Transcript of Video
Hello everyone, this is today’s video analysis for January 9, 2019. Today we’re looking at the US Dollar versus the Swiss Franc [USDCHF] for today’s trade analysis.
Starting here on the daily timeframe, there’s two trends of course we’re going to take a look at today. The black trend line on the left. The rising trend, which was quite a bit of the last part of 2018, going from September through November and early December I support, but late November. We see the market was clearly in an uptrend. Then it made a little bit of a shift in direction, reaching the 1.0001-level or so. Shift in direction. The blue trend line moving back down again.
Interesting. The 100-period moving average fairly parallel or horizontal I should say in the middle of the chart. You could see it just kind of flattening out here as the market was a little bit above. Started coming down. Got back below. So, 100-period moving average not really being super useful as a trend indicator except for the fact that we’re underneath it right now, which may lead us to believe the market is going to continue to go lower.
One other interesting aspect here is Fibonacci of the black trend. From the lowest low of the black trend line to the highest high, Fibonacci of that range – what I want to point out is the .618 Fibonacci retracement level or 62 percent retracement of the black trend lives right here just close to the yellow zone, 0.9766. I’m going to put an arrow there, so we can see where that is. Right here. I point that out because we’re not too far from it. I mean all it’s going to take is a little bit of a breakout lower below the 0.9800-level and we’ll be charging down towards that .618 Fibonacci retracement level of the black trend. So, keeping an eye on a breakout scenario would be a prudent opportunity in the direction of what is the current momentum and trend here for the USDCHF.
So, now that we’ve seen those larger aspects, the Fibonacci, the previous trend, and where the current market is, let’s go ahead and zoom it in a little bit. And of course the trend is more bearish than bullish and has been for a little while. So, if we’re looking for opportunities to go short or go bearish and sell the USDCHF, we’re wanting to do that at two particular times when you’re looking to sell something. Selling for lower risk and higher reward comes on a rally to resistance.
Well, first off, that would be the green zone. We could see yesterday’s candle finding resistance and stalling out just into the green zone, which by the way happens to be the 50 percent retracement level of that previous black trend as well. Right here, 0.9835. The market came up, shied away from it, and fell back down. So, the green zone is resistance. So, that would be a good place to potentially go short.
Well, we’re not there today, so we don’t want to go short yet. The other opportunity to go short would be that it breaks through the support. Well, it’s not too hard to see the pink zone, 0.9805, 0.9790 is support. Today, yesterday, the day before, and even these three days back here finding support here at the pink zone. So, if we’re going to sell the trend, if we’re going to sell down towards the .618 Fibonacci retracement level, the only two reasons with lower risk and higher reward to do that is back at resistance or under support. Until then, selling right now just doesn’t make logical sense because you’re sitting on top of support and the potential is history says that if it doesn’t break through the pink zone, we could see a bounce back higher.
So, selling today at the current moment at and on top of 0.9800 just doesn’t seem like a prudent activity. So, the question is should we buy. Well, I don’t think there’s any good reason to buy it. The trend is down. The momentum is down. We haven’t seen a real good solid rally yet today for the USD, so there’s no real good reason to buy it. I think if you buy it, you’re just guessing and speculating that it’s going to go up and there’s no real activity that would imply that it’s going to go up quite yet.
So, buying would just be merely taking a chance on that this is going to continue to hold support. Selling at least would be in the direction of the overall trend that this currency pair has been in for the past several weeks. So, that would be the main focus. Selling. Doesn’t mean you can’t buy it. I would suppose that if you’re looking for a low-risk reason to buy it, it’s as close as possible to this pink zone. That way, you know that if it breaks out underneath, you don’t want to stay in it very long.
Let’s take it on down to the four-hour timeframe just to get a good view of this on the four-hour. There it is. Look at that blue circle there, where the market has just been bouncing around in here. So, again, I suppose if you’re going to buy it, try to get as close as possible to 0.9800. Your stop loss would be underneath. That way, if it does eventually break in the direction of the trend, you can get out with minimal impact to your trading account.
Selling. Again, there’s only really two good reason to sell it. Rally back to the green zone, which we don’t know if it’ll do that, or a breakdown of the pink zone. Again, a good example of that and as technical traders, we look for examples of things happening in the past. The black circle. We bounced around in here for quite a while. The purple zone holding as resistance. The orange zone holding as support. Eventually breaking underneath the orange zone and going lower.
That’s somewhat what we’re looking for now today, is the market to get out back underneath this pink-shaded area. Let’s just draw it out as somewhat of an implied candlestick underneath there. It gets out underneath the pink zone and then we increase our confidence that it’s going to continue to pressure down to the yellow zone. It doesn’t mean it will, but that’s what we’re waiting on before we take a trade opportunity here on the USDCHF 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.