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FOREX PRO Weekly September 24-28, 2012

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Sep 22, 2012.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Monthly
    By taking a look at monthly chart we can see how monthly Confluence resistance works. At first glance market has passed through it, but now we see significant pullback almost to lower border of K-support area. All other moments still hold – trend is bearish, market is neither at oversold nor at overbought. So, as on previous week, coming one probably will be also focused on pullback from monthly K-area.


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    Weekly
    Well, weekly chart doesn’t demand a lot of comments as well, since we’ve discussed Stretch pattern in details in previous research. Here we will speak mostly about technical side of this pattern – how to trade it and about its potential targets.
    Since this directional pattern is mostly technical rather than fundamental, i.e. it is based on market mechanics but not on some events that make market move. The core of this technical condition is overreacting, extreme deviation of price from one side, and reaching significant resistance from the other. This is some sort of fork that market can’t overcome in most cases and has to make some retracement to exit from overbought pressure first, get some forces for breaking resistance. That’s why Stretch pattern is retracement in nature. Precisely by the same reason it is more risky than the others, since it demands trader to act againts the trend and momentum. And this, in turn usually leads to chopper price action, since Stretch has no impulse.
    Due to these moments trader has to think twice before taking trade on Stretch pattern.
    Ok, now let’s turn to trading. Theoretically Stretch target is zero level of DOSC, or middle area between Oscillator predictor bands. Since OB/OS is dynamic parameter, it could turn so, that DOSC will hit zero, but your position will be at breakeven or even with some loss. That is also possible, and you will have to exit anyway, since Stretch will end by this target. Still, on our weekly chart currently this level is 1.25.
    In most cases better to take conservative target, at least you will get more experience with Stretch pattern. Use some AB=CD on daily chart or nearest significant support level on daily as Stretch target.
    Entry process is as follows. As we speak about weekly pattern, next time frame for us is daily. So, you need get Stretch combination on weekly (done), second – wait when market starts to behave according to it and shift trend bearish on daily (done). After that you need nearest 3/8 retracement up on daily to enter short. Stop should be placed above weekly overbought by close price, or, better by high prices. Still there are multiple variants. For instance, you may try to trade Stretch by some daily reversal pattern, but not purely on Fib framework.
    Now, what target we have to take precisely in our situation. May be it will be a bit brave decision, but I think, that 1.25 should be reached. Mostly because as I’ve said milion of times – this is first reversal swing up, and market has significant accumulated bearish momentum. Precisely this momentum will force market to show deep retracement, and 1.25 – is 5/8 major Fib support on daily. Second, as a rule, after first reversal swing market tends to show AB-CD retracement, rather than just single-leg AB retracement. For entering with Stretch, probably BC leg will be perfect.
    Since this pattern stands a bit separately from daily patterns – we need to keep in mind it.

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    Daily
    In continuation of Stretch pattern – first condition has been completed – trend is bearish…
    As we’ve said on Friday – we didn’t get our Stop Grabber pattern, but as DRPO as B&B are still possible, and what particular pattern will prevail – we will see. Let’s talk about B&B first.
    B&B
    Till that moment everything develops as in theoretical book. We have two days close below 3x3 DMA. Usually it is suggested that B&B should reach significant support level on 1-3 day close below 3x3. So, we still have Monday day to hit this level. At my point of view perfect level for B&B starting is 50% support of B&B up thrust at 1.2815 that is also daily Oversold. Keep an eye on this level, perfectly if we will get some intraday reversal pattern here or AB=CD agreement. Stop probably could be placed below K-support on daily. Target, as usual, is 0.618 resistance of current down move.
    At the same time keep in mind that B&B is a shortest perspective and its work will not cancel deep retracement and potential Stretch pattern. May be particular by B&B we will get greater BC leg.
    DRPO
    If market still will not reach significant daily level and show upward reversal by some pattern that will be chance for DRPO pattern, and strong downward retracement could start by it. Recall that DRPO is completed when market will show second down penetration and close below 3x3 DMA. Surely we will not miss this stuff in our daily updates.
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    1-hour
    Well, based on houlry chart, looks like puzzle is completed. We have AB=CD that creates Agreement with 50% support at daily Oversold... Current BC leg looks like bearish flag on 4-hour chart, so from classical point of view, context is bearish on intraday charts, as well.

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    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 22, 2012
    Last edited: Sep 22, 2012
  2. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Tue 25, September 2012

    Good morning,
    current market's observation lets me one more time come to conlcusion that there is nothing perfect on the market. Looks like price decides to limit with semi-retracement between B&B and DRPO. For perfect B&B it's a bit smaller retracement while for DRPO is a bit overextended. But...

    B&B could start from 0.382 as well, besides, this pattern has no more time, since today is 4th trading sesison already. At the same time, if market will form second higher top we could get DRPO LAL.

    By taking a look at hourly chart and adding 0.618 Extension we can see that there is Agreement as well around nearest Fib support and WPS1. Also, market now stands at 1.27 extension of BC leg, we have bullish wedge is forming that is accompanied by MACD bullish divergence. So, enough signs, isn't it?

    Recall that minimum target of B&B is 0.618 resistance of total move down on daily time frame. Keep an eye on this wedge, if even market will proceed slightly lower to 1.618 of BC leg, starting of B&B is somewhere near. We have support within 3 days, we have pattern... So, we can enter long, I suppose.
     

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    #2 Sive Morten, Sep 22, 2012
    Last edited: Sep 25, 2012
  3. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Wed 26, September 2012

    Good morning,
    looks like all of us have the same question - when B&B will start? Although yesterday was nice bounce and attempt to start it - this attempt has failed. That's why I every time recall that market was at OB on weekly and daily. This makes additional pressure, that could force price reach some deeper level.

    Although we didn't get perfect B&B, since 3 demanded trading sessions below 3x3 have passed already, but, upward momentum still here, and pullback still could happen, and I suppose it should.

    By taking a look at hourly chart we still have the wedge and divergence. But today we also have a bit ugly butterfly. My first thought was that B&B should start from 1.2815, 1.618 target of this Butterfly stands at ~1.2830 and now price stands at 1.27. So difference is very small. One thing that worries me is a bit longer black candle, usually market proceeds to 1.618 after such price action.

    So, here you have to make your choice - apply partial entry, or wait till 1.618 target around 1.2830. That is a tactic task, since strategically we have all that we need - support, wedge, divergence and butterfly pattern. Major question is how to enter.

    Personally I think that partial entry (scale in) is better choice, since inside of multiple support and targets zone price will be choppy and unstable, you just can miss your fill at perfect price. But that question is up to your risk management and trading style.
     

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    #3 Sive Morten, Sep 22, 2012
    Last edited: Sep 26, 2012
  4. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Thu 27, September 2012

    Good morning,
    my daily updates is already some sort of deja vu, since market is challenging of our patience.
    I still think, that this is due additional pressure from weekly OB condition. That's why, as we've initially suggested, market could show deeper retracement before upward momentum will take control again and lead price to desirable retracement up.
    Today we see that price has touched 50% support on daily time frame.

    On 4-hour chart, trend has turned bullish. We have not quite nice looking AB=CD pattern, but this is just ABCD that we have. Although CD leg is flatter than it should be - pattern has not reached 100% target yet.
    Taking at price action on houlry chart - it does not look impressive and looks more like respect of 1.618 extension that we've specified yesterday. Anyway, if you've entered long yesterday, you should feel nice. What kind of solution could be offered here? Do not tight stop above 100% target of AB=CD, since if price will reach it it will not mean that upward retracement will not happened.
    It's very rare happen, when market leaves uncompleted AB=CD pattern at semi-position and turns.
    That's being said, if you've entered long - hold this position, but put stops below AB-CD target. Or, move it at breakeven, and if market will stop you out - you probably will have the chance to re-enter at lower levels.
    If market already has started retracement up on daily - your stop should not been touched by price.
     

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    #4 Sive Morten, Sep 22, 2012
    Last edited: Sep 27, 2012
  5. Sive Morten

    Sive Morten Special Consultant to the FPA

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    EUR/USD Daily Update, Fri 28, September 2012

    Good morning,
    so, guys, probably this is it. At least today we have much more bullish signs than previously.
    First is - bullish engulfing on daily right at 50% support. Although shadows are too extended, but still, this is engulfing pattern. This gives us significant advantage, since we can trade accordning to candlestick pattern.

    On 4-hour chart trend is bullish, but market still has not hit 100% extension. Although probability of this even almost anemic currently, it's better to anticipate it, and place stop not right below englulfing low, but below 100% extension. I do not want to tell that market has to reach it (probably not), but still, this is just safer. Even if W&R on houlry chart exclude this possibility (since low was W&Rinsed market has no reason to move lower). Also, I will become absolutely happy, if market will show greater swing up, that previous swing down on 4-hour chart.

    On hourly chart is most valuable information for us. Frst is a target - 1.3040. WPP at 1.3017 has not been traded yet - so it is also near. Finally, around 1.3050 stands 1.618 extension target of butterfly. So, 1.3020-1.3050 is a nearest destination point.
    Also we have thrusting move, breakout of the wedge pattern and W&R of previous lows.
    So, if you have bullish position by butterfly - hold it. If not - I suppose you will have a chance to join the party, because market should show retracement at minimum to 1.29 before continue move up. That's your chance.
     

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    #5 Sive Morten, Sep 22, 2012
    Last edited: Sep 28, 2012
  6. wilsiano

    wilsiano Recruit

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    Thanks Sive for your awesome analysis
     
  7. tunji wahab

    tunji wahab Private

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    Hi Sive,
    Thanks for your indepth analysis always. Enjoy your weekend..
     
  8. Mahen Ganhewa

    Mahen Ganhewa Recruit

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    Hi sive,

    Thank you so much for your continued education. A quick question regarding the stop grabber pattern. Does this pattern have any merit on the intraday charts? Correct me if im mistaken, but is there currently a bullish stop grabber on the 4H time frame?
     
  9. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi, Mahen,
    Hm, to be honest I do not see any stop grabber on 4H chart...
     
  10. samuelken

    samuelken Private

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    B&B, K resistance and support

    Dear Sive,
    I will continue to thank you for your generosity. there some term i am yet to know what they mean: B&B and K
     

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