Daily Cable Analysis

seems like evening star is forming now...

took my original short entry from 8995 off 123 top, and daily 2b pattern currently up 317 pips with 150 pips locked in on the short also looking for further weakness but trying to estimate what the pullback level might be have some areas in mind, looking to catch the possible continuation down if it emerges...

i see good short term support at 9550 however this good lead to a deep pullback unless dollar bull positioning is firmly is place.

Monarch,
Are you expecting those targets for Euro session open ? Just to understand what timeframe you're in. Thanks

Perhaps it is, but not so quick, until we can break below the 9550 level on close, at least for January, this trend is still up. We must start differentiating trend from direction. While we may have seen a strong directional move from the recent high, the trend is still up in most daily and above based terms.

Thus, I would have to say that your channel will soon be breached on close, and although this breaching may pose itself as a retracement only, for now my immediate short term directional bias is to the upside.

I have these trendlines on the dailys going back, I zoomed out to the monthly to get a better view. We are currently resting atop the upper TL. January has been an outside bar, however, the low for the month(1.9259) is to the pip right on the old resistance turned support line from feb 2005 monthly high
(red dots). We reached a new high, albeit on waning momentum, but price on monthly close still remains above the upper TL. The stage is set, while I see a retracement up to the 9650 level in the immediate future, this may act as a good selling area, in line with the recent bearish directional move. Ultimately though, my opinions will solidify on wednesday, the last day of the month with all of that market moving news to see if we close the month above or below this critical trendline.

Quoting cesarnc

Disliked

Monarch,

Ignored

Reviewing the Daily and Hourly Candles, and I would speculate that we would start testing the Frankfurt Low 1.9564/66 in the Pre-Frankfurt and London Open time today.

As far as breaking below the 1.9564/67 down to the 1.9545/47 area, would take the Frankfurt Low Today to accomplish this level.

If there is a new Low during the Frankfurt Today near the 1.9545/47 range, then I would expect the London Session to test the Upper Price range at 1.9580 which is a Fibo Level, then we could see the lower range tested near the 1.9535 mark.

This eventually would set up a bounce from 1.9535 up to the 1.9464/66 Frankfurt Low of Today, and then if price stalls at 1.9464/66 mark, I would take a Short to a Low projection of 1.9508/10 which is a Fibo Level that would be completed if this were to happen.

This is an analysis and projection of what is possible, do not take this information as a trade recommendation, I have placed very small lot sizes on this move.

This analysis is for the sole purpose of recognizing specific movement during, and after the London Session.

My trade strategy is based upon price activity and specific movement during Frankfurt and London Open time frame only.

Thanks

Pardon the interjection, Monarch, but I just have to ask: Was there a typo in your response when referring to the bounce to the Frankfurt Low?

Thanks in advance for the clarification.

1 thing that I think is too important to overlook right now.

Wednesday is a huge day in terms of trend implications. Although many claim the trend is down, the long term trend is in fact up right now yet has retraced to a critical level in its composition.

The rise to the recent high has been achieved with extreme reading in speculative longs and if conditions were to settle back to pre november readings their lies the risk of moving back to those levels. This move may have overextended itself.

As the nature of a decade long high is an extreme one, the risk to the downside remained great at those levels as there werent any speculative buyers left, and commercials surely weren't going to begin their initial buying stint at that level on the back of uncertain macroeconmic and technical conditions.

This only left one option. After the rise and break above 9900 long exit orders from the extreme reading of speculative buyers most likely began to accumulate just below the 9800 level. The large institutions who have visibility to this market depth(being that currently we were without reason to yet confirm a move much higher) most likely sold price down to the stop level creating an increase in momentum to the downside. As momentum increased not only did we have all of these longs exiting their longs, but also many speculators jumping on board to the shortside creating that extremely fast southern directional move.

Now we have hit a level which seems to be somewhat in equilibrium with the longer term trend and a decision will soon be made.

Important now is to use the tools that we have developed in order to give us an idea on how this thing is likely to set up before news time so that we may get involved in the larger move from the outset with minimal risk involved.

I will look further into this, but for now my idea is this.

The immediate direction we have been experiencing may in fact be the signal for the trend to come, however, my long term key level of 9550 would have to be breached on a monthly basis close to confirm that. I believe this is the level that the market will gravitate to just before news time.

In the mean time in order to set up for this level I am thinking along the lines of this. We have had a sharp move down from the high with many specs jumping hard on board. Some may have even been short just prior and having experienced this violent move, they are most likely ready to call this ride quits. The pair is oversold and many inexperienced technical traders are probably setting up to the longside once we have confirmation.

Being that all of this is occuring prior to news time with 9550 being the key level, I see it one of two ways. Either we drop hard below 9550 adding a few more specs on board and price retraces up to 9550 level at news time, or we take out stops now building momentum to the upside and adding some more longs on, only to retrace back down at news time.

I see currently the move to the upside as more likely being that it will be easier now to move market and give momentum a push to the upside to get some added buyers on board, whereas a move to the downside may be too powerful to bring back up to that key level, although with commercial shorts at an extreme, it is still very possible if some were to buy hard down at 9450 level.

Either way I will look a bit more into it, if anyone has any suggestion as to how to possibly set up to take advantage of these Orders prior to news time, it would be greatly appreciated.

hi my friend,

I think on this market Buy is too risky , I agree that 31 jan is so important and in all forecast show me that market will fall more ...
and now all traders sure about US interest rate that will not change and this will make $ powerful ...

Hey viking...

Why traders sure?

"not change" you mean, not rate cut? Because a no-change in opposition to a hike would be USD-negative, no?

Thanks.

Because before many positive news for $$ all traders think that
US Gov , will fall interest rate ... but now all think that they will not change it
its very good news for USD

Cable HIt 1.9546 today. At this point, intraday bias remains on the downside as long as cable stays below 1.9614 minor resistance. Further decline is expected to follow towards rising trend line (1.8517 to 1.8834, now at 1.9469).

Above 1.9614 will turn intraday outlook consolidative and bring some mild recovery. But still, break of 1.9679 is needed to indicate that fall from 1.9913 has completed. Otherwise, risk of another fall remains.
In the bigger picture, right now, we already have bearish divergence conditions in weekly RSI, daily MACD and RSI.

Sustained break of 1.9588 cluster support will be the a warning that whole rise from 1.8517 has completed earlier than we thought. Break of mentioned rising trend line support will confirm such case and bring much deeper decline towards 1.9237/61 cluster support (23.6% retracement of 1.7047 to 1.9913 at 1.9237). Decisive break of this 1.9237/61 cluster support will add much weight to the case that whole medium term up trend from 1.7047 has already completed and much deeper decline should be seen towards next cluster support at 1.8834 (38.2% retracement of 1.7047 to 1.9913 at 1.8818).

Meanwhile, a strong break above 1.9679 resistance is needed to save that case that rally from 1.9261 is still in progress. In such case, further rise should be seen to retest 1.9913 high and break will confirm whole rally from 1.8517 has resumed. But still, close attention will be paid to sign of loss of upside momentum and reversal pattern formation as cable approaches key 2.0106 cluster resistance (1992 high, 100% projection of 17047 to 1.9024 from 1.8090 at 2.0067) as the whole medium term up trend from 1.7047 could complete at or below this level.

Just look on 31 Jan


ADP Nonfarm Employment Change

GDP Annualized q/q (p)

Chicago PMI

Interest Rate Statement


and all forecast are positive ...


but we should wait and see what happend

I'm not saying a buy right now, I'm saying perhaps a look to fade at 9650 or fade @ 9450 -9500 once a turn is confirmed prior to news. This may get us in one way or another before news time comes around with 50 to 100 pips already bagged and remainder can be allowed to ride on news release for free or just exited prior.

The point is, commercials are net short at extreme levels,so the risk prior to news may be that they drive momentum and price down to allow them to let go of some inventory prior to news release bringing the price right back up. The other option is that they can buy it up which will act as a catalyst to bring momentum from oversold levels, which should easily drive prices back up to mid to high 9600s where they can come in and reverse this move on a dime.

I guess what I am really trying to say is that I am speculating that 9550-9600 is the fair price in equilibrium right now, it is also around where we started the month. Being that wednesday is the critical day, I am in the belief that price will fluctuate around this level until a clear decision is made allowing to sell above the level or buy below it until news time comes. My question doesn't involve wether or not I should sell above or buy below, but is leaned more towards what level would be a good one to sell above, and whay level would be a good one to buy below. For now my figures stand at sell 9650, buy on confirmation of turn back up once price trades for some time between 9450-9500.

If price were to break 9500 prior to news as in later today or tomorrow, where do you think stops will accumulate? Same for the reverse.

As for extremely short term, I dont see any problem with buying or selling as today and tomorrow should be easy pickens on the scalps.

macd negative divergence on the daily,monthly charts.Also commercials are xtremely short .freecotcharts.com

Although true, it is common for RSI to diverge at times in an uptrend, especially following a strong positive reversal which is what we have on the weeklys. The best way for me to illustrate this point is this way.

On the chart we have higher pivot lows, but RSI has moved lower as expressed by the trendlines(positive reversal). Since RSI is lower it will be more difficult for it to now move to a higher level than its previous high reading without a dramatic increase in momentum. This is where divergence comes in. Without a significantly stronger push from the pivot low, RSI will almost always diverge at the highs. This divergence is interpreted as exhaustion of trend and although it may be a signal of reversal in trend, it is a risky one when not taking many other factors into consideration. The reason that I am a fan of positive and negative reversals is that all they really tell me is something that you really can see from price itself and that is the direction of the trend. Instead of using divergence to pick off tops and bottoms, it is easier and safer to use pos and neg reversals to pick off tops in downtrends and bottoms in uptrends keeping you consistently on the right side of the market.

Now does this in any way nullify the case for divergence at the moment - no. In all honesty, we are at a crossroads right now.

The case for divergence right now may be a good one as speculative longs are at extreme, commercials are net short, we are at a multi decade high, etc, etc.

However, the case for continuation of the longer term trend to the upside also is strong. Although CPI may calm down in UK, its other measure for inflation is off the charts and getting worse. This does not seem to be priced in.

Anyway, I'm sure many of you can make better cases to either side than I, but the point is that we are at a crossroads right now so your divergence and my positive reversal really mean nothing right now. If Price retracts, you can say it was divergence and if not, I can say it was Positive reversal, but in all honesty these patterns may provide us with hints, but they do not lead the market. Do I believe the positive reversal is stronger, yes. Why, because it is in line with the long term trend right now and I believe it is much more difficult to change a trend than to go with it.

However, a weekly close below 9457 and the positive reversal has officially failed. If this were to happen, it would be another hint to the longer term trend reversal, however we may just consolidate for some time and in order for me to officially call this move a long term downtrend in terms of momentum, I would have to first see a negative reversal form.

In the meantime I will look more towards directional signals until the people make their choice.

Quote:
Originally Posted by monarch http://www.forexfactory.com/images/buttons/viewpost.gif

This eventually would set up a bounce from 1.9535 up to the 1.9464/66 Frankfurt Low of Today, and then if price stalls at 1.9464/66 mark, I would take a Short to a Low projection of 1.9508/10 which is a Fibo Level that would be completed if this were to happen.


Pardon the interjection, Monarch, but I just have to ask: Was there a typo in your response when referring to the bounce to the Frankfurt Low?

Thanks in advance for the clarification.

It should have read 1.9564/66 - Thanks RichardK

A push above 9609 now and we should be headed up to 9634 in the minimum.

LeugimpA push above 9609 now and we should be headed up to 9634 in the minimum



Correct. Im still long from earleir and im looking at 9632-9643
then 9666