Transcript of Video
Hello everyone, this is today’s video analysis for October 4, 2018. Taking a look at the Euro versus the US Dollar [EURUSD] today.
We’re looking at the daily timeframe. Really since going all the way back to the vertical line on the left-hand side, May 23rd, we have been for the most part stuck in somewhat of a range. I have the black box here on the chart to represent that range. Orange zone at the bottom. Yellow and blue zones in the middle. And the purple zone now at the top towards 1.1820 and the bottom, again, 1.1535, the orange-shaded area.
The blue circles back in time very interesting to look at. Support throughout this ranging period around this 1.1535, 1.1560, orange-shaded area. Support. Each one of those blue circles. There’s really only one period since May where it got below 1.1535 and it went all the way down into the 1.1300-level at the very bottom of the chart. So, again, there’s only one period that got underneath it since May.
Well, what’s very interesting is today is our second time since May getting underneath the 1.1535-level. So, the question of the day will be are we now looking for another run down into the 1.1400 or 1.1300-level, or will this be a false breakout and turn back higher. Well, as it looks at the current moment, we’re looking at this as a potential breakout. The continuation of a boost or rise for the USD as the market continues to pressure lower. Stronger USD against the EUR pressuring it now underneath historical support.
So, that support now will become resistance for the day today. So, as long as it’s underneath that orange zone, we’re going to look at that as resistance. And the risk is in this scenario that it gets back above the orange-shaded area. Is it possible by the end of day we get back above the orange zone? It’s possible, but I think at least at this point, looking at the news calendar for the day today and of course what we have going on tomorrow with non-farm payrolls, I think it’s unlikely that the market just suddenly reverses and gets back above the orange zone.
It could, but I think it’s unlikely at this stage of the game. So, what we’re going to do is look for that same 1.1535-level, which is only about 30 pips higher than current market to be resistance. The historical support to become our resistance for the day today. So, if we’re looking for an opportunity, that makes the most sense. We wait for it to rally there. Find resistance. If we decide to go short there, then our stop loss will be above the orange zone. That way, if it gets back above, we minimize the impact to our trading account.
Of course clearly our targets are going to be the pink and the green zones as it makes its way back down. So, you can increase your profit target. Decrease your risk just by allowing the market to drift back to 1.1535 or at least close to it before looking to go short.
Let’s take it on down to the four-hour timeframe. And as we get down here, it doesn’t really change that scenario. Just gives a little different view and of course all the circles change shape when I get down here to the smaller timeframe. But it’s all important, is the orange-shaded area.
I have Fibonacci from the low. Bottom left down here at the bottom of the black trend line. I have Fibonacci from that low down there at the bottom left to the high up here at the top of the chart. Fibonacci puts the .618 at 1.1497. We’re challenging that right now. Get a little bit above it. 50 percent of that black trend line range sits right there at the top of the orange-shaded area.
Let’s take one other fib. And we talked a bit about fibs yesterday in the Trade Room and how they play into our trade analysis. So, if you were in the Trade Room, this should make pretty good sense. If you take fib from the top to the bottom, that puts the .236 fib right here at the 1.1547 right in the middle of our orange-shaded area. So, we’re now discovering that Fibonacci retracement levels live around this orange zone as well, giving us higher confidence in that level as a potential resistance. And of course, again, the risk is it breaks back above.
So, rallying to the orange zone. Finding resistance. Targeting back down to the pink zone or lower will become our strategy for the day 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.