Transcript of Video
Hello everyone, this is today’s video analysis for November 30, 2018. Today we’re looking at the US Dollar versus the Swiss Franc [USDCHF] for today’s trade analysis.
It’s important to note of course that not only is it the last day of the week, Friday, it’s the last day of the month, November 30th. So, we’re going into the weekend with the last day of the month. We may have increased volatility as we close out the month, but definitely something to think about as we go into this weekend.
Coming back here to the USDCHF, a couple of different trends here. Of course the previous downtrend. The black trend line. Recent uptrend. The blue trend line. And even more recently, we’ve seen the market going down in a bearish fashion along this red trend line. We’ve made a new lower high and lower low. And the question is are we going to see the continuation of this red trend. Are we going to see it continue to fall and go down, which in essence is a falling of the USD, weakening of the USD, which we saw earlier this week, or will the USD strength return and it turns right back above the red trend line and makes a new high?
So, we have some real significant questions to answer here for the market over the next couple of weeks. One quick Fibonacci here just of the blue trend. Let’s take bottom to top of that blue trend. In doing so, we’re underneath the .236 fib at 0.9990. So, that’s just at the top of the blue box you see here on the right-hand side. So, we’re under that .236. May be the barrier of resistance that this currency pair needs to fall back down.
Of course a break of that .236 may see, again, the return of the uptrend. .382 of that blue trend, again, sitting down at 0.9904. That’s the purple-shaded area and, incidentally, real close to where the 100-period simple moving average is as well. .618 of that blue trend all the way down here at 0.9765 area. So, if we see the return of a downtrend, if the market starts to sell off USD again, we could see it even down into the mid-0.9700s if Fibonacci has anything to say about it.
But right now let’s just focus on today. We’re stuck inside this little blue box between the blue-shaded area, 0.9940, 0.9925, and the pink zone, 0.9980, 0.9965. Been bouncing around in there for a week and a half or so now. It hasn’t really decided on a significant direction. Will it go up? Will it go down? We are challenging resistance today into the 0.9965, 0.9980-level, the pink zone. I don’t think that today’s the best time to buy this currency pair.
Let’s go ahead and zoom it in a little bit more. I don’t think today’s the best time to buy it. As you could see, over the past several days, this currency pair has found resistance here at the pink-shaded area. So, buying right now in the past – well, let’s just count them out. Nine days. So, the past nine days, it hasn’t been a good idea to buy within and underneath that pink-shaded area.
So, what we’re looking for is something simple. When would it be a better idea to buy the USDCHF? And of course that would be a break above the pink-shaded area, or at least even better would be a buy down here at the blue zone. So, the same past nine, ten days, if you were going to buy, the best place to do it would be down here at the blue zone. So, you’re probably not going to buy it at the current moment as long as it’s underneath that 0.9980-level because it’s not been a good idea.
Could it be a place to sell the currency pair? Yeah, I think so. I think that that would be your most logical trading decision today, would be potential shorts into the pink zone, targeting back down to the blue zone. And of course if it ever breaks the blue zone, we know we’re looking for it to go lower. And that’s just logical. That’s just really following what the market is doing.
And that’s what I like to do. Not speculate what it could do because we don’t know what it could do. It could do anything. But what we can do is say this is what it is doing and let’s take advantage of what it is doing rather than what it could do. And then if it goes in our favor for a long period of time, great. If it doesn’t, at least we’ve planned ahead and used appropriate risk strategies. Risk strategies means that if you’re selling the pink zone, your stop loss is going above. That way, if it breaks the pink zone, you don’t have to worry about too large of risk.
I don’t think it needs to be too far. If we were to sell close to the 0.9980-level, even going to the last higher, we’re only looking about 25 pips. So, a good 30-pip stop loss, 35-pip stop loss isn’t too terribly extraordinary if you decide to go short into the pink-shaded area. Targeting the blue zone or lower, down to the .382 of that – remember that – blue trend line sitting over there. The .382 of that blue trend sitting down here into the purple-shaded area. And your risk, again, is simple. It breaks the pink zone. You probably don’t want to stay in it.
Again, if you’re looking for the long shot, you would be better suited at the blue zone or above the pink zone. We don’t want the false breakout. Take a look at these last three candles here. That was a false breakout. So, let’s not look for a false breakout. Let’s look for a real breakout. We’ll discuss what that means later in the day in the live Trade Room. But a false breakout we don’t want. So, at least at the current moment, I think for the current moment until we get later on in the day, selling looks to be a better risk, higher reward opportunity into the pink zone. The risk is a break above it.
I’m not in the sell yet. I’m looking for some clue that sellers are still here, but keeping an eye 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.