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I’m going to begin the day today on the Euro versus the US Dollar [EURUSD]. Starting on the Daily Chart, over the past several months, we have seen resistance here into the 1.3800-level. We go back several months, back into October of 2013. We see the first attempt into the 1.3800-level, settled out underneath it for several days, and made a reversal, pushing all the way back down into the 1.3300-level. Made another attempt, coming back up here into early December. Bounced off of it, came back in late December, bounced off of it, and we see a reversal coming back down into the 1.3400s again.
Well, here we are again, challenging into the 1.3800-level once again. This is a major resistance level. We’ve seen it over history in the trade room. We have looked at the Fibonacci from the Weekly Chart that sits there right above the 1.3800-level, into the 1.3830s. If you haven’t been to the Trade Room recently, please join in. We discuss these things on a daily basis and you have the opportunity to ask questions about each of the levels that I put here on the chart.
So, right now we’re finding resistance at 1.3800 again today. As it stands right now, we’re still holding underneath it and right now I can’t recommend a buy. Even though the market has been going up for the past day and a half or so, I can’t recommend a buy because historically this level has been a barrier, a brick wall in the market. And until it breaks through that barrier, I don’t have confidence that the buyers are going to be able to retain control.
So, as long as it stays underneath the 1.3800 to 1.3830-level, where that weekly Fibonacci level is, then I expect potential resistance and possible reversal. Will it happen? I don’t know, but that’s what I’m expecting with a fairly low risk opportunity to sell it here into this resistance. The risk, of course, is that it breaks above and continues to pressure higher, so it would be my recommendation today on an intraday basis that as long as it holds underneath 1.3800, 1.3830, we’re looking for information or clues to reversal and possible selling opportunities, knowing that the risk eventually is that it breaks out above 1.3800 and continues to pressure higher.
Buying right now carries a risk that it continues to find resistance and turns around and goes back down. The next thing you’ll want to look for, of course, if it is going to breakout, would be an open and close above here. I don’t think obviously today’s candle can open and close above here, but as we go into early next week, if we see a full daily candle open and close above the 1.3800-level, 1.3830, then we will likely expect a continuation of the longer-term uptrend.
Let’s go ahead and take that information down to the 4-Hour Chart. And as we get down here to the 4-Hour Chart, we could see, over the past several hours, challenging right there into the resistance highs. The 1.3800-level. As I’ve mentioned over there on the Daily Chart, in the Trade Room we’ve been studying the .618 fib from a Weekly Chart. Our weekly trend range sitting at 1.3831. That is sitting just above the current market. So, again, as long as it stays underneath there, there is potential resistance.
I’m going to go ahead and take this older fib off because we’ve already broken through there, and now we could see a couple of fibs up there from different trend ranges sitting between 1.3800 and 1.3845 actually, where an .886 fib of the previous downtrend leg sits here for the EURUSD. So, again, hard to recommend a buy opportunity. As long as it sits underneath this resistance, more likely here, on the 4-Hour or the 1-Hour, we’re looking for clues to reversal and possible selling opportunities.
I would expect today’s bank flow levels will also confirm resistance here between 1.3800 and 1.3830. Likely we’ll see today’s bank flow levels rise up. Yesterday they were down here into the mid to low-1.3700s. I expect we’ll see them push right back up here. If you just zoom out one time here on the 4-Hour Chart, you could see the last time we were challenging into the yellow-shaded area. Take a look at the bank flow levels. They sat right here into the yellow zone and into the top of this range. Again, today I would expect resistance here. I would expect the bank flow levels to be right here into the high point of this ascending triangle pattern and looking for resistance. And the only reason, again, that I will expect a continuation higher would be a daily open and close above here, and of course we won’t see that today, likely early next week.
So, again, as long as it stays underneath this yellow-shaded area and the 1.3800, 1.3830-level, it’s my recommendation today to look for resistance here. Now, let’s go ahead and bring some arrows. My recommendation is looking for resistance and possible clues to reversal. Your lowest risk opportunity, at least at this point, is for selling, because if you’re trying to determine what’s the risk and what is the potential reward, at least this point we know historically that this 1.3800, 1.3830-level is resistance. So, buying right now carries high risk that it runs into this resistance and goes down. Even if you were to buy it, your risk or your stop placement is fairly low. I would expect it’s likely down underneath the 1.3760-level. The yellow zone. Maybe even further down. If you go down to the last support, we’re all the way down here into the mid-1.3600s.
So, your risk or your stop placement is very high. If you were to sell it right now, it’s likely your stop is just above the 1.3845-level or so, so you’re only looking at about a 40, 45-pip stop on the sell side. The stop on the buy side is very large. So, your risk-reward doesn’t balance in your favor if you were to buy it. Better if you were to think about selling and reversal from here. So, again, that is your expectation for today.
Over the next several days, week or so, if we do see the break above here, we’ll likely look for the continuation higher and buys on dips into support above the yellow-shaded area. Your next support down, of course, like I said, may be down here into 1.3765 is some support. We could see the resistance candle sitting in here, so we’re looking at least down to the bottom of the yellow-shaded area, if not even deeper, back down to the orange-shaded area. This will change throughout the day if we get a new spike higher, but here is a minimal look at Fibonacci from the low to the current high. Puts the .236 fib right at the orange-shaded area. So, I expect that’s your current support.
If you’re looking for a buy opportunity, you need it to dip much lower or breakout above the yellow-shaded area if you’re looking for a buy. Right now, as long as it stays underneath there, I think resistance is the name of the game today for the EURUSD.
