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 April 19, 2018. Today we’re going to take a look at the New Zealand Dollar versus the US Dollar [NZDUSD] for today’s trade analysis.
The first thing that we can recognize here from the daily timeframe is the trend pattern that we’ve seen for the past several months. We’re going back into November and December of 2017, last year, where we began the uptrend. The blue trend line on the left-hand side of the chart represents the uptrend that the currency pair was in. Pretty straight line trend as it moved from all the way down here near 0.6800 all the way to the top of the chart near the 0.7400-level.
Nice rising trend. Since then and really since January 11, where I have the vertical red line, we’ve seen more of a ranging pattern within the trend. I’ve highlighted it with the black box. I’ve highlighted it with multiple trend lines. You could see all these red trend lines. Falling, rising, and falling and rising here within that range.
And even the most recent trend line, the black trend line on the right-hand side, falling from there near the 0.7400-level and falling all the way back to the bottom of the range. Very interesting is the green-shaded area between 0.7185 and 0.7200 at the bottom of this long range, where multiple times now we’ve seen the market come down, attempt to break underneath that green zone, and suddenly reverse and go back up.
The reason why that’s so interesting is that’s where we are right now. We could see the market attempting that breakout underneath 0.7185, the bottom of that green zone. Something interesting about that green zone is taking Fibonacci from the lowest low, bottom left-hand corner of the chart, to the highest high on the chart puts the .382, 38 percent retracement level or Fibonacci level at 0.7186.
So, again, that is right there at the bottom of that green zone. So, if we break the .382 Fibonacci retracement level, the expectation is we see a continuation lower in the current direction, which is the black trend line and the falling trend. Something else interesting about this area is that we’re underneath the 100-period simple moving average for the first time in quite a long time. Since back in 2017, we haven’t been underneath the 100-period moving average.
So, we’re attempting to break the moving average. We’re attempting to break the significant support within the range that we’ve had for the past several months. So, we’re watching for the setup. If it can break through here, our expectation then increases that we’ll see the continuation lower, down towards the 0.7140, 0.7120-level, the yellow-shaded area.
Let’s zoom it in a couple of times here. And again, we could see that. If it can get through here, if it can get through there, 0.7185, we look for it to go down to the yellow zone, 0.7140. The risk there is once it gets through there is that it gets back above the green zone. So, we know what the risk is. If we decide to go short in the direction of the current trend, momentum, and breakout under the green zone, targeting the yellow zone or lower, the risk is it gets back above the green zone.
We want to be sure that this is a real breakout because really the last time the market attempted to get underneath this green zone right there, where the black circle is, it was a false breakout. We saw, at one point, that was a red, bearish candle. It pushed all the way down and then suddenly reversed and eventually turned back into an uptrend, pushing all the way back up towards the upper-0.7300s. So, we want to be careful we don’t fall prey to a false breakout.
We’re going to talk a little bit more about false breakouts and real breakouts in the live Trade Room later today, so please join us for that and we’ll discuss what we can discuss as a false or real breakout. But we don’t want that to happen to us. We don’t want to go short and this turns around and goes back in the other direction.
Four-hour timeframe. As we get down here to the four-hour timeframe, I’ll just zoom it back out a little bit like this. Let’s take this off. Make it a little bit more clear here. These two blue circles. And back to the black circle. Again, that was a false breakout there that we recognized on the daily timeframe. We just don’t want that to happen to us again, so again, we’ll be discussing that in the live Trade Room later today. Over here on the right-hand side. Again, we’re looking at the potential breakout underneath the green-shaded area.
We’ll be watching for the setup. If it does breakout, a little bit of a rally back into the green zone will provide low risk and higher reward, and then we target back down to the green zone or lower for the NZDUSD this week.
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.