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I’m going to get started today on the Euro versus the US Dollar [EURUSD]. Starting here on the Daily Chart, this gives us a good chance to study long-term trends and shorter-term trends. as we see here on the Daily Chart that going all the way back into June and July of 2013, we began a longer-term uptrend, creating higher highs and higher lows through the life of the trend, starting all the way down here at the bottom left-hand side of the chart in the mid-1.2700s, climbing to the highest high on the chart into the upper-1.3900s.
So the longer-term trend has been up. Sort of a mid-term or you might even call it a shorter-term trend. It’s where the red trend line is. We could see even that last leg of the trend was an uptrend. We could see it climbing from the mid to upper-1.3400s at the bottom of the red trend line and, again, capping out here into the upper-1.3900s.
Now, we do see that the shorter-term trend, or what could be an intraday trend, has been falling. We see it going from that highest high in the 1.3965 or so, now down back into the mid-1.3700s. So, we have several different trends that we could study here. What I want you to remember is that we’re still in the confines of an overall longer-term uptrend. Through the life of that uptrend, we’ve seen many times where the market went down, returned in the uptrend, went down, returned to the uptrend. So, don’t get too caught up in the fact that we’ve been going down over the past six or seven days because, at some point, we could find support, especially as we approach the blue trend line down here into the 1.3700-level and find support again and start moving back up in the direction of the uptrend.
Of course all along we’ll be looking for intraday opportunities for trend reversal or trend change and clues to trend change that could be telling us it’s going to continue to go down. Let’s go ahead and zoom it in here on the Daily Chart. Red trend line again. Over the past four days, we’ve seen the market break underneath that red trend line, which of course is this trend here. Where we were going higher highs and higher lows, we’ve now seen it make a new lower high and a new lower low as we broke through the lows here in the yellow-shaded area.
Fibonacci retracement levels also confirming that we’re looking at support right now. If you take Fibonacci from that low of that red trend to the current high, we see the .382 right at 1.3779. That’s the top of the orange-shaded area, were we’re current sitting. If we get back above that 1.3779-level, back above the orange-shaded area – that’s the .382 fib, by the way, of this trend – then we could be looking for a challenge back to the yellow-shaded area. If we open and close underneath the orange-shaded area today, we could be looking for the fall and the continuation of the downward movement, here towards the blue-shaded area, which is where the 50% retracement level of that previous trend range is.
So let’s just outline this in a simple fashion here. Getting underneath this orange-shaded area, we’ll call it 1.3760. Underneath 1.3760, we’ll likely begin the fall back down towards the 1.3700-level and into this blue-shaded area. Above this orange zone, if we see the market turn back around, stay within this period of congestion between the the orange and yellow-shaded area, staying above 1.3780, we’ll likely make a turn back towards the yellow-shaded area and back into the resistance that we see here between 1.3817 and 1.3850. That’s the yellow-shaded area.
So, we’re in a period of congestion, between these two areas. Break out below goes lower. Staying above this orange-shaded area goes back up once again. Forex Black Book-wise, we could see the trend bar is still green this week. It’s dark green, but it is still green, implying that the trend, of course as for a long time been up. So, if you’re looking for new buying opportunities in association with this green trend bar, of course the lower it gets, the better. Even if it gets down here towards the blue-shaded area and into the 1.3700-level, that becomes a much better opportunity to buy it because your risk becomes smaller and your profit targets become larger the lower it gets within this current downward movement that we’re seeing to go back up in the direction of this green trend bar.
Of course the blue trend line, don’t forget, is that longer-term trend that we’ve seen this last June and July of 2013. So, as long as it stays above there, potential to rally back higher again. Let’s go ahead and take that information down to the 4-Hour Chart. And of course here, since last week, we’ve seen it bouncing around just above this orange-shaded area, and we could see that happening again today. So, again, the arrows really pointing to our expectation for the day today. Above the orange zone, if it stays above it, we look for rallies back to the yellow-shaded area. And of course underneath, as I mentioned, 1.3760, we’ll even say all the way down to 1.3755. Anything underneath there, we’re likely making that turn back down towards the 1.3700-level. The 50% retracement level of the previous uptrend that we measure with Fibonacci also sits right there at 1.3720. So, a break of the orange zone, we’re back to the blue-shaded area here for the EURUSD today.
Now, if you’re looking to trade in the direction of the current trending movement, which has been down for the past several days, then you’re looking for sells on rallies into resistance, or sells on breaks of support. So you’d either be looking for, which we’ve already seen, this rally back to the yellow zone. We’ve already seen that with the current candle, where it came back up, challenged the 1.3800-level, couldn’t break above it, and went right back down. So, again, sells on rallies to resistance, which we’ve already seen, or breaks of support.
Bank flow levels over the past two days have settled out right here into the yellow-shaded area. I would suspect that when we get those bank flow levels today, we’ll be looking for them right here into this yellow-shaded area and we’ll hopefully discuss those bank flow levels as they come out later today during the Trade Room. The live Trade Room. So, if you’re looking for those bank flow levels, join in the Trade Room today and we’ll look for those bank flow levels and discuss trading opportunities around them today. But most likely studying the breakout below the orange-shaded area and the continuation down to the blue-shaded area today for the EURUSD.
