1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.

FOREX PRO Weekly September 03-07, 2012

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Sep 1, 2012.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

    Joined:
    Aug 28, 2009
    Messages:
    11,504
    Likes Received:
    14,944
    Unflinching Ben
    So, yesterday Ben Bernanke has spoken in Jackson Hole. I’ve watched his speech with expert comentaries on Bloomberg TV yesterday, later I’ve read some comments and vast opinion of different analysts is that Fed Governor has not said anything new. Still, we have to make some conclusions even from flat sense of Bernanke speach, particularly in relation to EUR/USD pair.
    Here are just my thoughts and some conlcusion that I’ve made personally for myself. It goes without saying that you may not agree with me, so feel free to discuss it. Since, I expect that this will be important in nearest 6 month. Let’s start with it:
    One thought that seems to me important, that Bernanke said is QE I, QEII and Operation twist have given positive results. They led to GDP 3% growth, hold rates at lowest levels and gave 2 mln new jobs. The other side of those programs is uncertainty of a bit farer perspectives. First of all, Fed has injected approximately 2.3 Trln USD in economy by buybacking bonds from the market. How this influence on inflation? Now even lazy person talks that sooner or later it will lead to inflation, but how fast it will be, will Fed have significant tools to bridle it? That’s the risk that Bernanke has sounded himself on some previous speeches and in Jackson Hole as well. He said that Fed has no traditional tools any more that is Fed Interest rate, so Fed has to apply some untraditional, such as QE’s. The problem though that if applying traditional tools Fed knows how they impact economy, since it has passed through its application many times, while QE feature was just initiated and nobody dares now to predict how it will impact economy when cycles will start to change. Second risk, that also was spoken by some FOMC members – Fed has expected a bit stronger impact on unemployment reducing, credits growing and GDP. Hence – it is not as smooth as it was expected. Other words, major fear of the Fed is that they definitely bring inflation by 2.3 Trln injection but will they get equal positive effect that they expect and in what way it will come – this is still yet to be seen.
    Taking this stuff in consideration I have decided for myself that Fed still feels some lack of data, they need a bit more statistic about labor, production, sales loans and other. It is too small time has passed. That’s why I think that till New Year Fed will not take any radical steps and on September meeting there will be nothing tremendous. Since some positive effect has come, it is safer to just hold rates low and get a bit longer period with slow recovery, rather than take QE III with hope that positive effect will become greater but with absolutely unknown risks. Also we should not forget about elections on Nov 6, and probable US debt ceil fight in Congress in December. So, you can imagine how hot it will be right after elections. But what about EUR/USD?
    On next week will be ECB meeting. Draghi surely knows effect of QE on US economy, as we’ve stated above. Since ECB sees that inflation risks still blur but it shows effect as jobs growth and GDP, I think that ECB will follow Fed. They probably will announce starting buyback of national debt of EU countries, mostly Spain and Italy. It is prefferably for bulls, that ECB will hold rate. Mostly negative scenario if ECB will decrease interest rate simulteniously with silence about bonds buyback. But anyway, I expect that sooner rather than later ECB will start its own QE. This could lead to EUR appreciation to next area around 1.30. Based on our monthly analysis this still will not break the overall bearish long term trend.

    Monthly
    Monthly trend holds bearish. Price continues to force significant support area 1.19-1.23 that held EUR twice from collapse – first time in 2008 when sub-prime crisis has started and second – in 2010 at beginning of Greece turmoil.
    Currently August continues to be an inside month to July, but market has shown strong close. This is not a surprise, if we recall what the level it is. This is 50% support of major EUR rally of all times 2000-2008 year. Although this level was penetrated previously in 2010, but looks like it is still valid. This is most powerful Fib support inside of 1.18-1.23 area.
    Still, long-term bearish context still holds and target still is 1.16-1.17 area, based on analysis of quarterly chart of Dollar Index that we’ve made in Nov 2011. Index has 95% correlation with EUR/USD. Also this is AB=CD target of most recent pattern on current chart. Take a look – this is significant support of 2005 as well – marked by yellow rectangle.
    By current bounce market has reached nearest Fib resistance at 1.2590 area, but will this level hold market? If ECB will give investors what they expect to hear, then probably EUR could proceed higher. As we said above current bearish context can hold move even to monthly K-resistance at 1.2950-1.3150 area.
    So, major conclusion for us here is that market bounces from strong support and if it will pass though 1.26 – next area of monthly resistance is 1.30-1.31


    [​IMG]

    Weekly
    On previous week price appreciation was stopped by 1.2593 Fib resistance and Monthly+Weekly Resistance 1 around 1.2640. Also this is upward border of the channel. Next resistance is 1.2790 that includes MPR1 and previous swing high. Around 1.2935-1.3150 stands Confluence resistance that is also weekly overbought. This probably the destination, if ECB will suport EUR by bullish decisions. But for that purpose we need to see upward channel breakout first. Since we have new monthly pivot at 1.2450, some retracement is possible. One thing that could give us significant bullish confirmation is if current swing up will exceed previous swing low. This is very often becomes first sign of potential reversal or deep retracement.
    [​IMG]

    Daily
    Trend holds bullish here, but now we have potentially reversal pattern 1.27 Butterfly “Sell” at weekly resistance. In current circumstances it is logical to expect pullback, especially because MPP has not been touched yet. But it seems that most will depend on ECB. Strong speech could lead to further EUR appreciation. Technically it probably will express in Butterfly failure. The point is that butterflies are such kind of patterns that fail miserably. So, if market accelerates above 1.618 of butterfly “Sell” it very often lead to much further move up. WPP that now stands at 1.2560 also could help us with that, since it is very useful at the beginning of new week. Move below will suggest deeper retracement, while price holding above it increase probability of upward continuation. So, if you have bearish view you may trade butterfly with stop above its 1.618 target, while if you’re bullish watch for two levels – butterfly failure or retracement to 1.24-1.2450 area – daily Confluence support and MPP.
    [​IMG]

    60-min
    On intraday charts currently I do not see much information that could make significant impact on analysis that already made. Still, on Monday we can monitor price action around triangle that we’ve discussed in update on Friday. Probably if market will return into triangle’s body this will lead to further downward retracement and tell that buttefly has started to work. If this will not happen, then market could proceed higher. But again, ECB meeting could turn all stuff from top to bottom.

    [​IMG]




    Conclusion:
    Long-term bearish sentiment is still in play. Pullback that now in progress on monthly chart should not surprise us, if we take into consideration the level importance where this bounce has started. From long-term perspective, even move to 1.30 will not erase bearish context.
    Currently we can say that market is entering in new financial year after summer. Now is such a situation when fundamental, political events and statistics should extremely important for market behavior. A lot of “if, if, if…” is appearing.
    Short-term context still holds bullish, although suggests some retracement, but most will depend on ECB speech.




    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. Sive Morten

    Sive Morten Special Consultant to the FPA

    Joined:
    Aug 28, 2009
    Messages:
    11,504
    Likes Received:
    14,944
    EUR/USD Daily Update, Tue 04, September 2012

    Good morning,
    yesterday was quiet trading session, but still, market has tested WPP and returns right back. It probably means that it has not finished yet with buttefly. Next target and resistance stands at 1.2650-1.2670 area. That is also WPR1 and 1.618 target of butterfly inner AB=CD pattern.
    Slightly higher stands daily Overbought as well.
    The most interesting should happen after hitting of 1.2650 area. As we said in weekly research - if market disrespect this level, then we will see futher appreciation and looking at gold I suppose that odds to see it are solid.
    If, still market will show pullback - nearest area to watch is first Fib support at daily, that is also support line.
     

    Attached Files:

    #2 Sive Morten, Sep 1, 2012
    Last edited: Sep 4, 2012
  3. Sive Morten

    Sive Morten Special Consultant to the FPA

    Joined:
    Aug 28, 2009
    Messages:
    11,504
    Likes Received:
    14,944
    EUR/USD Daily Update, Wed 05, September 2012

    Good morning
    ladies and gentlemen,

    As it often happens - the eve of ECB meeting makes investors become nervous. At that is not a surprise.
    On daily chart it looks like market is done with upward move and picture looks bearish - market stands in some consolidation, has tried to break it, failed and returned right back. Common sense suggests that downward breakout should follow. Besides, if we will count the width of this consolidation to the downside, we will get precisely 1.24-1.2410 area of Confluence support. And all this stuff is true, if market will break the support of this consolidation. 1.24-1.2410 area is the first one to watch if you would like to be a buyer.

    Still, I will show you another side of the moon, as well. First, we might get the stop grabber on daily. Volatility is high on ECB eve. Second - look at 4 hour chart. Here we have another small upward channel, combining with bearish devergence. Second top inside the channel stands at 1.27 extension of the first one. That is not surprise, since that was our butterfly "Sell".
    Now look, that current retracement absolutely equal to the first one - as on slope as on depth. Counting 1.27 extension to the upside we will see that it agrees with 1.618 estension of the first retracement...
    Yes, that could be perfect 3-Drive Sell. Even more - here could be second 1.27 butterfly. Since as divergence, as two side-by-side butterflies inside of 3-Drive are very common to this pattern.
    Now take a look at hourly chart. Here I just want to show you hidden bullish divergence with MACD.

    As you can see, situation is not so simple as it looks on daily. So, what should we do?
    Conservative approach is do nothing till ECB meeting and take action only when it will be finished. Price action according to meeting tone will last longer than just 1 day, I suppose.

    Second, keep an eye on 1.2490 low. If market will break it, then probably it is really done with upward move and next area to watch - 1.24.

    That's being said - if you would be a buyer - look at 1.24 area, but escape long nasty black candles right to 1.24.
    If you intend to sell - your first area to watch is 1.2660. But here is attention: Only if market will jump to it on volatility and Draghi speech will not support it.
    If this move will be as a reaction of hawkish Draghi testimony - then your level is 1.2850-1.29 as we've suggested in weekly research.

    It's a bit sophisticated today, but how it could be on the eve of ECB meeting?
     

    Attached Files:

    #3 Sive Morten, Sep 1, 2012
    Last edited: Sep 5, 2012
  4. Sive Morten

    Sive Morten Special Consultant to the FPA

    Joined:
    Aug 28, 2009
    Messages:
    11,504
    Likes Received:
    14,944
    EUR/USD Daily Update, Thu 06, September 2012

    Good morning,
    may be it sounds curious but looks like our yesterday's suspicions about bearish sentiment were rewarded. At least currently market behavior seems clear.


    Now we have bullish stop grabber on daily time frame, trend holds bullish and market is coiling above WPP. I have some feelings that despite what Draghi will say market should clear highs and reach 1.2550-1.2660 just on volatility action. But if speech will be really positive for EUR - it could continue further to 1.29-1.30 area.

    On 4-hour chart we see picture, that disccused on hourly chart yesterday - I'm speaking about hidden bullish divergence iwith MACD. IT's not nessecary to tell, that potential 3-Drive still in progress and market still holds harmony with it.

    So, if you have bearish outlook - do nothing. Wait speech results and reaching of some significant resistance - at least 1.2650-1.27 area.

    If you're bullish - take a look at hourly chart. Here is the swing of daily stop grabber. Invalidation point is the low, nice area to watch for entry is 1.2575 K-support, that is also 50% of big bar up. 1.2560 is WPP. If market will show AB=CD retracement or something like that you may try to buy it.
    Target, as we've said - 1.2650-1.2670 area. 1.27 is today's overbought level.
    Good luck.
     

    Attached Files:

    #4 Sive Morten, Sep 1, 2012
    Last edited: Sep 6, 2012
  5. Sive Morten

    Sive Morten Special Consultant to the FPA

    Joined:
    Aug 28, 2009
    Messages:
    11,504
    Likes Received:
    14,944
    EUR/USD Daily Update, Fri 07, September 2012

    Good morning,
    so, that was really big week. M. Draghi has said all that investors would like to hear - hold rate, and announced some details of Spain and Italy buyback. You can see reaction not only in EUR but in all risky assets, stocks for example.
    This is supportive plan for EUR, so I will not be surpised if in medium-term perspective we will see 1.30. But this is just an assumption yet.

    So, today is relax day mostly. Since Investors have got significant information, they need to accomodate it and think about it. Today is Friday as well. Our trading plan mostly accomplished.
    Speaking about today's market, I suppose that price will try to continue move to hit 1.2660-1.2670 targets by nice short-term upward momentum. We've discussed this targets in previous two updates - so they are the same.

    Take a look how market respect Confluence support on hourly chart, when short-term traders have fixed profit after rate decision and before press-conference.

    If you're bearish, you may try to sell around 1.2670-1.27 area, but this will be trade against the major trend, and if market will respect this resistance - that will be only retracement.So, take nearest target.
    If you're bullish, it's better to wait a buy some deep, since we near resistance area.
     

    Attached Files:

    #5 Sive Morten, Sep 1, 2012
    Last edited: Sep 7, 2012
  6. Lolly Tripathy

    Lolly Tripathy Master Sergeant

    Joined:
    Jul 23, 2010
    Messages:
    493
    Likes Received:
    238
    Thank you very much sive sir,
    wish you n ur family a very jolly and colorful weekend..
    and a lot of green pips for the week ahead..

    happy piping all my friendzzz,,
     
  7. erich

    erich Private, 1st Class

    Joined:
    Oct 13, 2009
    Messages:
    55
    Likes Received:
    0
    On Monday the 3rd Sept. Draghi's birthday will be celebrated! In his speech the gold nuggets for the big investors will be distributed? The big boys will carefully listen if the magic word will occur: ESM!
    But the present will have NO legal basis and even the contrary will be true. The article 125 of the Maastricht contract include the No-Bail-out clause and says, neither the Union nor a Member State is responsible for the debts of another state.
    I think the Euro will go up like a rocket and comes down in that manner in September.

    thanks Sive for the technical analysis but in this messy political situation it's hard to predict and to trade!
    greetings, Erich
     
  8. FreddyFX

    FreddyFX Sergeant

    Joined:
    Oct 3, 2007
    Messages:
    336
    Likes Received:
    126
    Sive has a finger on the pulse of the EU.
    He always looks at it from a mathematical point of view and remarkably is right so very often.
     
  9. BenOm

    BenOm Private, 1st Class

    Joined:
    Mar 12, 2009
    Messages:
    30
    Likes Received:
    0
    Sive is my prophet.
    He is indeed remarkably right so very often. Otherwise, he is sill right and the market is wrong!! :)
     
  10. rashidin5178

    rashidin5178 Sergeant

    Joined:
    Oct 10, 2007
    Messages:
    244
    Likes Received:
    1
    Hi Sive,

    Nice analysis as usual. Thanks a lot, Sir.

    I just made a couple of observations lately regarding price gap (difference from previous close and current bar open exactly) especially on M5/M1 and found that normally market (EURUSD) do not leave the gap too long to fill. Still I'm afraid to declare this is very true but the results from my poor observation tell me that it is not a bad idea to consider it whenever we got some uncertainty in price direction. If we look back on M1 TF we can see that price do not fill yet 1.2495 around 6.14 am on 31st August 2012. I know gap is not necessarily be closed on short time period, but based on my previous observations, the probability is quite high to see retracement could be true at least to 1.2495-1.2400 area. So, I absolutely agree with you about this retracement. After that, anything could happen.

    Another thing that in my opinion should be take care is MACD bearish divergence on daily TF and it happen around resistance/confluence area. For me normally price will going south but as always, who am I to say definitely. Hope you can comment a little bit, Sir.

    Have a good weekend, Sir.

    Thanks and Best Regards.
    Rashidin
     

    Attached Files:

    #10 rashidin5178, Sep 1, 2012
    Last edited: Sep 1, 2012

Share This Page