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Transcript of Video
I’m going to begin the day today on the Australian Dollar versus the US Dollar [AUDUSD]. And just like yesterday on the NZDUSD, I’m going to start on the Monthly Chart today, giving us a longer-term perspective as we go into the end of the year and getting ready to start a new year for our trading.
Here, on the Monthly Chart, previously we can see that this currency pair was in an uptrend. We go all the way back into 2008. We were down here towards the 0.6000s. 0.6000-level. We saw the climb, going from that 0.6000-level in 2008, all the way up to the highest high on the chart, into the 1.1070s, towards the 1.1100-level, and that was into 2011. So, a couple of years going up within that uptrend.
Now, since then, we’ve seen a slow drift as it’s been coming back down. We went into a little bit of consolidation here. Really slow movement for a several-month period here into 2013. Finally got some motivation lower, continued to pressure lower, and now we’re pressuring all the way back down here towards the 0.8000-level. Some interesting things about this Monthly Chart. Fibonacci from the lowest low to the highest high of the previous uptrend that we see right here puts the .618 Fibonacci retracement level down here towards the 0.7950s, the mid-0.7900s. That’ll be interesting as we go down to the smaller compressions. Keep in mind that .618 a little bit lower than the current market price.
You go back along these red, horizontal lines and you could see the last time we were into these price levels was all the way back here in 2010. So, very interesting information from the Monthly Chart. Take it down to the Weekly Chart, and now you can start to see how those levels affect the current market and we could see of course the long-term downtrend that we’ve been in, coming back from all the way back here in 2011, 2012, the little bit of hesitation here inside the red box several months ago, basically the beginning of this year, and now the last leg that we’ve seen pressuring all the way back down here into the 0.8000s once again for the AUDUSD.
That’s the weekly vantage point. It doesn’t really help us a lot. Let’s take it on down to the Daily Chart. Now we’re starting to get a little bit more detail to what we’ve been seeing over the past several months. We saw the fall, from up here in the red box, top of the red trend line. We’re going all the way back into September of 2014. So, just a few months ago, we saw the high up here into the 0.9400-level. The fall down here into the 0.8600s, some hesitation, congestion, the next wave or leg coming all the way back down here towards the lows, into the 0.8000s.
Over the past few days, let’s go ahead and zoom it in one more time here on the Daily Chart. Over the past several days, and let’s count them out. Today included, nine days we have been finding support down here at the yellow-shaded area at the very bottom of the chart. That yellow zone goes between the 0.8130 and 0.8100-level. Let’s call it the 30-pip zone highlighted in yellow down here, and that’s been providing support for the past several days. Eight to nine days here for this currency pair.
Now, the trend is clearly still down. We don’t have any real evidence yet that the trend has changed and that we need to start buying this currency pair. Even though it’s going up, the trend is still down. We can see, again, zooming it back out, there’s many times within the downtrend that we saw a little bit of a rise, a little bit of a rally, and then a return of the downtrend. So, until we really see evidence of trend change, I want to continue to focus my efforts in the direction of the trend.
A couple of things that I’m looking at here. I did take Fibonacci from the high of the blue trend line, down to the low. That actually puts the .236 back here, around the 0.8250-level. It’s a little bit higher than the orange zone and a little bit lower than the pink zone. .382, by the way. That’s probably even more interesting; is that sits up here, next to the red trend line and the green-shaded area. So, clearly a significant resistance. Clearly a significant rally it would take to get back up there to that red trend line, that .382 fib, and that green-shaded area, but definitely a possibility, especially if we start to break through our resistance levels, which the first one we’re coming in contact with today would be the orange-shaded area that you see right there, just above the current market price.
So, we know that the yellow-shaded area is support. So, as long as we’re on top of that support, if the market falls back down between 0.8100 and 0.8130, it would be very discouraging about selling it there, in the direction of the trend. So, where do we sell it? Well, likely we’re looking for sells on rallies to resistance. And our first resistance we come to is this orange-shaded area. It’ll actually be a little bit more evident as we go down to the 4-Hour Chart, but right here, 0.8180, 0,8200. Clearly the 0.8200-level is a price barrier that could offer some resistance for the day today. And really the last time we were here, the last two days we saw the market challenge underneath 0.8185, 0.8200, it found resistance back here. And again, that will be more evident as we go down to the 4-Hour Chart.
So, orange zone will likely be our first opportunity. And clearly a breakout above the orange zone, we’ll look for it to go back to the pink-shaded area. Like I said, it’ll be much more evident as we go down to the 4-Hour Chart, so let’s go ahead and do that, and this is something that we were looking at during the Trade Room yesterday. And the two blue circles are probably the main emphasis that I want you to see here for the day today on the AUDUSD.
Take a look at the two blue circles back on the left-hand side of the chart. What happened when the market was between the yellow and the orange-shaded area? That’s probably the first thing that you need to see. This bottom blue circle. It found support in the yellow zone, bounced between the yellow and the orange zone several times before finding much support down here towards the 0.8100-level. So, clearly that orange zone and yellow zone are our current resistance and support zones. What happens, of course, if it breaks above the orange zone? Well, all you have to do is look back to the left-hand side of the chart. You see the top circle. It goes all the way back up to, at minimum, the pink-shaded area and that’s going to go back up here.
So, for the day today, I would be very discouraged about buying it close to the orange-shaded area because there’s high probability of resistance there. We could see the support and resistance from the left-hand side. So, more likely, in the direction of the longer-term trend, this 0.8185, 0.8200-level becomes your selling opportunity for the AUDUSD today in the direction of the trend. Forex Black Book trend bar also red and confirming that. The risk in that scenario is above 0.8210. So, if you decide to sell the orange zone, put your risk or stop loss above the orange zone because if it breaks there, we already have a good clue that it’s going back up into the mid or at least the upper-0.8200s, towards the pink-shaded area. And that’s what history tells us back here in these two blue circles.
I do want to take one other Fibonacci retracement level here on the chart. Let’s go get our fib tool. Let’s go from where the blue trend line connects right here in the green-shaded area, down to the lowest low on the chart. So, we go from the green resistance high. Let me put a little black X there, and I chose that because that’s really the last resistance that we see here on the chart. So, if we go from there to our lowest low on the chart, puts the .382 Fibonacci retracement level at 0.8197. That’s a very interesting price point there. 0.8197. .382 fib.
So, if you’re looking for a sell opportunity today, as close as possible to that I believe would be the opportunity. So, you could set a pending trade at 0.8195. Pending sell order there. Risk above the orange zone. If it breaks there, you don’t want to stay in it any longer. You’re going to target the yellow zone or lower in the direction of the trend. It looks like I need to maybe adjust this blue trend line just a little bit while we’re here. I don’t want to go away before we adjust it. Let’s put that blue trend line. Actually let’s go back a little bit further. Let’s make sure it gets on that high at the highest point there. Right about right there. I’m looking back here at the top of the chart, and I need to make sure. Let’s get this trend line connected to that high right there. And in doing that, you could see we’re just a little bit above it right now.
So, that’s okay. I still think we’re in the parameters of a downtrend. Selling the orange zone, targeting the yellow zone, that’s what history tells us. The risk is above there. If it breaks above it, we may be even able to look for new opportunities to buy above 0.8210 and target the pink-shaded area for the AUDUSD today.