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I’m going to begin the day today on the US Dollar versus the Swiss Frank [USDCHF]. Two different trends that we want to take a look at today. First off, the previous down trend going from the high that you see here on the top left-hand side of the chart, where the blue trend line starts. This goes all the way back into July of 2013, so a little bit more than a year ago, back into the 0.9750-level, top left-hand side of the chart.
Then it began falling, pushing lower over the next several months, pushing all the way back down here to the lowest low that we see, which actually sits right here into the 0.8690s, into March of this year. So, you could see several months in that downtrend. Then we took a little bit of a hop up, came back down, gave it another second try down there in that same area right around the 0.8700-level, 0.8690s, and ever since then we’ve been pressuring higher as we see a new change in the trending pattern. Where previous we saw lower highs and lower lows within the downtrend, now we see higher highs and higher lows as it begins to develop a new up trend.
Another tool that we have here on the chart to show us the trending direction is the 100-day moving average. That’s the green line that you see here on the chart. And as you can see throughout the down trend, the market was underneath that green, moving average, 100-day moving average, and then several weeks ago pushing above that moving average, pushing above the trend line, and again, changing the trending pattern.
So, right now we sit above the 100-day moving average. We started to change the trending pattern to higher highs and higher lows. Over here on the left-hand side is, again, inside that previous down trend. We also take Fibonacci measurements from the highest high to the lowest low within that down trend, and that will be important in the current market because as we see this pushing higher, that provides some retracement levels as it retraces this previous down trend.
So, now that we see where all that comes from, let me scoot the chart over a little bit so we could see all this information. Most importantly, from that previous down trend, the Fibonacci from that previous down trend, the .382 Fibonacci retracement level sits at 0.9100, so 0.9100. That’s exactly at the bottom of this orange-shaded area that you see here in the middle of the chart. So, the orange-shaded area, .382, 0.9100, previous down trend. That is holding our resistance for the past three days, and we could see the market has been in an up trend. It’s been moving up pretty stiff and you could see that it’s come into contact with this .382 fib and resistance here into the orange-shaded area.
Not only that .382 fib at 0.9100. You follow it back here on the left-hand side. You could see resistance. You could see support, congestion all around that zone highlighted between 0.9100 and 0.9132, the top of that orange-shaded area. One last thing I want to point out within the current up trend, the first leg of the up trend ends right about right here where the black X is and you see that spike high. Well, I’ve also taken a Fibonacci measurement from that black X, that spike high, back down to the first low or the second low that we see here. The first low underneath there, back down into the 0.8700-level. So, from the black X down to the low measured with Fibonacci, we find the 1.27 Fibonacci extension sitting at 0.9124. That’s at the top. That’s the blue, dashed line at the top of the orange-shaded area. So, very interest is this area today is of course resistance. We’ve just outlined several reasons for that.
And of course we could look for support. Support kind of a long way away. We’re back down here towards the green-shaded area and the red trend line. This will be our support for the day today. If it takes a dip lower, back down to the green zone, becomes our support. So, what we’re looking for today is either resistance and a fall back down to the green zone or a breakout above this orange-shaded area and a continuation of our current trending action. Of course in little bit less than an hour from the recording of this video, we do have non-foreign payrolls. Could be the catalyst for change.
The change could be a breakout above the orange zone above 0.9100 and a continuation towards the 0.9200 level and the pink-shaded area, which would be our next zone of resistance. Happens to be some Fibonacci up there at the top of the pink zone also. 50% retracement of the previous down trend. 1.618 Fibonacci of that same little up trend that I measured back here with the black X. So, clearly the pink zone is our next resistance. We can even see that back here on the left-hand side, where it broke through the orange zone, hit the pink zone.
So, if it can break through here with that catalyst, with that news today, breaking through the orange-shaded area, we look for a continuation of the trend towards the pink-shaded area. That’s not necessarily a given. We could find resistance here. The sellers dive in and we see a fall all the way back down towards the green-shaded area, into the 0.9030s and 0.9040s, which historically of course has been resistance, resistance, congestion, support all along that green-shaded area down into the low to mid-0.9000s. That becomes our support.
Now, if you’re looking to buy in the direction of the trend, which of course has been up for several weeks and we’re above the 100-day moving average and the green trend bar with the Forex Black Book. If you’re buying in the direction of the trend, you buy above the orange zone or a dip to the green zone. Sellers are selling likely underneath the orange-shaded area today. Let’s take all that information down to the 4-Hour Chart here. And as we get down here to the 4-Hour Chart, I just squeeze it in just a little bit because I want to show you where the bank flow levels from yesterday were.
Bank flow levels for yesterday sat right here in the green zone. We could see it’s a little bit difficult to see the blue line of the bank flow levels yesterday, but they’re sitting right here right into the green zone. The blue line sat at 0.9039, top of the green zone. Red line: 0.9023. Green line: 0.9009. So, there are your bank flow levels from yesterday and of course we don’t have today’s yet, but they would confirm support down here into the green-shaded area. A breakout above resistance looks for a continuation of the trend. Buys on dips into support are my main focus here or a break of resistance. I’m not really looking to sell this currency pair. Not really the mode I’m in for this pair, but buys on dips to the green zone or break above the orange zone today give us an opportunity to trade in the direction of the current trend for the USDCHF.
