Want FULL ACCESS To
ROSS’ DAILY TRADE ROOM?
Simply Click The Get Started Button Right Now!
Transcript of Video
Click Here to receive an email alert when Ross posts a new daily video.
I’m going to begin the day today on the Euro versus the US Dollar [EURUSD]. I’m starting all the way out here on the Weekly Chart because really over the past 24 to 36 hours we really haven’t seen a lot of movement out of the EURUSD, so we’re going to start all the way out here so we can get a larger perspective and maybe understand what the whole market is thinking about the EURUSD.
Over the past couple of years – we’re going all the way back to 2012, bottom left-hand side of the chart – we have been in majority an uptrend here for this currency pair. We started all the way down near the 1.2000-level, bottom left-hand side of the chart, and rose all the way up near the 1.4000-level at the top of the chart. Throughout the life of that trend, of course over the past couple of years, we’ve seen a few times where it took a little bit of a dive down here. Back into 2013, we saw a little bit of a dive where it went from here into the 1.3600s, down into the 1.2700s. Then it took another push in the direction of the trend, pushing it all the way back to 1.4000.
Now, in the most recent weeks and past few months, we’ve seen another downtrend starting to take shape within the overall long-term uptrend. Now, we could take some Fibonacci of the previous uptrend. I’ve taken actually two Fibonacci levels here on the Weekly Chart. One starts right here at the pink-shaded area in the middle of the trend, basically where this downtrend here ended before it made the second leg of the uptrend, and then from, of course, the bottom of the chart. So, those two lows where the black X’s are to the highest high on the chart with Fibonacci.
What’s important about that is where they overlap, I think. That’s helping us identify what is our current resistance and our current support. You could see right here at the yellow-shaded area. It’s a little bit hard to see both of the dashed lines there with that, and if I move the bottom line out of the way you could see right where the yellow-shaded area is there are two dashed lines. That’s showing us that there are two Fibonacci levels right there where that yellow-shaded area is. And you could see that over here on the right-hand side of the chart. So, that is our current resistance.
Then we look down into the blue-shaded area, just underneath the current market, and you could see there’s some more Fibonacci overlapping. So, that becomes, as far as Fibonacci is concerned, our next support. Then we can follow both of those levels back in time, specifically the blue-shaded area. Follow that back in time. You see a lot of support and congestion back here. I could probably take a rectangle shape here and just draw it out like this. You could see this area right here between the pink and the purple-shaded area, where we went into some ranging and congestion. And that blue-shaded area is just about halfway or in the middle of that little box that I just put over there on the left-hand side of the chart.
So, you could clearly see that we’re testing the top. If it breaks underneath the purple zone, the blue zone, and then maybe the pink zone become our next targets. Now, it doesn’t have to do that. Clearly it could bounce off of here, bounce off of 1.3100 and turn around and go back in the other direction, but at least it gives us a wider perspective of what we may expect over the next coming days here for the EURUSD.
Now let’s start to take it down to smaller compressions. Let’s go down to the Daily Chart, and again, we’re settled out. And like I said, the past four days, basically this entire week, we have seen absolutely no movement. I say no movement. There’s been movement. Just very little movement out of this currency pair. It’s been stuck inside this little area of congestion inside this purple-shaded area. Of course we’ve already discussed the yellow-shaded area as our potential resistance for this pair. We’ve already discussed the blue-shaded area as our potential support.
The trend is down, so we have this overall bias that we could look for a continuation down. What’s it going to take for that? It’s going to take, at least at this point, a breakout underneath 1.3100 and underneath that purple zone, which we haven’t done all week long. So, that’s our first thing that we’re going to watch for today. I know we have some Euro news coming up here very shortly, as I’m recording this video. That could be the catalyst that stirs it on. Of course tomorrow we have non-foreign payrolls out of the US. That could be the catalyst that breaks it out of this range. We just need something to spur on the buyers or sellers to make a move here on the EURUSD.
And I think the direction of the trend is definitely something that we’ll want to continue to focus in on, which is selling in the direction of the downtrend. Those two opportunities are the yellow-shaded area as resistance, and the break of the purple-shaded area as our break of support and this barrier right around the 1.3100-level.
Buyers probably not interested in this yet. We don’t see any real clues of support and reversal. We see clues of support, but we don’t really see any reversal yet. We don’t see higher highs and higher lows, no candle sticks or structures or patterns that imply reversal, so nothing really telling us that it has to or even is considering going back up again. So, until we see those, I’m going to concentrate in the direction of the downtrend. Forex Black Book trend bar is red. That also points in that direction. We’re underneath the 100-day moving average. That’s well above the current market. Trend line is down. All of that continues to point in the direction of the current downtrend and nothing really telling us it’s going to go around and go back up.
Something else that we’ve been looking at in the Trade Room over the past few days, and I’ll just put a couple of circles here if I can get them drawn out real quickly. We draw this one here. That shows us. Let me get it selected if I can. There it is. Draw it here. We see that retracement within the downtrend. A little upward movement within the downtrend, and then the fall. We see this area right here. Let me get one more circle here. We see this area right here, where it kind of went into a period of congestion and then it continued to fall.
So, we’re in that area where we’re looking for another either sideways period of congestion, like it was there in the middle, or at least a little bit of retracement before we can get back in. That would be there in the purple zone or into the yellow-shaded area. You think about a third circle being somewhere down around here. And then of course a break underneath the purple zone, 1.3100, we look for the continuation of the downtrend.
Take it down to the 4-Hour Chart. It doesn’t really change it a whole lot. We squeeze it in a little bit, so we could see some further movement. There’s this wide circle there. They get really wide when we go down to the 4-Hour Chart, but that’s that same area right there. We already know that the yellow zone, the purple zone, and the blue zone are major areas of support and resistance. We haven’t seen any new bank flow levels this week, and I think it’s probably because of the event risk, the data that’s coming out this week in a shorter trade with Labor Day on Monday in the US, so bank holiday.
Not really sure why we haven’t gotten any levels, but we haven’t seen any this week. They were just into the yellow zone and under the purple zone last time we had levels, so very interesting there, but I still think a breakout under the purple zone today will give you your clue. 1.3100 that we’re looking for it back down towards the 1.3000-level, the blue-shaded area. And the only reason that changes for me today would be a push above, we’ll call it, 1.3150. Gets above 1.3150, we’re back to 1.3200 and into the yellow-shaded area up here for the EURUSD today.
