Transcript of Video
Hello everyone, this is today’s video analysis for September 13, 2018. Today we’re looking at the New Zealand Dollar versus the US Dollar [NZDUSD] for today’s trade analysis.
Of course not too hard to figure out this currency pair has been in a downtrend for quite a long time. The black trend line shows that. Price action shows that. It’s made new lower lows and lower highs for the past several months. So, nothing really to argue about there I guess. It’s been in a downtrend.
So, the question is: will the downtrend continue or will we start to see some reversal? Throughout the life of this trend, you could see these red trend lines or red lines showing some reversal. Some pullback, where it went higher and then turned back lower. Went higher and turned lower. And even recent days. I’ll just grab one of these lines up here and pull it down here.
Even in recent days, we hit the green zone and bounced back up to the pink zone. So, we know that there’s been pullbacks within the trend. So, that’s something that we need to be watchful for. Pullbacks become potential opportunities for reversal, but definitely want to continue to watch for them. But the trend is still down. Let’s not forget about that either.
Let’s go ahead and zoom it in a little bit here now on the daily timeframe. A couple of things of note of course is the black trend line. So, it’s still a little ways away from current market value, so not out of the question that the market could take another turn towards the trend line for resistance. That would be back up here into the orange-shaded area, 0.6610, 0.6630 as our next potential resistance within the downtrend.
Our first potential resistance though comes at the green-shaded area, 0.6550, 0.6570, because of course that’s where the current market is. Look back at the green circle and you see support here. Bottom of that red trend line. Green-shaded area. Green circle. Five days found support and that began the rally. Now, what’s important about that is that the current market is underneath there. 0.6550, 0.6570. So, that historical support is actually right now offering us a clue to resistance.
Support becomes resistance. That’s the way the market generally works. It doesn’t have to hold there forever. It did hold there yesterday. Yesterday’s candle stopping here at the green zone. Didn’t move higher. Today’s candle opened and having a difficult time moving higher. So, we know clearly this is fact. This isn’t anything we can make up. That the current market is finding resistance at 0.6650, 0.6570. So, we know that. That’s fact.
So, the facts are we’re finding resistance here at the green zone. There’s potential that it turns back down in the direction of the trend. The other fact is it’s finding resistance. If it breaks that resistance, the facts are it moves to the next resistance, which happens to be the orange zone and the black trend line. Of course if it goes down, we also know that there’s a potential support down here. And we studied that in the Trade Room. There’s reasonable expectation 0.6495, 0.6470, the blue zone at the bottom would be our next support.
So, we know what the facts are. We know there’s resistance here at the green zone. Next resistance: orange zone. Next support: blue zone. So, we need to focus in on this green zone. Decide which one of these things. A break above it or a bounce off it to go back down is the most likely scenario.
Then we use multiple tools for that. Price action. Tools. Indicators. Trend lines. Fibonacci. Whatever indicator you want to apply or momentum indicator you want to apply. All of those things are only there to figure out those two scenarios. Either it’s going to break through and go higher or bounce off and go down.
We have some news today that can of course affect this currency pair mostly out of the US. CPI popping up at 8:30AM Eastern US time. If it’s positive for the US, we may see this turn back down. If it’s negative for the US, we may see this turn back higher.
Speaking of US, let’s just look at the dollar index chart here. Sitting into support. Has been for the past couple of days. The yellow-shaded area 94.80, 95.00. If this takes a turn higher, if the USD surges higher as it has a couple of times in the past week and a half, then we look for the NZDUSD to go down. If this breaks through 94.80 and goes lower, then we look for the NZDUSD to go up.
So, right now at least the USD finding support and trying to make its way back up again, which also leading the NZDUSD back down. Zoom in one more time here. And again, not too hard to see we’re finding resistance at historical support. So, the question again is are we going to see it turn lower. I wish I could answer that question with 100 percent certainty, but of course I don’t have a crystal ball for the market.
Let’s take Fibonacci from the high, down to the low. Just that last little high there down to the low. .236 sitting at 0.6554. That’s good news. That’s right where we are right now. .382 a little bit higher. 0.6587, just above the green zone. 50 percent at the orange zone. And of course that would be the 50 percent of that little short leg right there. So, the question is will it break through or go back down.
We don’t know. So, what we’re going to do is look for price action that indicates one of those two things. So, let’s go back down here to the four-hour timeframe. And we’re looking for price action. What I mean by that is if we’re going to see this go higher, what we’re looking for is a candle body that breaks through this green zone. Let me draw it out as a blue candle. Implied candle here.
So, what we would look for is clues that it’s going to break through and go higher. Obviously it has not done that yet, so we can’t have extreme confidence in that quite yet. Again, if positive news pops up, we look for this to go lower out of the US. So, the other side of that is that we would look for bearish price action to imply that it’s going to go down.
Right now, the market over the past several hours really not doing either one of those things, is it? It’s not really significantly bearish. Not significantly bullish. So, we need to wait. We need to wait for better price action. Probably the US news popping up in about a half-hour from the recording and we’ll see how this plays out for the next several hours for the NZDUSD.
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.