Transcript of Video
Hello everyone, this is today’s video analysis for February 11, 2019. Today we’re looking at the New Zealand Dollar versus the US Dollar [NZDUSD] for today’s trade analysis.
Starting here on the daily timeframe, we could see that for the past couple of days we’ve had a pretty strong bearish move here for the NZDUSD as the market fell in the past few days from all the way up here into the 0.6935-level, the orange-shaded area at the top of the chart. Now challenging down into the mid to low-0.6700s. Right now current market price right around 0.6745 or so. The next support level, the pink-shaded area, 0.6730 down to 0.6715. Sitting down here right in the middle of the chart. It happens to coincide with the 100-period simple moving average.
Take a look at that green line coming down here into the chart. We tested it as support here. Bounced off of it. Now we’re coming right back down here to challenge it once again. So, we know we have some support backed up with the 100-period moving average. When I say we have support, what I’m looking at is some of the historical price action around this area.
Take a look right here. The last time the market was here, the black circle, we settled down here at 0.6730, 0.6715 as support and turned around and went back up. But we have other evidence around this level as well. Let’s go ahead and put in another circle back here, and we could see right there found support, turned around, and went back up.
Not only that. We can see historically there are other things going on here into this same area. Back here, on the far left-hand side, we could see resistance into the same area. So, we know that this area right around 0.6730, 0.6715 is a historical, factual, statistical area of trading decision. Sometimes as resistance, where the buyers exit and sellers enter. Sometimes as support, where the sellers exit and the buyers enter. But there’s statistical fact that trading decisions are being made around that pink zone, 0.6730, 0.6715.
So, as it approaches it, we know that there’s really one of two things that’s going to happen. Either we see the buyers fight back and we see a bounce off of this level for it to go back up, or eventually we look for the breakdown of that level and the continuation lower in the direction of our current momentum.
Now the same thing could be said about the orange-shaded area. If I just take this black circle and put it right here, we see support into that area, where it found support and turned around and went back up. We can also see on this last time here when it bounced off, it settled down on top of it as support before continuing the rise. So, we know that the orange zone as resistance – that’s 0.6755, 0.6770 – is a decision zone as well.
Right now, as long as it holds underneath there, we’re finding resistance. Only if it gets back above there do we look for it to go back up. So, we’ve clearly defined now two distinct areas that if we’re going to trade the NZDUSD today or even this week where our decision points will be made. Either at the orange zone or the pink zone for the NZUDSD.
Take it down to the four-hour timeframe and really take a look at what’s happening here for the past several days. The market has just been in a holding pattern underneath that orange zone. So, at least at this point, if you’re looking to trade the NZDUSD in the most recent momentum, we could see that as it’s been going down, finding resistance, the best place to trade this so far in the past several days has been selling underneath the orange zone.
Buying underneath the orange zone not a good idea in the past few days. It just hasn’t been a fruitful opportunity to buy under the orange zone. But as it approaches it, it becomes an opportunity to go short. Targeting back down of course to the next support level, the pink zone. And of course we know that if it gets underneath there and that 100-period daily moving average, we could be seeing much further lower here for the NZDUSD.
Trend is down. Momentum is down. So, I would say that that’s probably the direction you want to focus your energies on. And I’m going to give you an opposite example of this. I’m just going to take this circle and squeeze it in right here. Take a look at that. That’s almost exactly the opposite of what we had over here. We had a significant rise. Support on top of the green zone and then it continued that rise.
So, here we’ve had the significant fall instead of support on top of the green zone. Now we’re looking at resistance under the orange zone. So, just the exact opposite of what happened up here at this green-shaded area we’re seeing happening here at the orange zone. So, what that tells us again is really our best trading options here for the NZDUSD is selling as close as possible to the 0.6755, 0.6770-level. Our risk and our stop loss will go above the orange zone. That way, if the market changes its mind and goes back up rather that continuing to go down, we limit the impact to our trading account this week 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.