Transcript of Video
Hello everyone, this is today’s video analysis for January 30, 2019. Today we’re going to take a look at the Euro versus the US Dollar [EURUSD] for today’s trade analysis.
Starting here on the daily timeframe, let’s zoom out one more time. As we could see, this currency pair has been a downtrend for quite a long time. Going all the way back to February of 2018, we started the downtrend, top of the chart, and have been moving down ever since. There’s these periods though I have highlighted with the black boxes where the market went into somewhat of a range or period of congestion.
The first black box here. The market was held up quite a long time, and I’m actually going to squeeze it in a bit. Held up quite a long time inside this black box between let’s just say somewhere around May 25, end of May, and over here into October, middle of October. We had this one period where it dipped down below it, but much of the price action contained within that box during May to October of 2018. Then it broke out a little bit and now we’ve been moving lower and into a new range-bound market between let’s call it the pink-shaded area at 1.1480, 1.1450, top of our range, and the green zone, 1.1330, 1.1310 at the bottom of the green zone.
So, we’ve been bound up in here. We had one attempt to get below it. Got right back in. One attempt to get above it. Got right back in. But now currently just holding inside of this range. So, this is our area that we’re studying for possible trade opportunities. Trade entry opportunities here for the EURUSD.
I do want to mention here before we zoom back in the 100-period moving average again coming into the chart. That’s a clue to direction as we are underneath it. It can help us identify potential resistance when we’re underneath it; support on top of it. But underneath it, it can help us identify potential resistance.
Let’s go ahead and zoom it in a couple of times. And what I mean by that is take a look right here, and I’m just going to grab this circle. And we see right here, where this circle is here, and let’s grab this one in here. We could see the market hold underneath the 100-period moving average and then bounce back down. Then we did get one period that tested above it, but we can see some examples of the moving average helping us identify the pink zone as resistance even though we already know it’s resistance based on the history of this level and the top of the range.
So, what I’m trying to point out here is that we’re at the moving average underneath it and it’s helping us identify this 1.1450, 1.1480-level as resistance, the pink zone. So, for the day today, we know this is resistance. Also, Fibonacci from the last high to the current low. High to low of this little run right here. We find the .618 Fibonacci retracement level lives inside of this pink-shaded area just above the moving average as well.
So, we have .618 fib, 100-period moving average, and historical resistance into this pink-shaded area. So, all of that tells me the first easy trading decision here is it’s a difficult place to buy and go long on the EURUSD underneath here. Just think. If all of these times, if you tried to buy under the pink zone, look how many times it would’ve failed. Sure, one time would’ve been productive, but most of the time it would’ve failed.
So, that tells me pretty easily that I’m not really keen on buying and going long underneath 1.1450 because historically that’s been a bad idea. So, if I’m not buying, potential shorts do come about. Of course for this to go short, we need to see positive movement for the USD and today we have FOMC, so that could be the catalyst for that movement. We’ll have to wait and see it.
But first things first, no buys underneath the pink zone. May be looking for shorts underneath it. The risk at this stage if you were to go short is that it gets above the pink zone, because we already know historically and factually that if it gets above the pink zone, the market is going to the orange zone. That’s not too hard to see. You just look back here. If it does go short, of course we know that the blue zone becomes a potential opportunity for support and then all the way down at the bottom of our range, the green zone becomes the next opportunity.
So, what we’re looking for here around the pink zone is clues to resistance and reversal to go back down. We’re looking for positive movement on the USD after FOMC later today. Four-hour timeframe doesn’t change that information at all. We still see all that. Still holding under the pink zone. Still at resistance. The only thing we don’t see the daily moving average, but still underneath here. Not the greatest place to go long. I would say you’re watching for clues to resistance and reversal.
So, let’s just draw out a couple of hypothetical situations. One hypothetical situation is that it gets above the pink zone and starts moving its way back towards the orange zone. So, we’ll watch for that. It hasn’t done it, but we’ll watch for that over the next several hours. Maybe even after FOMC.
The other hypothetical situation is that we see a sudden infusion of sellers from the pink zone and we see the market go back down. I don’t think we have enough information to go with yet. Let’s wait for FOMC later today. See how that plays out for the USD.
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.