Transcript of Video
Hello everyone, this is today’s video analysis for September 10, 2018. Today we’re going to take a look at the Euro versus the US Dollar [EURUSD] for today’s trade analysis.
We’re starting here on the daily timeframe. Of course long-term, we go back several months back to January and February of this year. Beginning of this year. We have been in a downtrend here for the EURUSD. The USD has had a nice, solid improvement since the beginning of the year and we’ve seen this heading back lower. All the way back down into the 1.1300s at the very bottom of the trend.
In the past month or so, a little bit more than that maybe, we’ve seen the market push back higher against that downtrend, pushing from the 1.1300s all the way back up into the 1.1700s just underneath the 100-period simple moving average here on the daily timeframe. In the past two weeks, a little bit of a pull back down against that rise.
So, it’s been a little bit back and forth over the past couple of months. We see since June maybe we’ve seen the market bouncing around. One attempt to go lower. Then right back up. So, you see this black box. Orange zone. Bottom. 1.1560, 1.1535. The yellow zone: 1.1645, 1.1620. And the blue zone at the top of the black box: 1.1705, 1.1745. We’ve seen the market statistically bouncing around in there as a range with the exception of, of course the little dip lower here and a couple of times trying to peak back above it at the very beginning of the range.
But for the most part, in the past several months, we’ve seen the market range-bound inside this black box with the exception, again, of that significant dip lower that we saw. Let’s take a look at the orange zone at the very bottom of the black box. If you look at it, I’ve put blue circles there, so it’s not too hard to see. Where the blue circles are, we see support into the orange-shaded area. 1.1560, 1.1535.
So, statistically speaking again, the fact is a majority of the time, again, with the exception of the dip, we see support into the orange zone. So, for individual traders, retail traders that have absolutely zero control over direction that the market is going, what we take from this is as long as it’s above the orange zone, as long as it sits on top of that orange-shaded area, we’ll just say 1.1560, which is the top, it’d be difficult to sell or go short EURUSD, because statistically speaking, that’s been a bad idea with the one exception for the past several weeks.
We’re going all the way back to May. It’s been a bad idea to go short, sell on top of that orange-shaded area. It doesn’t mean it won’t eventually or couldn’t eventually go through there, but statistically speaking, it’s a bad idea to sell on top of that orange-shaded area. So, if we’re not selling, we may look for opportunities to go long because that’s actually been a pretty decent idea since May. To buy into the orange-shaded area.
That’s just statistics. I can’t change that. It’s nothing that is magically happening here on the chart. It’s just what’s happened and we can’t change that. So, we zoom it in on that one more time and we say well, guess what. The market is sitting on top of that orange zone – 1.1560, 1.1535 – again today. So, the question is should we sell it. Well, I think the answer there clearly is no. But should we buy it?
And I think maybe there’s a possibility that that becomes our answer for the day today. We’re looking for low risk and high reward. What’s the potential reward right now? Well, the potential gain or reward is being capped by the orange zone. We can’t expect high potential reward unless the market is able to get through that orange zone, which obviously it hasn’t done. Now, if it does, of course next targets lower: the pink and the green-shaded area. But it hasn’t done that yet.
If you’re looking for lower risk, that’s just not an opportunity because lower risk means you’d at least go above today’s high, if not all the way back up to the last resistance high at the yellow-shaded area. Now, on the other side of things low risk, high reward, the risk is fairly small for going long. What’s the risk here? The risk is it gets underneath today’s low. So, your stop loss for any longs or buys would be underneath today’s low, which isn’t too low. We’re talking low of today so far is 1.1525.
So, you’re looking at maybe 30, 35 pips lower for the stop loss. Not too bad. And your potential gain is what? You’re targeting back to the next resistance, which is the yellow zone. So, again, risk-reward-wise, makes more sense to buy than it does to go long. We know that statistically the orange-shaded area is support. So, that makes the most sense for the day today.
We take it down to the four-hour timeframe. And again, that begins to shape up as an opportunity. Take a look at this. We’ve seen the market come down Friday of course. Significant fall. Came down into the orange zone. Finding clear support here into the orange-shaded area. So, if we’re going to go long, that makes the most common sense.
What I do want to point out is right here, where this blue circle is about to be, is a similar situation, isn’t it? It came down into the orange zone. Found support. Look at this. Several four-hour periods, candles into this orange zone. Got back above it and made its way back to the yellow and the blue zone. So, we’re looking at a very similar situation. As it came down into the orange zone, we’re sitting on top of it.
So, buys or longs would happen here into the orange zone, targeting back to the yellow or maybe even the blue zone like it did over here on the left. And the risk is simple. We just don’t want it to get underneath that orange-shaded area.
One last thing before I close out for this video. Dollar index is into resistance. Take a look. USD is into resistance. 95.30, 95.50 zone, the blue-shaded area, which means as long as USD is under that resistance, historically that means it could bounce back down. If the USD bounces down, goes lower today, then our expectation for the EUR is that it goes back up. So, consider that. We’ll talk about that more in the Trade Room later 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.