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I’m going to begin the day today on the Euro versus the US Dollar [EURUSD]. Starting today on the Weekly Chart, we could see that this currency pair has been in an uptrend for quite some time. We go all the way back down here to the bottom of the chart on the Weekly Chart, and we could see, back in July of 2012, we hit a bottom down into the 1.2000s, made a good climb here in towards the 1.3700-level, a dip back down into the 1.2700s, and now a new climb coming all the way back up into the 1.3700s, approaching the 1.3800-level.
Highlighted in green is that last resistance high that we’ve seen going back into October. Just a couple of months ago, we could see that resistance high here into this green-shaded area – the 1.3800-level. Follow the green-shaded area back in time and historically we can see some congestion, support and resistance along here. We could see some support in this area. We could see a spike low here into this area here. We could see resistance. Support all the way back in 2010. Resistance here all the way back in early 2010 and then even support on the far left-hand side, back in 2009.
So, historically, we could see that this level highlighted in green has been support and resistance back in time. And most recently, of course challenging into that same 1.3800-level as a resistance high. Now, taking Fibonacci from the highest high that we see up here at the top of the uptrend back into the 1.4900s. We take Fibonacci from that high back down to the current low of the last downtrend. We also find that that 1.3830-level happens to be the .618 Fibonacci retracement level.
So, key resistance based on Fibonacci and historical support and resistance level. So, I wanted to start with that so we could see how important this green-shaded area is. The 1.3800 to 1.3830-level is for the EURUSD. If we can satisfy a break above 1.3800 and the last resistance high that we see here, it’s possible to see this continue to pressure higher all the way up into the 1.4000s or 1.4100-level, into this purple-shaded area, as it challenges into the next level of historical support and resistance here on the Weekly Chart.
Take that information now down to the Daily Chart and of course we could see the market coming up into that green-shaded area – the 1.3800-level. As long as we hold underneath there and we don’t break above that resistance level, there is possibility of finding resistance and reversal from this price level – 1.3800 – as we saw the last time we challenged here. So, watching for that. The closer we get to the green zone, watching for clues to reversal and potential for this to go back down. Temporarily or even long-term, we could look for a bounce back down from the 1.3800-level. The closer it gets to it becomes a lower risk, higher reward scenario for selling on the EURUSD.
Of course the other side of that is if it breaks above here. If it gets above 1.3800/1.3830 – that’s that green-shaded area and these last resistance highs. Getting above there, we’ll likely look for the continuation, as we pointed out, potentially all the way back up into the 1.4000s for the EURUSD. Now, taking that, let’s zoom it in here on the Daily Chart. And I’m also going to take Fibonacci from the last resistance high here. Just a couple of months ago into October, taking Fibonacci from that last resistance high into the 1.3830-level down to the most recent low that we’ve seen here, we also find the .886 fib sitting right here into the 1.3769-level. That’s the bottom or just underneath that green-shaded area that we could see there.
In fact, I could bring this green-shaded area down a little bit just to match closer towards that .886 fib. You could see sitting there just underneath that green-shaded area. So, as long as holds within or under that green zone and these last resistance highs, potential reversal to go back down. Right now we have higher highs and higher lows. That has not changed over the past several days. What we’ll need to look for, for clues to reversal, is a change in the trending pattern, which would be lower highs and lower lows, which we do not see yet. But we are reaching into a critical decision – a key decision – point here for the EURUSD.
Staying under the green zone, we potentially head back down. Breaking above it, we start moving back higher again. Taking this down to the 4-Hour Chart, of course no clues to reversal yet. No changes in the trend pattern. No lower highs and lower lows. We finally did see yesterday’s bank flow levels published and they sat just about exactly where we expected them to be. Just above the pink-shaded area from yesterday, above the 1.3735-level. Market has been holding basically within that zone highlighted with the bank flow levels from yesterday. If today’s levels come out in similar fashion or just underneath the green-shaded area, we’ll once again be expecting resistance underneath that green-shaded area. Possible reversal indicators.
We could take a trend line and put it along here, but I think that really explains the difference here. Right now we have higher highs and higher lows. If we’re going to see a change in the trending pattern, we’ll look for lower highs and lower lows. If you’re looking for a buy in the direction of the Forex Black Book green trend bar, looking for a new bullish or buy arrow with that indicator, I believe it’s going to have to come down first, before we could see that. If you take a look at our last several buy or bullish arrows, even the yellow ones, we had to see a dip down before it gave us a yellow arrow. Over here on the left, where you see the green arrow, it had to take a dip down. So it’s going to have to take a dip down before you get a buy or bullish signal with the Forex Black Book. And I expect it will need to break under the pink zone, fall back down to the yellow shaded area before we can even see a new signal with the Forex Black Book.
So, for the day today, let’s squeeze this in a little bit. And I’m going to bring those arrows in like we typically do. Underneath the green-shaded area, within or underneath it, potential resistance to go back down and reverse this trend that we’ve been in for quite some time now. Breaking above the green-shaded area, we look for the continuation higher, above the 1.3830-level to continue pressuring higher. Right now we have some support along this pink-shaded area, but getting back underneath the 1.3700-level, likely looking for the continuation lower. Staying above the pink-shaded area, we look for a challenge back higher in towards this green-shaded area.
Bank flow levels today likely coming out here into the green zone or just underneath the green-shaded area, going to imply some resistance and selling pressure here for the day today. If we see some bullish pressure breaking through the bank flow levels, likely looking for that challenge of the 1.3830-level. Your main focus today will be resistance into the green zone, support into the pink zone. A break underneath the pink zone will likely challenge the yellow zone. I think if I was looking to buy this, I’d want it to pull away from the 1.3800-level as far as possible. So, I would look to buy it closer down here towards the yellow-shaded area.
I’m actually going to zoom this out. Let’s go ahead and put this trend line here. Somewhere like this. We could take that trend line out a little bit further like this. All in all, if we’re going to challenge the trend line, that’s going to take a fall back again down here towards the yellow-shaded area and into the mid to low-1.3600s, down here towards this yellow-shaded area and red trend line where this arrow is down here. So, definitely some things to watch for here on the EURUSD. Support into the pink zone. Resistance into the green zone. I don’t think I’d want to buy it this close to the green-shaded area because of the historical resistance into here. But if it breaks above there, it gives us a potential buy for the EURUSD today.
