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 December 7, 2017. Today we’re going to take a look at the Euro versus the US Dollar [EURUSD] for today’s trade analysis.
We’re starting here on the daily timeframe. A couple of trends that we want to look at. Of course we have the previous uptrend, the blue trend line on the left-hand side of the chart. In the middle of the chart, we had the bearish trend. The red trend line that falls from the highest high, down to our most recent low. And we even have another trend here that we could be looking at, and that’s this little rising trend right here.
Let me make that line black so it differentiates between the trend. So, we had the blue trend line. The red trend line. The black trend line. Well, recently we have seen the market pushing in the other direction. It was rising along the black trend line and now we see it falling again, now underneath that black trend line. The question of course is: are we seeing a change of the trend again, where we’ve seen it several times?
Of course we have significant news coming up over the next several days, week or so with interest rate news out of the US. Non-farm payrolls coming up tomorrow. So, all of that could change here for this currency pair, but at least right now what we see is the market breaking the black trend line, pushing through what was support, which is the green zone, and pushing through the 100-period moving average.
Before I zoom in a little bit, I want to show you history here around this green and blue-shaded area. The green zone specifically is 1.1795, 1.1820. Follow that back in time and I’ve put these three black boxes on the chart so we can see what the facts are, what is statistic here for the EURUSD. Under the green zone, we see it fall to the blue zone. You could see it here at the first little black box. You could see it here, falling from the green zone to the blue zone. And even way back here, you could see resistance at the green zone, support at the blue zone.
So, statistically, what this tells us is that as long as it’s under – we’ll average it out at 1.1800, but underneath 1.1795, the green zone, we have this expectation that it’s going to go down to the blue-shaded area, so that becomes our opportunity. Our expectation. What we’ll look to trade if it can stay underneath that green-shaded area.
Let’s zoom it in now a little bit. Now that we’ve seen this history of the green and the blue-shaded area, let’s zoom it in a little bit and you could see the market today pressuring underneath there. Now, we haven’t really seen it stay underneath there yet. Yesterday it challenged underneath 1.1795 and then got right back above it. So, today is really the first opportunity that the market is potentially going to stay underneath the green-shaded area. Again, that green 100-period simple moving average sitting there as well gives us a clue to what we might be looking for.
Something else interesting here on the chart is Fibonacci, and I’m going to take this other one off. Let’s take that one off. So, the only Fibonacci that we have on the chart is the low of the black trend line to the high. So, low to high of that black trend, we find the .382 at 1.1805. Well, today is the first day to open underneath that .382 Fibonacci retracement level. 50 percent sits down here, 1.1757, and the .618 sits all the way down here at 1.1709 inside, again, the blue-shaded area.
So, what this tells us is that our expectation for the day is if it stays under the green zone, breaks the green zone, stays under the green zone, then we have this high statistical probability that it could go down here to the blue-shaded area, 1.1730 or lower. So, we look for an opportunity. We look for setups that give us low risk and high reward.
Well, if you look at the bottom of the chart, I’ve been holding a trade from 1.1860, which happens to be up here at the purple-shaded area. I’m protecting profit on that trade. But I think if you’re not in that trade, the real scenario today is the break of the green zone and opportunity to go short towards the blue zone. There’s no real reason under the 100-period moving average, under the green zone to go long right now. There’s absolutely zero reason to go long. Most of the expectation today should be that you’re looking to go short.
The risk in that scenario of course is that it breaks that green zone and goes higher. So, easily your stop losses go above the green-shaded area. That way, if it does break back above it, you have minimized the impact to your trading account. So, how do you make that stop loss smaller? Allow the market to bounce its head back into the 1.1790s toward 1.1800. That way it gives smaller risk. Your profit potential becomes larger.
Let’s take it down to the four-hour timeframe. It doesn’t change any of that. It just gives us a little bit of a different viewpoint. Again, I think your risk-reward becomes better if you allow the market to touch the green zone again before going short, targeting the blue-shaded area, which we’ve already determined becomes our next support target. All you have to do is look back here to the left. That’s what the market did. Got underneath it. Hit it as resistance. Went down to the blue-shaded area.
So, that’s what we’ll be looking for today. Selling resistance, the green zone, targeting the blue zone for the EURUSD 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.