Transcript of Video
Hello everyone, this is today’s video analysis for December 12, 2018. Today we’re taking a look at the New Zealand Dollar versus the US Dollar [NZDUSD] for today’s trade analysis.
Of course first off, we want to discover the trends here for this currency pair. We have had really two significant trends here on the NZDUSD over the past several months. Going all the way really back to the beginning of the year, January, February of 2018, we started up here at the top left-hand side of the chart just above the blue trend line. The blue bearish trend line. Capping out at the highs into the 0.7400s, and then it’s been falling much and most of the year all the way down here into October, bottoming out down here into the 0.6400s.
And then it started to turn around. Got through the blue trend line. Broke through the blue trend line. Started making higher highs, higher lows. Pushed back above the 100-period moving average, and it’s been moving up ever since. However, within the rising trend along that black trend line on the right-hand side, we’ve seen this pattern within the trend, where we see these pullbacks into support, and I’ve highlighted them with these red trend line channels or these short downward trends that you see here.
Let’s go ahead and zoom it in a little bit. You see the double red trend line. Let’s start down here at the bottom. It pulled back into the blue zone as support and then a new breakout and rally into a new high. Then it pulled back a little bit here into the pink zone, and then a new breakout and a new high. And then it pulled back again here around the blue zone. Maybe just a little bit under it and rally to a new high.
So, the pattern so far has been pullback, rally, pullback, rally. So, here we are in the midst of the pullback phase all the way at the top of the black trend line and top of the current rising trend. So, the question of course is are we going to see a similar scenario. Are we going to see the same thing? That’s what we do as technical traders, is we’re looking for patterns. We’re looking for things that happened in the past to happen in the future.
No matter if you’re studying candle sticks or any indicator that you use, you’re looking for that indicator to do the same thing into the future that it did into the past or the price action do the same thing into the future that it did in the past. And same thing here. We see the past. The price action within this rising trend is pullback, rally, new high. And so, with that, we’re looking at this current pullback and saying well, there’s nothing really to change our mind about the trend. It’s still an uptrend overall. We’re still well above the moving average.
There’s nothing really telling us this is a downtrend. Yes, it’s been pulling back, but it’s nothing telling us a downtrend. We have some lower highs. We have some lower lows in the short-term, but nothing really in the longer-term viewpoint here on the daily timeframe. So, all in all, I say we’re still in an uptrend. We’re pulling back as the pattern has continued to do for the past couple of weeks. Couple of months really, and it becomes an opportunity for us to look for support and a new buy within the overall uptrend. If it does exactly what it’s done the last three times and makes a new high, we’re going to be enjoying some profit if we buy into support.
And as it sits on top of support, it becomes cautious about going short and selling the currency pair. The only real reason you would sell it would be that it rallies into resistance. We actually did that earlier on in the week just into the upper-0.6800s and the yellow zone. I’ll point that out here in the four-hour timeframe in a moment.
But look at the green zone. 0.6830, 0.6850. That’s right here, top of these two black boxes. You could see historically that was resistance. That’s offering us a clue to support right now, the green-shaded area. Let’s zoom it in one more time. There we go. Zoom it in one more time. Today we are finding so far support here into the green zone. If it breaks through there, of course your next potential support is the blue zone. 0.6800, 0.6780.
So, definitely watching both of these for clues to support and possible opportunity for it to go back up. What we need really for this to go up and for it to rally to a new high is really the USD to sell off again. If the USD sells off, falls off of its significant resistance high, we’ll look at that later in the Trade Room. Then we’ll look for this to head back up. So, watching this green zone for support and a new rally in the direction of the trend.
Four-hour timeframe real quick. Here it is. Right here into support. So, again, I don’t think that selling right now, going short right now, makes a lot of sense unless it breaks through that green zone. Going short here doesn’t make a lot of sense. We did go short at the yellow zone earlier on in the week. Had an opportunity to see over 20 pips of profit. The market went down 20, 25 pips of profit. Went back up. Took us out at break even.
If you got back into it, of course you’re seeing about 30, 35 pips of profit now, but we were selling the yellow zone earlier on in the week. That’s not an opportunity now. Now we’re looking for support and opportunities for a reversal for this to turn around and go back up. We’re looking for an infusion of buy orders that tell us that the buyers are even present into this area. That’s really what we want to see.
We want to see some price action that says buyers are even here at the green-shaded area. So, watching that. Looking at the sell off on the USD. If we get negative new today from the US, we may look for the USD to fall off more and this would turn back higher towards the yellow zone. The risk is of course the market breaks underneath the green zone. So, if you decide to buy, stop loss is underneath the green zone today 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.