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 15, 2018. Today we’re taking a look at the New Zealand Dollar versus the US Dollar [NZDUSD] for today’s trade analysis.
First things first, of course we are in a downtrend. You could see the black trend line. Far right-hand side of the chart. Right edge of the price action. The downtrend. It’s been in place for quite a while now. Several days. A couple of weeks as it’s been pressuring lower, all the way down here towards the 0.6900-level. The yellow-shaded area, down towards the bottom of the chart.
Now, we’ve been in this area before. Look at the bottom of the blue trend line. The black box down here at the bottom of the chart. We’ve been under the orange zone, finding congestion, support, resistance at the yellow zone, the green zone, the blue zone. So, the black box is the area that we’re in, so we’re taking clues from that area to what we might watch for over on the right-hand side.
We’ve seen resistance at the orange zone, so we would now expect resistance again underneath it if the market takes a rally back towards it. We’ve seen support. Look at this blue circle inside the black box, where we saw support at the yellow-shaded area. So, it’s not too hard to see today we are also finding support into the yellow-shaded area. You look back over here. Once it got under the yellow-shaded area, the market had this tendency to go to the green zone.
You could see that here in the black circle inside the black box. We know that the green zone becomes our next area of support. And of course under the green zone, we tested the blue-shaded area all the way at the very bottom of the chart all the way into the 0.6800-level. So, first things first. If we’re going to look for a continuation of the trend, we want to sell resistance, which right now is at the orange zone and quite a far way away, or a break of support, which is the yellow-shaded area that we’re close to right now.
0.6890, 0.6905 is what I have the yellow-shaded area set at. Again, look at the top of the black circle. The bottom of the blue circle. That shows historical price action around that area. Zoom it in a little bit here, so we could see this a little bit better. So, we came down. We touched the yellow zone. Bounced up, implying potential reversal with a hammer candlestick. That did not shape up and now we see the market challenging once again the yellow-shaded area.
So, what we’re looking for is one of two things. Evidence of reversal, which of course at least at this point we don’t have. It hasn’t pushed higher. It hasn’t broken the black trend line. It hasn’t created higher highs and higher lows. So, we don’t have evidence of reversal, so the next thing we would look for would be evidence of the breakout. Since we don’t have reversal, we look for the breakout.
There’s only two things that are going to happen at each of these colored, shaded areas. One of those two things. Breakout or reversal. So, we’re watching for one of those two things to happen from this yellow zone, 0.6890, 0.6905. So, what’s it going to take? We need it to get underneath this yellow-shaded area.
Let’s go ahead and take it on down to the four-hour timeframe. And as we get down here to the four-hour timeframe, it begins to give us a little bit more detail. We see that the market has been challenging the past 8 to 12 hours into this yellow-shaded area. So far unsuccessful in breaking through it. So, again, there’s really only these two things that we’re watching for. If the USD continues to improve and go higher, then we look for the breakout underneath 0.6890 and the continuation lower.
So, we need it to get underneath here. The market needs to break out underneath the yellow zone before we’ll have confidence it’s going to continue down to the next area of support, which obviously is the green zone. We also would look for some evidence of reversal from this yellow zone. So, that could be a possibility. We don’t really have anything right now that implies that reversal.
We do have the market slowing down here, but I don’t think we can assume reversal at least at this current point. But if we do start to get it, higher highs, higher lows. We could be looking for it to go higher. So, reversal or breakout from the yellow zone in the direction of the trend, I’m looking for the breakout under the yellow zone, 0.6890, 0.6905. Then we look for the targets back down into the mid to low-0.6800s for the NZDUSD today.
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