FOREX PRO Weekly September 19-23, 2011

Monthly
During the coming week whole financial world expects 2-days FOMC meeting that will start on Tuesday, 20th September. All we know that this kind of events could become really drastical moment for the market and we can’t exclude that FOMC statement could erase our analysis, but still, let’s take a look at technical picture.
Long term picture has not changed much. AS on previous week our attention focus on two moments – behavior around strong monthly Confluence support and potential trend shifting moment based on MACD.
Monthly trend still stands bullish, market not at oversold. There are two significant moments that I would like to discuss today. One of them is not so crucial currently - I suppose it will be important in medium term, probably in October. This is MACDP indicator (red line) that comes in play and moves very close to current price action. Currently market stands a bit far from it, but in October there will raise the real possibility of monthly trend shifting. We will keep a close eye on it definitely.
Second thing is extremely important for nearest 1-2 weeks. This is monthly Confluence support (K-area). Initially we’ve marked it as 1.3650-1.3760, but today I’ve chosen hidden reaction point from thrusting bar on monthly at 1.2643, that gives us a bit wider area 1.3515-1.3760. Since this is monthly strong support it could be some kind of directional indicator for lower time frames, such as weekly or daily. Existing of support such kind of strength could lead to solid bouncing on daily time frame, even if on monthly chart it will remain invisible. Also do not forget that monthly levels are rather wide, they are not just 1.3650 pips-to pips but more as some area. You can see it with penetration, it acts as rubber – market has pierced it, but returned right back. Also, previous low at 1.3811 stands very close and current bar has not closed yet. In general existing of such areas gives us huge advance for week ahead. We know particularly where to search for Buy signals.
Also we already have got its advantage – first bounce has given us nice daily B&B “Sell” trade on Friday. This is only first sign of pretty long-term Fib levels. Later we can get more signals in that area.

We will not speak about upward targets again, since they are not so important right now on monthly chart. Still, I just want to remind that probably we should treat 1.3550-1.36 area as crucial point for this time frame. If market will move below it then our long-term context will turn bearish. 1.4140 is no more the Fib support. Next fib support below K-area is major 1.3039 level.


Weekly
Trend here is bearish, so as price action. As you remember, during previous week we’ve said that just under 1.3650-1.3760 level stands minor 0.618 Fib support 1.3480 that we can’t see on monthly chart. This level creates at Agreement with 1.0 Fib extension target at 1.3439. Also this level is very close to weekly oversold. So, retracement up has started from here and reached first 0.382 resistance at 1.39 area. The fact that market has accelerated down right to 1.0 extension target tells us that downward continuation has not bad chances. After some retracement market could continue to 1.27 extension or even to 1.618.
Since this is just first pullback, on coming week we can count on some returning down. How deep it could be – we can’t answer on it currently, especially just based on weekly chart.


Daily
This time frame is most interesting for us currently. Daily trend is still bearish. Let’s start first from our B&B “Sell” trade that has started on Friday. With B&B’s there is always some indecision exists. What if current move down is just a respect of 0.382 resistance and on Monday market will accelerate to the upside, right to 1.4023 area? Theoretically, market has one more day to act above green line (3x3 SMA) and this will be in a row with B&B, since this pattern requires that market has not much than 3 days above 3x3. And if this scenario will happen, then real B&B will start from 1.4023 area. That’s why I offer you move your stops to breakeven. Still one moment could help us. For that purpose (1.4023 becomes start point of real B&B) we need that market will not reach target of current B&B – 1.3665. If market will reach it, then current B&B is a real one, if not and just fly to 1.4023 for during single day – then we can try to sell again, because 1.4023 also is a daily overbought.

This is outstanding how much opportunities Monthly K-area could give. Now we have high probability directional B&B pattern and we have not got yet major patterns on daily that we are expected to see – some reversal pattern that could point on deeper retracement. Always take in consideration of longer time frame strong areas – they could give you huge advantage and a lot of high probability trading signals.


Now let’s take a look at overall daily picture. Right above the market we see that 0.5 Fib resistance stands almost in the same area as major 0.382 resistance level – 1.4025 area. 1.4034 is a daily overbought for Monday and 1.3990 is weekly pivot resistance, so 1.3990-1.4030 rather strong area of resistance. If, as we’ve said market suddenly will accelerate there – probably we will have to search for sell signals around it.
Below market we see pivot point at 1.3743 and pivot support at 1.3539


4-hour
Trend is bearish. We see how market has pulled back from 0.382 resistance (that is 4-hour K-area by the way) and pivot point, returned below upper border of former parallel channel and has reached 0.382 Fib support at 1.3770. Now, if this is real B&B market should move up too high, other words, it should be just shallow respect of current support level. If market will return right to 1.39 area – this will probably mean that we can see further up move to 1.4025.


1-hour
Trend has turned bullish. Our major risk here is that market could show AB-CD retracement to 1.3856-1.3867 Agreement area. If market is really in B&B, it should not move higher, hence our area for stop placement is above 1.3867. Market is not at oversold, daily and 4-hour trends are bearish, in fact, market should not show deep retracement. Whatever it will be, we could use it to enter short with 1.3660 target.


Conclusion:
Currently we feel impact of strong monthly/weekly support area and first breath is initial pullback from it that has given us nice B&B “Sell” trade. 1-2 days will past on this move finishing, right till FOMC meeting, btw. What will be after that – difficult to say, but I hope that this strong area will give us some more clear patterns, since I do not want to leave it so fast.
On of the scenarios, that very probable could happen is butterfly “Buy” that will start around 1.35 level. Due to volatility on FOMC meeting, market probably will show new lows (long-term targets has not been triggered yet), but strong support again could return price right back to deeper retracement, like on the picture below, but this is just an assumption…



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.

 

FOMC Scenario?

Hi Sive,

Not enough words to say thank you. I really appriciate your guidance.

One question that I am curious to find answer is what are the different scenarios for E/U with QE or without QE.

Thanks for all your help.

Regards,

Muzammil

 

Hi Sive

You give such a concise analysis. It is a true pleasure to study and follow your technically deductions for the coming week.
Thank you for your dedicated work in providing us with potential trade set ups.

Have a great weekend. You deserve the rest of the just.

Kind thoughts

 

hey sive

hey sive, hope your well,

just a quick question, the b&B trade, are we supposed to hold on to it? i have moved me stop loss to breakever at 1.3880, but im not sure, whether to hold on to it.

Im thinking of closing at a lower price and then open a short order again at a better price or a retrecement, so i can milk some more pips out of the market, but then again dont want to be greedy.

Want to know what your doing, are you holding with sl at b/e or ur closing?

Thank you sive,

Yousuf.

 

Thanks

Hi Mr Sive,
Great analysis, God bless you and your family.

Have a great week and happy pipping!

Ciao!

 

Hi Sive,
Your comments and analysis are really appreciated. Quite frankly I would have been lost/ BROKE if I did not follow your comments . Thanks for sharing your knowledge with us all at Forex Peace Army and please don"t stop sharing your valued insight.
Kind Regards
Dave
Cape Town

 

profit target

hey sive, as to the above post market has hit the profit target as soon as it opened so its cool thank you!

Yousuf

 

Nice W&R

We have nice W&R on 5-min chart. I suppose we can count on gap filling...

 

Thank you Sive! I see W&R on smaller time frame.It looks like market will choose to draw a butterfly buy on Daily as you mentioned on weekly preview!
Lots of happiness to you

 

Hi Sive,

And what is going to happen after the gap is filled, will it continue the up movement or return to the previous down movement or it is to early to say?

ALSO CAN YOU PLESAE EXPLAIN IN ONE POST WHAT ALL THE ABBREVIATIONS MEAN? Like B&B,W&R and so on. Im appologise but I am new to this forum and I have a lot to learn so if I dont understand the abbreviation I cant learn.

Regards,
Mick