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 October 10, 2017. Today we’re going to be taking a look at the Australian versus the US Dollar [AUDUSD] for today’s trade analysis.
There’s two trends that we’re talking about here on the daily timeframe. First is of course the blue trend line, where the market was significantly rising from all the way down here into the 0.7300-level to the top of the chart into the 0.8100-level. Pretty long uptrend there for the AUDUSD.
In the recent weeks though, we’ve seen a little bit of a change of that pattern as the market found resistance and started falling back down along the black trend line. Some significant things about the past couple of days, and I’m going to go ahead and zoom it in here, is that we have broken underneath what was support. You could see the green circle over here on the left-hand side, 0.7825, 0.7800. That’s the yellow-shaded area. You might call it 0.7830. That’s the yellow-shaded area.
Historical support over here. And even if I take this black circle and widen it out a bit and put it right here, you could see there was some resistance on the way up. So, resistance on the way up. Support here. Even support on the way back down under the black trend line. It came back down for five days. Found support on top of that 0.7830, 0.7800-level before finally breaking through over the past three days.
Something else interesting about this area is the 100-period simple moving average coming up just underneath the 0.7800-level, giving us another reason to expect some resistance into this, or just underneath 0.7800 and into this level. Fibonacci coming from the lowest low on the chart, bottom left-hand side of the chart, to the highest high also puts the .382 Fibonacci retracement level right at 0.7820, which happens to be right in the middle of that yellow zone. So, we have kind of a perfect storm gathering here.
We have historical support and resistance highlighted by the yellow zone. We have the downtrend highlighted by the black trend line. We have the 100-period moving average and we’re holding underneath it. And we have the Fibonacci level, .382, sitting inside the yellow zone. So, what that tells me is I’m more likely to look for resistance here at the yellow zone than I am for it to break through it and go higher.
And that’s what really each of these colored, shaded area represents for us, is a point of decision, where we have this expectation that it’s either going to find resistance and continue to go down in the direction of our trend, or if that changes, the market changes, it breaks above it and we look for a significant reversal for this to go back up. So, the yellow zone is very interesting for the day today.
Obviously the green zone, 0.7745, 0.7725, is holding as support for the past three days. If you’ve been looking for support, that’s it right there. That happens to be at the 50 percent of that same previous trend range. One more clue here is the Forex Black Book is red, and that gives us a bearish bias. As it was going up, for the most part it was green. Some hesitation here caused it to turn red again. Then it moved up again. Turned green. And now under the black trend line and the falling trend, it is red, giving us a bearish bias to our trading focus.
Let’s take it on down to the four-hour timeframe. Now, often in the live Tade Room we talk about opportunities for lower risk and higher reward. Lower risk means often what we’re looking to do is sell into resistance because that gives us a lower risk and higher potential reward. What’s the risk in this scenario? The risk is what we already talked about, is that it breaks above the yellow zone and goes higher again.
So, our stop losses, if we decide to go short into the yellow zone, are going to be just above it. That way, we have lower risk and our potential reward. Of course our first target is the green-shaded area. Anything beyond there becomes further profit if it breaks through the green zone. But that’s the risk. The risk is a break back above the yellow zone. The first potential target is the green zone if we decide to go short into the resistance, which I believe there’s reasonable expectation for resistance there. And the only risk here is that it breaks back above the 0.7830-level and starts moving higher for the AUDUSD today.
From 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.