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I’m going to begin the day today on the Euro versus the US Dollar [EURUSD]. I’m going to start here on the Daily Chart. Get a historical view for this currency pair. We go back to the left-hand side of the chart. We could see, going all the way back down here to July of 2013, so about a year ago we began an uptrend, starting all the way down here into the 1.2700s at the bottom left-hand side of the chart, taking a rise all the way up into the 1.3900s, approaching the 1.4000-level. So, we had a pretty long-term uptrend on the left-hand side of the chart.
Throughout most of the life of that trend, of course we see it above the trend line, but we also see that the currency pair for quite some time was above the 100-day or 100-period simple moving average that we have put on this chart, and that’s the green line that we see here. And you could see a couple of times coming down, support, support, challenged it here, got a little bit underneath it, got right back above, and then came back down. Support one more time before making the high.
Well, in the most recent days, we have been studying in the Trade Room the fact that we are underneath now that 100-day moving average. Several weeks ago we broke underneath it. We actually broke underneath the 100-day moving average and the trend line all at the same time. And since then, we’ve just been kind of hovering around, down underneath that 100-day moving average. So, we haven’t seen a real continuation of the downtrend, but we also have not seen a reversal for it to go back above the moving average yet again, so we’ve just been kind of hovering around just underneath here.
So, what I think we’re looking for is the market to become trending. Either to turn around and go back up in the direction of the previous trend and break back above that moving average, or turn down in the direction of the breakout and we look for a continuation and a change of the trend, and we look for it to go back down. And we haven’t seen that breakout yet, and I think we’re now establishing those breaking points. The blue-shaded area here above the current market is our resistance. That would be the break point. If it gets above that last high, we see a continuation of the uptrend. If it gets below the current support low, which I believe is this pink-shaded area; if gets underneath that low, we look for a continuation of the downtrend. So, we’re now establishing those breakout points or those pivots that you might want to consider them. If it gets above the resistance, we make a new high. If it gets below the support, we make a new low.
Right now, today, we’re right smack in the middle. We’re right into this orange-shaded area, between the blue and the pink-shaded area, so really it could go either way today and really this week I think it wouldn’t be too difficult to see it go even back to the blue zone, challenge resistance, or finally breakout underneath the 1.3585-level and continue to pressure back down towards the pink zone in the direction of the current breakout that we’ve just discussed with the moving average.
So, definitely an area to watch for would be this orange-shaded area today. Let’s go ahead and zoom it in here a little bit on the Daily Chart. I’m going to zoom it in and let’s put a couple of arrows here. So, above the orange zone, above 1.3620 we’ll call it. 1.3620, we challenge back to the blue-shaded area. That becomes our intraday resistance and, as I just mentioned, if it ever can get back above there, we may be looking for a return of the uptrend. The other side of this of course is a breakout underneath the orange-shaded area. 1.3585, we look for a continuation as the market pushes back down towards the support down here at the pink-shaded area. And of course at any point, if we see a break of that support and a break of that pink-shaded area, we’ll look for a continuation lower.
So, those are some of our major areas that we’ll want to pay attention to. I’ve also thrown some Fibonacci here on the chart. The previous long-term uptrend. The current downtrend from the highest high to the current low that we see here on the chart. Taking Fibonacci and those two areas, we see the .236 fib of the current downtrend, this previous downtrend right here, sitting at 1.3622. That’s right at the top of the orange zone. We also have an overlap of fibs of the previous up and downtrend sitting at the top of the blue zone, and of course we could see down here into the pink-shaded area, just underneath the current market. If i I move this black line out of the way, you could see the .382 Fibonacci retracement level, that dashed line right at the top of the pink-shaded area, is the .382 of the previous uptrend. That’s where the current market is finding support. So, a break under that .382, we definitely would look for a continuation lower.
Now 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 can of course see the current support that we’re seeing right there into that orange-shaded area. Let me zoom it in a little bit. You could see that orange-shaded area. We could begin to devise a more intraday plan here for the EURUSD on the 4-Hour Chart. We know that the shaded areas are critical decision points and a long-term outlook or a long-term view. I might even bring this line down just a little bit. Let’s put it closer towards here. 1.3585 or 1.3583 I should say. A breakout underneath there, we’ll look for it to go lower. Staying within here, of course we could be looking for some intraday ranging. Wouldn’t be difficult to see it stay inside this orange-shaded area today until we get some real catalyst, some market mover, like news, to break it out of this area.
One last place I’ll put a Fibonacci is our current low, and I’m going to go from this low right here, right at the second low you see. The middle low, I guess, you would call it, between these two lows here. This middle low to the current resistance high with Fibonacci, and let’s make sure it’s connected exactly to that low there. In doing that, very interesting. In doing that, from this low right here inside the middle of the pink zone to the current resistance high. The .618 Fibonacci retracement level is at 1.3582, so clearly that is your current support. 1.3582. A breakout underneath there, under the orange zone, we begin the fall back down to the pink zone.
So, how do you play through here? If you’re looking for a buy, we obviously have a green trend bar with the Forex Black Book. If you’re looking for a buy, you’re probably at your very best opportunity today. Intraday-wise, you’re probably looking right here into the 1.3580-level. You’re looking at the .618 fib. You’re looking at the support here. And if you’re considering a buy, right here is probably your best opportunity to do that. The only other opportunity I could see today to buy it would be a breakout above the orange-shaded area. So, you’re at the bottom of the orange zone or above the orange zone, if you’re looking to buy today.
For those on the other side of the market that are saying, “Well, I think the downtrend is really the direction to focus on. We’ve seen the break of the moving average,” then I think there’s two reasons to sell this. We’re either looking for a rally to the top of that orange-shaded area, where we see some Fibonacci overlap there into the top of the orange-shaded area, closer to the 1.3620-level, or a breakout under the orange-shaded area. So, this orange-shaded area will be your two opportunities. For the buyers, the bottom or a breakout of the top. For the sellers, the top of resistance or breakout underneath the bottom of the orange zone becomes your direction to focus on today.
Forex Black Book trend bar is green, but it has turned dark green, so that’s interesting. We see a disagreement between the longer-term and the shorter-term trends today. Definitely something to consider there. A new green arrow of course would tell you that momentum is shifting to go back up for the EURUSD today.
