Transcript of Video
Hello everyone, this is today’s video analysis for February 21, 2019. Today, taking a look at the Australian versus the US Dollar [AUDUSD] for today’s trade analysis.
Looking here at the daily timeframe, I want to look back at history because we can learn from history where the market has made trading decisions before. I want to look at the blue zone right in the middle of the chart, right around the 0.7105, 0.7120-level. Follow it back in time. Let’s go all the way back to the left-hand side of the chart.
Small blue circle. Left-hand side. The market was coming down strongly. Found support. Four days found support there and then turned around and went back up. Then it came back down strongly, pushed underneath the blue zone, went down to the green zone. That’s important. Right here at the black circle. Under the blue zone, went to the green zone. Then it got back up. Found some congestion. Resistance at first. Got above the blue zone. Hit the orange zone. Red circle. Found support there.
Back underneath the blue zone. Resistance there for several days inside the larger blue circle. Finally moving higher. Well above it. Then it came back down. Black circles. Some support there at the blue zone. Moved all the way down into the pink zone as the next support. Got back above it. Right here. Let’s just take this little black circle here and pull it here. So, right here, where this black circle is, let’s flip it around like this. This little black circle.
As you could see, some support there again. So, what I’ve highlighted multiple times here is that the blue zone is a significant area of decision by the market right around 0.7100. As long as it’s above it, there’s potential support, but clear break of that blue zone, we look for the market to push lower. Potentially down to the green zone or even lower for the AUDUSD. And of course if it stays above it, the potential is it goes back up.
Interesting is the 100-period moving average. Clearly a downward sloping trend over the past year or so. We’ve seen a downward sloping trend for the most part in this area right here. It’s kind of hard to see that box, isn’t it? Let’s make it thicker and black. Just make it like that. So, inside that box for quite a while now. Going back to August and September, we’ve been bouncing around in this range here for the AUDUSD.
So, very interesting information, but how do we use all that information for the day today? Let’s zoom it in again. So, what I would expect to see is that we’re looking for one of two things here. It’s either going to bounce off of this and turn around and go back up, or it’s going to follow through with the momentum that’s been created since yesterday and break through the blue zone, challenge that support, under 0.7100, and continue this bearish momentum back down to the green zone or maybe even lower back down to this pink zone down here as the next zone lower.
So, let’s look for clues for one of these things. Either a bounce off to go up or a break through to go down. Just a quick side note here. USD is into support. Just looking at the USD index for the day today. We are into support. 0.9630, 0.9620 area. The past three days. Two days now and today, the third day, finding support at this orange zone. So, again, USD is at support and if it bounces off, that’s positive movement for the USD. We actually, on the AUDUSD, look for it to break the blue zone.
If the USD bounces up and has a positive move today, we would actually look for the AUDUSD to go lower, following through with this large red candle and current momentum we’ve seen. So, breaking 0.7100 and going lower if the USD goes higher. Now, it’s having a difficult time. USD going lower. So, if the USD does eventually break the orange zone and go lower, then of course we would look for the AUDUSD to bounce back up.
So, I think it’s very interesting. The USD into support today and the potential break below the blue zone for the AUDUSD. Back to the AUDUSD. Down to the four-hour timeframe. Take a look at what’s happening around this blue-shaded area here. We’re challenging it. We’re testing it. It’s underneath 0.7120 clearly. The top of that blue zone. So, again, underneath it, we potentially look for the market to continue to go down. So, that’s what we’re looking for, for the day today.
We need some evidence that the market is going to stay underneath this blue zone. Let’s just make this a smaller box. There we go. Stay underneath the blue zone and begin heading down to the green zone will be our trade setups for the day today. Our risk here is that we don’t want it to get back above the blue zone if we decide to go short underneath the blue zone. Targeting the green zone first, and of course if it can break the green zone, lower for the AUDUSD today.
From Forex Traders Daily, this has been your daily analysis with Ross. If you would like to get Ross’ analysis on all the currency pairs he’s watching and all the trades he takes today, join him in his live Trade Room by clicking on the link below. Please leave any comments you have about today’s video in the comment section below.