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 November 30, 2017. Today we’re going to be taking a look at the Euro versus the US Dollar [EURUSD] for today’s trade analysis.
We’re going to start here on the daily timeframe. Two different trends we want to take a look at. First off, the red trend line, which was a downtrend from the highest high on the chart, down to the low here into the mid-1.1500s, bottom of the black trend line. So, we had that downtrend. Then, since reaching that low, we’ve been seeing an uptrend. The market has been moving higher along the black trend line.
One time, midpart of that trend, we saw the market pull back to the blue-shaded area. Push through the 100-period moving average and then found support and started moving higher again. I point that out because we have a very similar situation happening now, where the market has now pulled back into support near the black trend line and the potential is that it turns back higher, breaks resistance, and continues the upside.
Of course there is always the risk that the market doesn’t do that. It breaks the black trend line, the 100-period moving average, and begins going lower. So, with that, we know that this green zone right around the black trend line, 1.1820, 1.1795, becomes our area that we want to study for a possible trade opportunity.
Zoom it in a little bit. Again, I took Fibonacci from the highest high of the red trend line, down to the lowest low on the chart, and Fibonacci from the lowest low, up to our most recent high. Doing that, we find some Fibonacci overlapping inside the purple-shaded area, where we’re currently finding resistance for the past two days. We also find Fibonacci sitting at the green zone, where we have currently found support for the past two days.
So, we know that the purple zone, green zone – main areas of resistance and support since yesterday and today and we want to study these areas as potential trade opportunities. Now, if we’re going to trade the direction of the trend, the direction above the 100-period moving average, the Forex Black Book by the way is green as well. If we’re going to trade that direction, obviously the best place to do that is closer to the Fibonacci level, the green-shaded area and the black trend line, 1.1820, 1.1795.
The risk in that scenario is that it breaks underneath, changes the trend back to a downtrend, and starts going back down towards the blue-shaded area as our next target. So, at least at this point, if you’re going to buy, the best place to do that would be a dip to the green-shaded area, targeting the purple zone. And then of course you’re going to cheer on those buyers to break through the purple zone, 1.1885, and you’ll look for it to target at minimum the orange zone, but could even be on an aggressive move back up here to the yellow zone.
So, again, if you’re a buyer, the green zone becomes your area to look at. If it doesn’t go back to the green zone, we could be looking for the market to break through. Puncture through the purple zone again and start moving up again. Again, the entire risk in that scenario is that it breaks under the green zone and goes lower. So, the closer you can buy to the green zone, 1.1820, 1.1795, the closer it can get to that green zone to buy it becomes lower risk. The potential profit target becomes higher.
Right now your profit target, well, at least the current resistance, the purple-shaded area is very close and it’s not good risk reward. Now, on the other side, if you think hey, maybe this little uptrend is over and you’re thinking about going short, purple-shaded area, 1.1860, 1.1885 becomes resistance for the day today and then, again, you’re going to look for the breakdown of the green zone and go lower.
I think I’m leaning towards the buy side today just simply because of the direction of the most recent trend. Four-hour timeframe gives us a little bit of a different vantage point. Yesterday, during the Trade Room, I circled those two areas where the market went up, pulled back to the blue zone. Broke out, went up, pulled back to the green zone. So, again, we know that the green zone is your main area of focus if you’re looking for the buy scenario. And again, if it doesn’t do that, we could be looking for the breakout above 1.1885 as the buy scenario.
Again, look down here at the blue zone. You could see the market bouncing there for several hours. A couple of days, bouncing on top of that 1.1735-level, eventually turning back higher. So, we’ve just been here for a day or so, so I think, again, it could take a day or two or even three before we find enough support and rally for the EURUSD for it to break through that purple-shaded area. Again, it doesn’t have to. Your risk, stop loss likely just underneath the green zone in case the market changes the direction of the trend.
So, I’m looking for another dip, another push down to the green zone. Minimize my risk. Maximize my potential gain. If it doesn’t do that, the breakout above the purple zone.