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 June 11, 2018. Today we’re taking a look at the New Zealand Dollar versus the US Dollar [NZDUSD] for today’s trade analysis.
I’m starting all the way out here on the weekly timeframe to get a wide-angle view of this currency pair first before we go down to smaller timeframes. Looking at this currency pair on the weekly, I’m looking all the way back to May of 2016. Vertical red line. Left-hand side of the chart. What’s interesting: since May of 2016, there’s been this wide range. A long-term range that this currency pair has been in.
You could see it reflected on the chart by the black boxes. The long rectangles here. Bottom and top of the pattern that we’re seeing here on the chart. You could see the trend lines rising and falling between the top and bottom of the range for the past two years. So, quite a long period of time that we’ve been bouncing around in here. What’s very important about that is that we’re at the very bottom of that pattern.
So, as we’re at the very bottom of this long-term pattern, the question is will we see the continuation of the pattern, which means that we’d more likely be looking for it to bounce and go back up if this pattern continues. If there’s a break of this pattern, it would need to have a significant fall off. It would need to break through the bottom of the pattern if it was going to continue to go down.
I think for the time being, we can’t expect it to go down until we see evidence that that’s going to happen. So, at least at this point, I’m looking for the opportunity to go long on the NZDUSD because of the long-term two-year pattern that we’re seeing here for the NZDUSD. Let’s now take this down to the daily timeframe and you, again, see parts of that pattern. Again, we’re not seeing the whole thing, but now you could see the fall, the rise, congestion where the red trend lines are.
Then it fell down to the bottom of the long-term pattern and now here we are rising along the blue trend line on the right-hand side of the chart. So, with that, we have the potential to look for buys on breaks of resistance, dips into support, and the potential return of the long-term pattern. That’s what I’m going to continue to watch for.
Interesting. Our Forex Black Book has gone from red to green, which means that the bias, the momentum has shifted to the bull side. Along the blue trend line not too hard to see that. Let’s go ahead and zoom it in a couple of times here, staying on the daily. And again, look at this. We’ve seen the market rise. Break through the orange zone. Rise. Break through the blue zone. Now we’re looking at five days that we’ve seen the market now holding above 0.7000.
0.7010 to 0.7025 is the blue-shaded area. So, we’re holding above it and the potential is of course as we’ve noted that there’s this pattern for two years that if it continues to rise, we look for the break of the purple zone and a continuation higher within the overall long-term pattern. And really at least at this point, we don’t want it to get back underneath 0.7000. If it does, may have some pullback or turnaround to go back down.
Let’s go ahead and zoom it in one more time. So, here it is. There’s that blue zone. Take a look at all these days sitting above 0.7010, 0.7025. So, again, take a look at this. As it sits on top of this blue-shaded area, 0.7025, 0.7010, it doesn’t make much logical or common sense to go short or sell on top of this blue zone. It’s just not common sense because if you’d had done that for the past five days, you’d been unhappy because it hasn’t gone down. It’s not bouncing on top of that blue-shaded area.
So, the most common sense or logical scenario is to buy above the blue-shaded area and not sell or go short. The only reason you would sell or go short really is that it would break through this barrier, 0.7010, to go lower and it obviously hasn’t done that. So, logically, lower risk, higher reward tells us that we’d more likely buy above 0.7025. Our first target of course would be the purple zone because we already know that there’s resistance there at 0.7055.
It needs to break above the blue zone if it’s going to continue the pattern of the trend back towards the yellow zone or higher. So, at least at this point, we’re buying above the blue zone. Targeting the purple zone or higher. No reason to go short unless this barrier of support, the blue-shaded area, is broken. Target the orange zone. Below the orange zone, I think we look for the return of a more longer-term bearish trend for the NZDUSD.
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.