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Forex FOREX PRO WEEKLY, September 23 - 27, 2019

Discussion in 'Sive Morten- Currencies, Gold, Bitcoin Daily Video' started by Sive Morten, Sep 21, 2019.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Fundamentals

    Technical picture as on EUR as on GBP stands boring a bit, as volatility has dropped significantly, long-term charts stand without a changing more than 4 weeks in a row. Right now fundamental background is important as never and sooner rather than later charts will show the picture of new fundamental situation on the markets.
    Now recent Fed statement stands in focus and here we have some moments, that match to our fundamental view but a bit surprising to the market.

    As Reuters reports - The dollar stood tall on Thursday after the U.S. Federal Reserve cut rates by 25 basis points, as expected, but its chairman signalled a higher bar for future rate cuts.

    The U.S. central bank, on a 7-3 vote, lowered the Fed funds target rate on Wednesday to a range of 1.75% to 2.00% “in light of the implications of global developments for the economic outlook.”

    Here is what we talked about in our recent weekly report:
    However, Fed Chairman Jerome Powell described U.S. prospects as “favourable” and the rate move as “insurance.” He did not rule out future cuts, but his remarks were not as dovish as markets had hoped for which lifted bond yields and the dollar.

    Projections published by the Fed showed policymakers, at the median, expected rates to stay within the new range through 2020, while futures markets have priced in at least another cut.

    Fed Chair Jerome Powell said that “what we think we are facing here is a situation which can be addressed, which should be addressed, with moderate adjustments to the federal funds rate.” Powell noted that the U.S. labor market was strong and inflation was likely to return to the Fed’s 2% annual goal.

    “In the short term, this hawkish cut should still see the dollar well-bid, given that the path of interest rates outlined by the Fed is not close to that priced into the markets,” said John Veils, Americas FX and macro strategist at BNY Mellon.

    “The USD is still the highest-yielding currency in the G10 world, a sign that it is also the least unattractive house in an increasingly blighted neighbourhood.”

    Subsequently, the Swiss National Bank, the Bank of England and the Bank of Japan all kept their policies on hold. Norges Bank increased its key policy rate, moving its rates in the opposite direction of the United States and European Union.

    Central banks “came off a really bad month of August for risk and for sentiment,” said Brian Daingerfield, macro strategist at RBS Securities in Stamford, Connecticut.

    “But as September dawned, some of the worst U.S.-China trade escalation has pulled back, the market has been pricing out the possibility of a near-term no-deal Brexit as we prepared for elections in the UK. Some of the economic data have brightened a bit,” he added.

    The central banks are generally “kind of holding their breath and holding their fire in terms of fully acknowledging that further easing could come down the road but not moving in a proactive way towards additional easing,” said Daingerfield.

    “What we’re looking at is brewing central-bank divergence,” said Chris Weston, head of research at brokerage Pepperstone Group in Melbourne. “We’re starting to see signs of that resonating in currency markets.”

    Sterling hit a two-month high of $1.2566 against the greenback, after European Commission President Jean-Claude Juncker said he thought Brussels could reach a deal with Britain to leave the European Union.

    “Other central banks are not in easing mode as the Fed has been this week and hopes of a breakthrough in trade talks between the United States and China is also dampening some of the safe-haven appeal of the dollar,” said Thu Lan Nguyen, a foreign exchange analyst at Commerzbank.

    Investors are also focused on U.S.-China trade talks in Washington, aimed at laying the groundwork for high-level discussions next month.

    However, most traders are cautious. Few signs of progress have emerged and with a wide gulf between both sides remaining, the issue is weighing on the recent risk-on mood.

    “If you look at the Aussie dollar or renminbi it’s faded,” said Joe Capurso, senior currency strategist at the Commonwealth Bank of Australia in Sydney.

    “”I think market participants are going to need something concrete to really rally... at the moment there’s just not enough.”


    The U.S. dollar erased earlier losses and rose on Friday after investors cut back short positions in the greenback as concerns about slower global growth prospects and political tensions boosted its safe-haven appeal.

    But market watchers say the slowdown in global growth and increased tensions following the weekend attacks on Saudi oil facilities were making the dollar more attractive, despite a dovish policy stance from policymakers.

    “As long as the outlook for global growth remains uncertain and geopolitical tensions don’t ease, we expect the current trends in the FX market will continue,” said Richard Falkenhall, a senior FX strategist at SEB. “Our forecasts point to further USD strength, while smaller currencies remain weak this year.”

    Indeed, U.S.-China trade deal appeared elusive on Friday after Chinese officials unexpectedly canceled a visit to farms in Montana and Nebraska as deputy trade negotiators wrapped up two days of negotiations in Washington.

    Chinese officials were expected to visit U.S. farmers next week as a goodwill gesture, but canceled to return to China sooner than originally scheduled, agriculture organizations from Montana and Nebraska said.

    The United States had removed tariffs overnight from over 400 Chinese products in response to requests from U.S. companies.

    Trade experts, executives and government officials in both countries say that even if the September and October talks produced an interim deal, the U.S.-China trade war has hardened into a political and ideological battle that runs far deeper than tariffs and could take years to resolve.

    The Chinese delegation did not present any new proposals on core structural issues including intellectual property protections, forced technology transfers, industrial subsidies and other trade barriers, said a person briefed on the talks.

    “The conclusion from the U.S. side was that we’re not close to an agreement,” the person said.

    Speaking on GBP performance - Sterling hit a two-month high of $1.2566 against the greenback, after European Commission President Jean-Claude Juncker said he thought Brussels could reach a deal with Britain to leave the European Union.

    Thus, this is shortly events that we've got this week. Let's take a look what has changed on the markets.

    First is - expectations on rate change in 2019 has changed and chances that Fed will hold the rate at current level increases.
    upload_2019-9-21_11-58-20.
    Source: cmegroup.com

    But what is more important is recent CFTC report that gives us very important answer on investors' attitude to recent Fed statement. As you can see, net short position has been increased almost for 20K contracts. As no progress stands in US/Sino negotiations, demand for US dollar could return next week.

    upload_2019-9-21_12-3-5.

    Source: cftc.gov
    Charting by Investing.com

    That's being said, it seems that recent week was mostly bearish for EUR rather than bullish, despite that EUR/USD has not shown any major breakout and spent all time in tight range.

    Still, on a background of relatively positive Fed view on US economy perspectives, blur chances on another rate cut this year and failure of positive breakout in US/China negotiations keeps small room for EUR growth on next week. Recent CFTC data on EUR net position just confirms this theory. And, in general - speculators boosted their net long bets on the U.S. dollar in the latest week to a five-week high, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday.

    In a wider measure of dollar positioning that includes net contracts on the New Zealand dollar, Mexican peso, Brazilian real and Russian ruble, the greenback posted a net long position of $15.40 billion in the week ended Sept. 17, compared with $12.58 billion the previous week.

    The strength of the U.S. economy relative to the rest of the world and low interest rates around the globe have led investors to favor the U.S. dollar.

    Also we have to keep in mind all important moments that we've discussed in previous two reports, such as ECB statement and EU bankers disagreement on QE new round, big difference in EU and US economy statistics and other stuff. In addition to the subjects that we discuss today, it creates the whole picture around EUR/USD.

    Technicals
    Monthly


    Due very tight trading range we do not have the break of major tendency here, which is moderately bearish, as by price action as by MACD trend. As we've expected market hits YPS1 at 1.0950 and shows normal pullback after first touch.

    August performance by long upper spike shows existing of pretty sufficient amount of offers above the market .September is almost an inside month by far. As we've said earlier, 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. Once market will drop below it - automatically it will mean that road to 1.03 lows will be open.

    eur_m_23_09_19.

    Weekly

    We keep weekly chart comments without a change as well. Market has to break out from current range to add something new as to monthly as to weekly time frames.

    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 of 1.1185.

    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 and channel's border. Once response will be over, we will keep an eye on downside continuation. EUR has pretty much room to fluctuate inside the channel as upper border stands around 1.13 area. To break the bearish context EUR has to climb above 1.14 top.
    eur_w_23_09_19.

    Daily

    On Friday bullish sentiment was supported by expectation some positive breakout in US - China negotiations, but nevertheless market was not able to keep the tendency and breakthrough daily resistance, as we've suggested. Although vital level of 1.10 area has not been broken yet, but probably it will happen on Monday morning, when news will be priced-in.

    By recent drop, EUR almost has erased the engulfing pattern, showing second downside deeper pullback after major one. This is bad sign for the pattern because of irrational price action.

    Too long flat standing below major K-area is starting look like bearish dynamic pressure. Trend has turned bullish rather long time ago but price action still stands flat without continuation. On dollar index this looks even brighter.

    We do not want to run ahead of the train and do not hurry with taking short position as 1.10 area is still holds the market. But, at the same time, we cancel our bullish intraday setups. in fact, on Friday market almost has formed bearish reversal session. Trying to catch some trade inside this consolidation becomes too risky journey.
    eur_d_23_09_19.

    Intraday

    Taking in consideration new inputs discussed above, we should consider deeper targets first. Trend stands bearish on 4H chart and you can see why I call this action "irrational". Take a look at circle lows - that was a retracement after engulfing has been formed. Once it has been completed, bullish market should had to show upside breakout and continuation. But instead of that EUR has dropped deeper. This is not normal.

    Thus, as it is long run to the 1.09 lows, we consider first AB-CD targets. Market has hit COP on Friday, next one is OP, it stands around 1.0956:
    eur_4h_23_09_19.

    On 1H chart market indeed has shown upside action on Friday morning, as we've suggested but only to recent tops and no breakout has followed. Result of this action was "222" Sell pattern that has triggered massive sell-off and Reversal candle.

    Thus, here we have smaller "222" Buy, but it's minimum target already has been reached at 3/8 Fib resistance area. Recent sell-off was rather fast and it has not bad momentum. Thus, for intraday traders, it is possible to consider short entry at some resistance levels if market will get there.

    P.S. Here, by the way we have puny B&B "Sell", based on recent thrust down. But it is very shot-term setup.
    eur_1h_23_09_19.


    Conclusion:

    Fundamental events of last week add new bearish notes. EUR inability to break daily K-resistance has become a bad surprise and week probably will start on negative mood. Although theoretically vital levels are still hold and on daily chart we're still waiting of 1.10 breakout - overall situation doesn't inspire to take new longs as well. On intraday charts it is even possible to consider short-positions at resistance levels.



    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.
     
    #1 Sive Morten, Sep 21, 2019
    Last edited: Sep 21, 2019
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  2. FreddyFX

    FreddyFX Sergeant

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    Master Sive.

    Are we getting parity on the horizon again?
    If it keeps developing this way....and I see NO solution to the Trump and China camps, we will see the US$ building in strenght slowly.
     
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  3. Joh

    Joh Sergeant Major

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    Re China and Trump IMHO delay is to China advantage,this could take years that is if Trump is re elected and lives that long.

    Re the E/U pair - Parity, like you say ''if'', but ''if'' a currency pair goes lower and lower anything becomes a possibility - this issue has mentioned for years at that same time the Gbp/Usd was meant to dive to 106 (monthly chart). I did not see it.

    What i like about Forex Trading is, instead of holding my breath waiting for the future, i can be successful as long as i trade what is in front of me right now on the chart.
     
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  4. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Although Joh criticizes all this "long-term" stuff, currently I do not see the force, driving factor, whatever, that could reverse this perspective. Something extraordinary should happen either in EU or US to change this.

    Well, I have some doubts on this. Once this US/Sino tariffs relations come on global level, I've started to monitor the consequences. Actually they are been posted in our weekly reports. China has real problems in economy right now, more heavy than US. They need tariffs relief as soon as possible. I suspect that tariffs is just a surface the real negotiations stand under curtain and could involve geopolitical interests or big moments of mutual economical relations. Tariffs is like a siege from US. It seems that they do not get what they want from China by far. And continue to press them by tariffs.

    And why do you think that postponing is favor for China?

    Indeed. long-term view is nice thing, that could help a lot but we do money on short-term trading setups.
     
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  5. minimax

    minimax 2nd Lieutenant

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    My 1st impression on Friday was rather bearish but later after analysing constructions of both waves down I am more bullish than bearish.
    I see the construction as wxy correction of wave a of 2nd ED. I could even find triangle as wave x on lower TF so we could be in extended c wave which should not pass 1,099, but I stay with presented construction.
    BUT if y breaks 161,8 extension of w it can become impulsive 3rd so, 1st, break of 1,099, and 2nd, passing 1,0973 without hesitation, would change me from a bull to a bear.
    MUST add: of course this wave b could become wave aFlat and more correctiive ups/downs in this range follows, not just x and z as in the picture..
     

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    #5 minimax, Sep 22, 2019
    Last edited: Sep 22, 2019
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  6. minimax

    minimax 2nd Lieutenant

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    About paritity eurusd I think we should see it and why not, if situation in EU is really so bad. I cant imagine price goes above 1,1412 in this time. I think reading the leg labeled 5ED as ending diagonal is wrong, we should consider it as ZZ and from that very important price @ 1,1412 down I consider start of last c wave with an impulsive 1st wave (1,1412/1,1027) and so we really should get impulsive leg up as cFlat at least 38% if not more of 1st wave. 50% is at 1,1220, 61,8 at 1,1265, 161,8 extension is at 1,1296.
    I believe we should get an answer in next days...
     

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    #6 minimax, Sep 22, 2019
    Last edited: Sep 22, 2019
  7. minimax

    minimax 2nd Lieutenant

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    Cable is more complex. According to CFTC and also Dukascopy (59%) traders are short so cable is open to the upside. I see this move up as a correction and ab wave is hidden on 1H TF, wave c is developing as an impulse, so far at least.
     

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  8. sveckar22

    sveckar22 Private

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    Hello to everyone.

    I would like to show you some things I spotted after looking at this week's COT report.

    One of the possible shortcomings of my analysis is that traders need to report their position on Tuesday, but CFTC releases the report on Friday. If there are some important changes in the traders outlook/sentiment we could only see that in the following week (10 days later). For example, such events could be when the market did not ‘’correctly’’ price in FED interest changes or any other outstanding events. This week we had Federal Funds Rate decision on Wednesday, but since I think rate cut was mostly priced in we can relay to this report with some confidence.


    Worth mentioning that looking at COT report is just part of my analysis as I also use technical analysis.

    DXY and EURO:



    DXY 22.9 COT.JPG


    On the US Dollar we see a small increase in Long positions and around 50% decrease in Short positions which stands in line with Sives fundamental analysis, and in the following picture we at the same time see in EURO position a big decrease in Longs (around 16.000) and a small increase in Shorts which also stands in line with Sives fundamental analysis, and as he said many times Euro has around 60% weight in Dollar index. This is starting to look even more bearish if we see % of shorts positions rising above 65% in the following weeks.


    EURO 22.9 COT.JPG



    CAD:


    On the Canadian Dollar, we see a small decrease in Longs and a big increase in Shorts. If you take a look at Net Positions you can see traders are turning bearish on this pair again.

    CAD 22.9 COT.JPG



    I think the technical picture supports this outlook.


    On the weekly chart, the market couldn’t push through 0.618 FIB resistance, made a W&R and formed a Bearish Grabber. Market stayed inside this Bearish Grabber for two weeks.

    22.9 CAD WEEKLY.JPG

    On the daily chart, the market completed retracement to 0.618 FIB, tried to break through several times but couldn’t close above it. I agree with the view that the more time the market tests support/resistance level the weaker it becomes/ more probable to breaking it, but due to my COT analysis and some uncompleted targets on Weekly and Daily chart, I think the market will go lower.



    22.9 CAD D.JPG



    On the intraday charts, the only clear pattern I see is market completing this ABC XOP target to perfection and then dropping bellow Daily 0.618 FIB resistance.

    22.9 CAD 1H.JPG



    GBP:


    Although Sive regularly covers GBP/USD and with great success I would like to point out something really interesting on COT report, which I am excited to see what will happen with the price and how the report will look like in the following weeks. Investors decreased positions on Long and Short and side, but take a look at the massive decrease in Long positions. Even when the market was around 1.20000 in the first half of August this year the number of Long positions was significantly higher. Also the % of Short positions is now at 86% which is much higher than in August, but the number of Net Positions is Higher.


    I would not like to make any assumptions or implications of this positioning from the big players, but I am very interested to see what will happen next.



    GBP 22.9 COT.JPG



    NZD:

    My first post on this forum was about NZD/USD. Looking at the COT report today, traders are still keeping a bearish outlook in this pair, as they have massively decreased long position and kept the shorts almost unchanged (only a small decrease).


    NZD 22.9 COT.JPG



    On the technical side, I didn’t spot any clear patterns. Overall market wasnt able to reach even minimal FIB retracements before turning to the downside.


    On the weekly chart, we had bearish engulfing last week which suggests taking out of the previous lows. Market indeed made a lower low this week with tail closing below the previous low.

    22.9 NZD W.JPG



    On the daily chart, the market found strong support around 0.64200 but I can’t find any FIB levels, maybe the is an important Pivot level. Market than formed to bearish grabbers before moving lower. At 17th September close showed a bullish grabber but the market went straight down the next day closing lower.



    22.9 NZD D.JPG



    On the intraday charts, I see no patterns so I will wait for any meaningful retracement before trying to go short.
     
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  9. minimax

    minimax 2nd Lieutenant

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    Based on my knowledge, COT report is 1st delayed and 2nd shows sentiment of trading futures, spot trading is not involved in the report but spot prices are the core of futures prices. So I rather look at traders sentiment in spot prices.
    Main thing is that liquidity providers know every position, open and pending, and to earn money they move the prices in spot market. So much about free market and opinion of traders.
    Worth to see:
     
    #9 minimax, Sep 23, 2019
    Last edited: Sep 23, 2019
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  10. minimax

    minimax 2nd Lieutenant

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    As I said move down could be a part of bigger flat so this is how I see it.
     

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