Transcript of Video
Hello everyone, this is today’s video analysis for December 20, 2018. Today we’re looking at the US Dollar versus the Swiss Franc [USDCHF] for today’s trade analysis.
Before I begin the analysis for the day today, going to be taking several days off here for the holidays, so there will not be these daily videos for the next week or so. So, I hope that you will have a good holiday season and come back in the new year ready to get started trading.
Anyways, coming for our analysis today, of course yesterday we had significant news. FOMC and fed information yesterday from the US causing significant movement. We, first off, saw an appreciation of the USD. It rallied a bit and then turned back around and sold off pretty heavily after that. So, both directions after that news yesterday.
So, we take a look here at the USDCHF daily timeframe. We have seen now with the selloff of the USD after yesterday’s news pushing all the way down now into the 0.9900-level. Just a tad underneath it. 0.9890. A couple of significant things going on here. First off, the 100-period moving average. You could see that coming into the chart. The green wavy line. We’re sitting right on top of that right now. It’s kind of hard to see because it sits at the bottom of that purple zone and the bottom of that black box, but it is there right around the 0.9890-level.
That’s our first clue. We follow it back in time. The purple-shaded area. And we’ve seen some support and some resistance around there. Mainly though closer towards the orange zone just underneath there, 0.9870, 0.9860. You can even see today’s low touching into that orange zone, but pulling back to the moving average. One more thing here before we zoom in. The black trend line. Low to high with Fibonacci puts the .382 or 38 percent retracement at 0.9904. Again, top of that purple-shaded area. So, we’re challenging the .382 of that black trend.
The 50 percent of that black trend line sits over here at the green-shaded area closer to the 0.9830, 0.9840-level. And .618 of that same black trend sits all the way down here at 0.9766 closer to this yellow zone. So, quite a bit lower if Fibonacci has anything to say about it if the USD continues to sell off. If it doesn’t, then of course we’re looking for support.
Blue trend of course showing the direction. Much of the direction the market has been going in that past couple of months, but the black box shows that we’ve been somewhat ranging and in congestion, and that’s indicative of prior to significant news like the fed yesterday. We might see some of that. We’re also going into this of course holiday week next week that lower liquidities. Less traders in the market. May see some range-bound market because of that as well.
So, a lot of things to think about there. Let’s just zoom in on 0.9890, 0.9900, that purple-shaded area real quick here on the daily timeframe. Here we are challenging into here. And as you could see, last time we were here, and this is probably very important for us for the day today. The last time we were here, right here where the blue circle is, we found support at the purple zone. We challenging underneath two days. Two days came down to the orange zone, 0.9870, and then bounced right back up. So, when we see the market down here like it is today, we have to take it with a grain of salt maybe because the last time we were here, it bounced and turned around and went back up.
So, how can we avoid this? How can we not go into a short and see it turn around and go back up against this? For me, and again, we talk about this in the daily Trade Room just about every day, I would prefer to see a full candle body underneath that purple-shaded area, 0.9890, 0.9900. If I can see that, which it didn’t do back here at the blue circle, that increases my confidence that it’s going to continue to go down. That’s all that does. Increase our confidence.
This. Less confidence. An open and close underneath increases our confidence that it’s a real deal breakout rather than a false break. If the USD suddenly rallies again, this could turn back higher and start moving higher. So, that’s what we’re watching for today, tomorrow, maybe even next week. We’re looking for a real deal break underneath this purple-shaded area for the continuation lower. Selloff of the USD.
Until that happens, we have to be cautious and wary that it’s a false breakout like what happened back here where the blue circle is. Also, watching for clues to reversal. If it turns around from here and starts moving back higher, we want to be able to take advantage of that as well.
Four-hour timeframe. Not really going to change our sentiment about that. In fact, if you look at it, let me see if I can get that blue circle pulled back in a little bit so it’s not so wide. The last time we were here, again, we actually saw four hour candlesticks underneath the purple zone, but we have not seen that yet now. So, again, that’s our clue. That’s what I’d like to see. I’d like to see it stay underneath the purple zone, increasing our confidence that it’s going to continue to pressure down to the orange zone or lower. But at least a real deal clue to a breakout rather than a false breakout because, again, if this suddenly gets back above the purple zone, we could be looking for just the opposite, where it might turn back higher.
And really if you look at that blue circle, that’s what happened. Eventually, you saw the market suddenly buy. A sudden infusion of buyers. Large bullish candle got back above and eventually made a new high all the way up here to the pink zone, where the blue trend line is. So, this is the caution I give you today, going into the holiday trading environment. Be careful that you’re falling prey to a false breakout. Wait for the open and close or watch for further evidence of reversal here for the USDCHF this week.
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.