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Forex FOREX PRO WEEKLY, September 09 - 13, 2019

Discussion in 'Sive Morten- Currencies, Gold, Bitcoin Daily Video' started by Sive Morten, Sep 8, 2019.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Fundamentals

    As we've mentioned last time - the major long-term driving factors are set. Fed has provided clarity last month on long-term policy, ECB position is relatively clear also as well as approximate situation of EU and US economies. The combination of these factors mostly supports downside trend of EUR/USD, as least as it seems right now.

    This week, we've got just few elements of overall picture - statistics. In our daily reports we mention two major numbers - EU GDP and US NFP of course. EU GDP was released neutral, according to expectation. So, the possible negative surprise that we were worry on, has not happened. YoY numbers was even 0.1 better than expected. As a result - almost no effect on the market.

    NFP numbers were a bit more complicated. At first glance - numbers were worse as it was definite lag to expected levels. But, as we talked about it many times already -take a look at unemployment rate. It is just 3.7%. Employment market is highly saturated and economy can't generate every month 100K+ new jobs.

    High participation rate tells that US has no big problems with employment, and here we need to take in consideration very important indicator - wage inflation. It has increased as on YoY as on MoM basis for 0.1 and was better than expected. Yearly wage inflation now is 3.2%. This is the reason guys, why we think that Fed will avoid massive rate cut. So my view is overall NFP report was good, preventing Fed from too often rate cut, and supportive to USD.

    Still Reuters reports that dollar was marginally lower on Friday against a basket of currencies, holding above a one-week low as a mixed report on the U.S. jobs market in August reinforced the view of a slowing expansion and chances of more interest rate cuts from the Federal Reserve.

    Fed Chair Jerome Powell did little to ruffle those expectations. At an overseas event on Friday, he cited risks in particular U.S.-China trade tensions that may derail the current U.S. economic expansion, which is the longest one on record.

    “The jobs data were sufficiently mixed,” said Marc Chandler, chief market strategist at Bannockburn Global Forex LLC in New York. “The market is not going to change its view of a rate cut later in September.”

    The U.S. Labor Department said domestic employers hired 130,000 workers in August, fewer than the 158,000 forecast among economists polled by Reuters, while hourly wages grew 0.4% last month, a tad faster than the 0.3% increase projected by analysts.

    Interest rate futures still implied traders positioned for a quarter-point rate decrease at the Fed’s Sept. 17-18 policy meeting, according to CME Group’s FedWatch program.

    “We are going to act as appropriate to sustain the expansion,” said Powell on a panel in Zurich.

    “The Fed will keep the record long expansion going with future rate cuts as significant risks to the outlook will warrant further accommodation,” said Edward Moya, senior market analyst at OANDA in New York.

    The greenback lost ground against its rivals as global tensions receded this week, most notably with China and the United States agreeing to high-level trade talks in October.

    Safe-haven bids for the dollar also abated in response to political opposition to a “no-deal” Brexit and Hong Kong leader Carrie Lam’s withdrawal of an expedition bill that triggered months of violent protests.

    Still, global tensions have not dissipated, so there remain some underlying bids for the dollar and yen, analysts said. Meanwhile, riskier currencies are looking at weekly gains with improved investor sentiment.

    Although it is mentioned above that investors supposedly oriented on new rate cut by the Fed, the data shows that probability of rate cut has dropped slightly. This is probabilities for December meeting and expected rate change. You can see minor odds drop that rate will be 1.25% and increasing that it remains in 1.5-1.75% range. Changes are small, but at the same time they do not show increasing of dovish sentiment. I would say the opposite.
    upload_2019-9-8_13-46-15.
    Source: cmegroup.com

    Second is, recent CFTC report. It shows increasing of net short positions on EUR, which also doesn't correspond to idea of rising dovish expectations:
    upload_2019-9-8_13-48-7.
    Source: cftc.gov
    Charting by Investing.com


    Thus, mass media news could write anything but statistics is a stubborn thing and it shows the opposite - markets doesn't show any sign of dovish sentiment growth by far. In general recent NFP report doesn't break the major tendency and stands in a row with our long-term view on EUR/USD rate and support Fed's careful policy, avoiding any dovish cycle.


    Technicals
    Monthly


    Technically market also shows no big shifts. The bearish engulfing pattern that we've mentioned here, is not exhausted yet and has some downside potential. As we've expected market hits YPS1 at 1.0950 and shows normal pullback after first touch.

    So, in shorter-term we keep moving with bearish engulfing pattern here. September range is too small by far and makes no impact on overall picture. Actually, here we could recognize downside narrow channel and market stands accurately inside of it.

    In longer-term view, take a look that EUR stands for a long time below upper border of rectangle, while normally, bullish market has to jump up after re-testing it. Dropping back inside rectangle and standing there, although near the border, is a sign of weakness. Besides, neither big support nor oversold levels stand around and it is free space till 1.03 lows. The only support is YPS1 where market stands right now.
    View attachment 44258

    Weekly

    Although last week action was strong and showed tale close, this week data has not enough power to complete the breakout and price holds inside the channel by far, despite breakout of major 5/8 Fib support

    Technically previous upward action was reaction on COP target, and downside action that we see right now should be continuation of major tendency to the next target, which is OP at 1.05 area. Now downward action is held by Yearly Pivot Support 1. Once response will be over, we will keep an eye on downside continuation.
    eur_w_09_09_19.

    Daily

    On daily chart in fact, we have the same setup as on Friday. Despite a lot of statistics, volatility was not too strong and our bearish grabber is still valid. As we've said - the background that has triggered upside action last week looks artificial and mostly emotional. Recent data, as we've estimated, also doesn't bring support to dovish sentiment.

    Market failed to break 5/8 resistance and MPP. So, while our grabber is valid, we keep this scenario intact of possible downside reversal, although technically it doesn't look very probable. To erase this short-term setup EUR just need to continue upside action and erase the grabber.
    eur_d_09_09_19.

    Intraday

    On 4H chart market still stands around K-resistance. First challenge was not successful. Here we do not have any specific patterns and mostly will keep an eye on the levels:
    eur_4h_09_09_19.

    On 1H chart our major point is recent top, as the crucial level for daily grabber. On Friday's action market indeed has reached 5/8 Fib level, so those who have taken short position now could move stops to breakeven.

    For others - since we do not have clear patterns here, there are two ways how to trade this setup. In general, it is possible to use Stop "Sell" entry order around WPP, when market start breaking the lows. Second way - wait for breakout and then try to take position on retracement.

    For bulls - it would be better to wait grabber erasing and upside jump above the tops and daily K-resistance area.
    eur_1h_09_09_19.

    Conclusion:

    Despite a lot of data and talks around recent events - overall situation barely has changed. The tasks that we will decide on coming week are mostly tactical. In particular, whether this recent activity will live for another week and market still will show upside leg, or it will be extremely short-term and we will get downside continuation. The cornerstone of the answer is bearish grabber that we have on daily chart. We will use it as indicator of next direction.


    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.
     
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  2. minimax

    minimax 2nd Lieutenant

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    In this mess of waves from 1,1825 down is impossible to tell the right structure but I prefer b1 point as start of ending diagonal for wave c. If so, we are in 3rd wave and on Thursday we probably placed cFlat which I had expected for some time and had expected to be seen on weekly TF. If grabber will do the job then I expect moves like on daily TF picture.
    BUT, which always exists, I do not like move up on 4h, where it has only 1 down fractal and warns me that this could be just 1st wave of potential move (ending diagonal?) up. Question is, what is the nature of whole move down, except ED. If this is wxy, than y is limited with 161,8 of w, what could mean, that might just go just few pips lower to hit 61,8 or lower but should not pass 161,8, can touch/penetrate but PA should stay above/arround.
    So, in both cases, ED or wxy, moves are same down to 1,10022, there both could turn up and then we will see if price goes higher and out of channel or will turn down into 4th ED.
     

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    #2 minimax, Sep 8, 2019
    Last edited: Sep 8, 2019
  3. sveckar22

    sveckar22 Private

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    Hello everyone. I have been a long-time reader and follower of this thread and of Mr. Sive's work. I would like to thank you, Mr. Sive, you though me so much about trading. After such a long time following I decided to make an account and contribute to this thread.


    I know sometimes there is an analysis of the NZD/USD currency pair which I also like to trade. I use Stives methods but I take a closer look into the COT report, especially the report of Non-Commercial traders, I noticed something very interesting, that I would like to share with everybody in this thread.


    If you take a look at the spreadsheet (picture 1), you can see that Non-Commercial traders have been aggressively adding short positions on NZD/USD, and they are starting to take off or they are not adding any long positions, still, the price rallied to the upside last week.
    nzd usd cot (pic 1).JPG

    Please correct me if I am doing this wrong but on the Monthly chart (picture 2) we have this major A B C (COP, OP and XOP) targets, first COP at 0.59400 and minor A B C (COP, OP and XOP) -> COP of the minor one has been completed, but since the market broke through the COP that would suggest we would see at least hitting of this minor OP target at around 0.60300, which is very close to main COP target, as Sive said 100pips is nothing on the Monthly chart.

    NZD USD MON(pic 2).JPG


    On the weekly chart, we have another a b c, OP was already hit, but the XOP coincides with minor Monthly ABC OP target. (Picture 3)

    NZD USD WEEK(pic 3).JPG


    On the daily chart (this is where I am confused) I am looking for a level to enter SHORT position, but I am not sure if I have drawn the minor retracement correctly? (Picture 4)

    NZD USD DAILY(pic 4).JPG


    On the intraday charts it is tricky I think because we have not seen any smaller retracement, not even 0.38 on this move the whole week, there was a small one at the beginning of the week but XOP has been hit without any sign of retracement. Or maybe this was just the AB wave of a bigger retracement that is to follow, but again looking at COT report it looks like there is a really bearish outlook on this pair, and any possible tweet from Trump about any new tariffs could add fuel to bears on this pair. (Picture 5)

    NZD USD HOURLY(pic 5).JPG


    What do you guys think about this currency pair?
    Best regards to everyone.
     
  4. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi mate,
    In general, everything that you've said is correct. Here are just few moments, that could important IMO. If you let me I point them.

    First is CFTC NZD speculative position stands very close to absolute bottom, which signficantly increases probability of moderate upside retracement.
    By the way, the action that we see here could be the one. This is very similar to situation that we've discussed yesterday on GBP. Here is CFTC NZD graph:
    upload_2019-9-9_10-31-45.

    Second, the conclusion that we have to make on your analysis depends on your trading time frame. From your research it is not clear enough, on what time frame you want to take position. But this is vital question.

    On monthly chart you correctly have calculated targets but missed that NZD stands at major 5/8 Fib support and Yearly Pivot support 1. Now we see market reaction up:
    nzd_m_09_09_19.

    On weekly we also have butterfly "Buy" at the same place, which suggests at least 30% upside retracement. Market is also oversold here. Bullish engulfing pattern right at bottom confirms suggestion of action at least to 0.6535 area
    nzd_w_09_09_19.

    Thus, if you intend to go short - overall context is not ready. As retracement is forming on monthly/weekly basis, it could pretty extended amount of time to wait.

    Speaking on daily/intraday basis - we could get DiNapoli B&B "Sell" on daily very soon, maybe even today as hourly OP @0.6480 creates Agreement resistance with daily major 3/8 Fib resistsance level. Once B&B will be done, upside action should continue.
     
  5. minimax

    minimax 2nd Lieutenant

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    In this 1M chart at the moment 3rd wave, if my count is correct, is shorter than 1st so 5th will exceed 3rd for just few pips, hit 50% and drop into impulsive cFlat, at least in my opinion, as wave y. Targets 62/100/162 etensions of move from 1,1057.
     

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  6. minimax

    minimax 2nd Lieutenant

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    I think this is expaneded ending diagonal as C flat. It penetraded 100% of A and top might be in place, in my opinion as 2ED for South.
     

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  7. sveckar22

    sveckar22 Private

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    Thank you sir, your insights are always highly appreciated.


    I trade on the daily time frame but use intraday analysis in order to get the entry, I have no problem holding my positions for few days even a week if the market, maximum stop loss I am still comfortable with is 100 pips, but sometimes I risk less.


    Now I see it on the monthly chart but sometimes I get confused about what is “more important” when I see an uncompleted ABC extension target, and the market hitting one of the Fibo retracements. In this case, looking at the monthly chart I would think that the market broke through the 0.61 Fibo with this tail closing below it.


    The picture on the weekly is now clear to me.


    Thank you again for your reply.
    Best regards!
     
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  8. minimax

    minimax 2nd Lieutenant

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    If price breaka 161,8 of wave y it will become an impulse and we will see new high almost certain.

    10.08 CET: Was I wrong or The Market is playing with traders?
     

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    #8 minimax, Sep 10, 2019
    Last edited: Sep 10, 2019
  9. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Morning guys,

    To be honest - it is not much to talk about today. EUR and GBP stand in tight range. Theoretically, we could talk about NZD setup but we already discussed it yesterday.

    It seems that on EUR we turn to ECB expectation. Market stands flat showing lazy action. Hardly we will get any breakout until Thu. Tomorrow we have US CPI data, but reaction probably will be weak, as CPI is lagging indicator and hardly it will trigger strong action.

    Price action still stands inside the range of the grabber and below daily K-resistance area. As always - the vital levels are the top and bottom of consolidation. Since the breakout will follow on ECB speech, it probably will be strong.
    eur_d_10_09_19.

    As consolidation consists of narrowing siwngs - both directions are possible. For example, here on 4H chart it is easy to imagine upside butterfly, if we will get upside breakout. Thus ,if you have bullish view and expect upside breakout - your vital point is 1.1010 lows around WPP:
    eur_4h_10_09_19.

    For the bears - the top of the grabber is vital point. In fact, on 1H chart we have triangle. Some patterns were formed inside of it, but nothing really interesting. Here again, we could consider using of Stop entry orders on your prefferable direction, either Stop "Sell" around 1.1005 or Stop 'Buy" around 1.1075 area. Or, do nothing but wait for final direction and then act accordingly. The advantage of stop orders is that you could use both of them (or OCO feature). Onces one will be triggered, you could cancel another manually.

    It is not forbidden of course to anticipate breakout and take position inside the triangle, but - it gives worse risk/reward ratio, second - we do not have clear patterns inside... This makes process of position taking more like a gambling.
    eur_1h_10_09_19.
     
  10. minimax

    minimax 2nd Lieutenant

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    I expect new low but I am ready for everything..
     

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