Transcript of Video
Hello everyone, this is today’s video analysis for November 27, 2018. Today we’re looking at the Euro versus the US Dollar [EURUSD] for today’s trade analysis.
Starting here on the daily timeframe, of course we’re looking at a historical downtrend for a very long time. If I zoom out a little bit here, you could see for a very long time we have been in a downtrend. Pretty much most of 2018 we have seen this currency pair falling from all the way up here at the top of the chart into the mid-1.2500s. 1.2560 or so at the high, and we’ve seen it falling now all the way down at the low point into the 1.1200-level. So, quite a long downtrend.
We have the blue trend line there showing that. The 100-period moving average showing that. And the black trend line is what I really want to focus in on today. The shorter or midrange downtrend that we’ve seen in the past couple of weeks. Let’s go ahead and zoom it back in once. Look at the black trend line again.
Again, capping out at the last high here. A couple of ways to look at it. Of course you could attach it to this high or this high. Either one I think. You’re looking at overall we have seen this currency pair in a downtrend. But we’re seeing some changes. Some indications of potential change here. Remember defining a downtrend, we look for lower highs and lower lows. That’s kind of the defining points of a downtrend. The highs are getting lower. The lows are getting lower.
But in this case, we see a little bit of a difference here, where we see a new higher low. And what I mean by that is if you look at the last two circles, the black circle here on the left, you see the low at the green-shaded area right around 1.1310. Then it made a new low at the blue circle all the way down into the 1.1200-level. And now you look at the green zone again, the next black circle. We have a higher low. So, this could be our first indications of a potential shift in the direction, where we see higher low.
What’s going to be the confirming factor? A new higher high, which means it would probably need to break through the pink-shaded area all the way up here at 1.1450. But we’re looking for our first clues. Our first indications. Historically, we have seen support around this green zone. 1.1310, 1.1335. Look back here to the left. You see the green circles and we see support here at the green zone. Eventually, it reversed and went quite a bit higher here for the EURUSD.
And then of course we’ve already pointed out the black circle here and the black circle here. So, all of these three circles here showing support into the green zone, 1.1310, 1.1335. So, the first things first. The first clue to us for the day today is that we don’t want to go short right now. As long as it’s within and above that green zone, 1.1300, I don’t think going short is the best idea. Now, if it breaks that, it gets underneath the green zone, underneath 1.1310, then sure, we may have an opportunity to go short and look for a new low down to the orange zone or maybe even all the way down to the bottom of the chart again.
But as long as it’s within there, I think we’re looking at support and potential signs of reversal. We’re above the black trend line, which is important as we look for changes in direction. Also, yesterday we started looking at this somewhat as a potential head and shoulders. Inverted head and shoulders pattern, where we see the left low, the middle low, and the right low as an inverted head and shoulders.
If I was drawing out a textbook for trading to teach people what a head and shoulders looks like, maybe this wouldn’t be the exact image I would use, but it’s definitely something that I want to make note of because we actually see the opposite indications on the USD index and we looked at that in the Trade Room yesterday. We’ll look at that again today. The opposite head and shoulders style pattern on the USD index daily timeframe.
So, what I mean by that is whatever the USD does, we’re looking for the opposite here on the EURUSD. Anyways. We look at this green zone, and this is our area that we’re contemplating opportunity. Either, again, it’s going to bounce off of here and we’re going to start looking for some reversal back higher, or we’re going to see it break through here and go lower.
Let’s take it down to the four-hour timeframe. Doesn’t really change that. That’s still the scenario. We’re here on the right into the green zone. And so, what we’re looking for is price action evidence of one of these two things. What’s going to happen here? Is it going to turn around and go back up or is it going to break through and go down? We’re looking for evidence of that.
One of the things that we would look for would be a sudden infusion of buy orders. We look for the buyers to come back in. Get it back above 1.1335. That’s going to be a price action clue, sudden infusion of buyers, that it’s going to go back higher. The other side of that of course is if it gets underneath the green-shaded area. If it gets underneath the green zone, then of course we would look for it to go lower. So, these are some of the clues that we’ll look for today on the EURUSD.
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.