1st Class

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    Thanks Sive

    Impressive as Usual..
     
  9. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi, Georgeta,
    unfortunately not. Besides, I think, that you can do this after some time also.
    There is nothing impossible here.
     
  10. Steiniteer

    Steiniteer Recruit

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    Sive,

    this, again, is simply genius.....
     

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