Transcript of Video
From Forex Traders Daily, this is your daily analysis with Ross Mullins, live from Richmond, Virginia.
Hello everyone, this is today’s video analysis for May 11, 2018. Today we’re taking a look at the Euro versus the US Dollar [EURUSD] for today’s trade analysis.
Starting here on the daily timeframe, I want to go all the way back to the left-hand side of the chart, where we see these circles on the left-hand side. The black circles, first off, are very important for us because it shows historically we have seen resistance into this orange-shaded area. The orange zone, 1.1920, 1.1950. That’s historically had resistance when it was underneath that orange-shaded area.
Then it got above it and then used that same area, green circle, as support. So, what I’m trying to highlight here is specifically that the orange-shaded area at 1.1920 and 1.1950 has been a historical trading decision point, where the market, the buyers and sellers in the market have exchanged hands. Sometimes the sellers taking control over from the buyers, causing resistance and it going down. Sometimes the buyers taking control from the sellers and causing support and the market going up.
So, we know that this has been a historical decision zone in the market. And then we look to the right-hand side and we could see for the past week or so same thing. It’s been a decision zone. Right there, where that little blue box is, let me zoom in one time. The little blue box here above the orange zone. Three days. Fourth day pressuring through it. So, again, showing that same area as a historical support now becoming a resistance again.
You could see that area now the past two days. Yesterday and now today finding resistance here. So, we know that this orange zone – this is what I’m trying to highlight – is a decision zone for the market. It’s an exchange zone. It’s a battle zone, if you will, where the players are exchanging control of this area. And depending on who wins the battle, depends on which direction it goes.
If the sellers who have been in more control of this currency pair for the past several weeks as it’s been a downtrend take back control, then we look for it to find resistance and go down from 1.1920, 1.1950, and that would be in the direction of the trend. But if the buyers take back control and it pushes through this front line of the battle zone, this resistance area, then we look for it to go back higher. Potentially to the yellow or higher zones from there.
So, we know that this is the area that is happening right now and we want to look for opportunities, setups, price action around this area that implies one of those two things. Breakout above it to go higher or bounce off it to go back lower again. So, let’s go ahead and take it down to the four-hour timeframe. And as we get down here, we could see that battle raging on here for the EURUSD.
It hasn’t been really significant for the past eight, 12 hours, but look back here, where we saw the market fall and then come back up and close out and a small candle body. Then it’s just been settled out here and now we see another challenge of this area. So, for the trade opportunity today, we’re really looking for one of two things. And I’m just going to draw out some implied candles here just to give us an idea of what we’re looking for.
And let me take this. I’m just going to make it blue just to imply a bullish move, but we’d look for the market to get above here. If it can get above this orange zone, which it hasn’t done yet successfully, but if it can, we’ll look for it to go up to the next zone higher, which is the yellow zone or even higher from there. If it can’t do that, if we don’t ever see the market successfully push through and get above the orange zone, we would look for just the opposite.
Some pressure. Some indication of sellers being available for pressure and infusing into the market. We’d look for a bearish engulfing candle. A small body with a long wick on top, implying sellers diving into this. So, if the current candle were to suddenly go back lower again underneath 1.1920, we might have a higher expectation that the market is going to go back down here to the purple zone or lower in the direction of the trend.
So, I would always lean towards the direction of the trend. That would give me the most confidence. So, we’re looking for one of these two setups. A break above the orange zone or sudden infusion of sellers back down towards the purple zone, leaning a little bit more towards that direction because of the direction of the trend. One last thing I want to point out. We’ve been studying this in the live Trade Room. The dollar index slipping now into support.
Yesterday it came close to this 0.9235-level and just bounced right back off of it. So, here we are again today. So, if the dollar finds some support and starts to rally again as it has been for several weeks, that will imply that this EUR will go back down. Now, of course the other side of that. If the USD breaks this support and goes lower, then we could be looking for some reversal further higher for the EURUSD, so that’s when we’ll look for that push above the orange zone for the EURUSD today.
Forex Traders Daily, this has been your daily analysis with Ross. If you would like to get Ross’ analysis on all the currency pairs he’s watching and all the trades he takes today, join him in his live Trade Room by clicking on the link below. Please leave any comments you have about today’s video in the comment section below.