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 October 12, 2017. Today we’re going to be taking a look at the Euro versus the US Dollar [EURUSD] for today’s trade analysis.
A couple of things here on the daily timeframe before we zoom it in. First off is the black trend line. Previous uptrend. Not too hard to see the pattern within that trend. The congestion zones highlighted by the blue boxes. Congestion. Breakout. Congestion. Breakout. All the way up until the black box at the very top.
At the black box, we saw a change in that pattern, where instead of breaking out to the topside and continuing the uptrend, we saw the break to the bottom side and a reversal of that trend pattern. So, it broke under the black trend line, under the black box, and maybe more specifically at this point, we’re looking at the orange-shaded area at the bottom of the black box, where it broke the trend line and the black box all at the same time. Right around or just underneath 1.1900. 1.1890, 1.1860 is that orange-shaded area that we want to study up here at the top of the chart.
Let’s go ahead and zoom it in a little bit. And if I’m going to really highlight this, I want to put a circle back here on the left. I’m going to take this circle and put it right here. So, we see resistance. Big blue circle on the left-hand side. Resistance telling us that this was a major decision point. The market was coming up significantly and then found resistance and bounced back down pretty good. Let’s see. It bounced back off of the orange zone about 180 pips from top of the orange zone, bottom of the blue zone. That’s about 180 pips.
So, we look further in time. It finally starts making a move back higher, breaks through it, and then we begin finding support along that same orange-shaded area. We find support here. We find support here, where these blue circles are. We even find support here before it makes the major breakout. So, all these blue circles representing periods where the market made a significant decision zone between 1.1860 and 1.1890. The farthest left was resistance and then it became support, support, support. Finally, the breakdown.
So, what we would say about it today is that there’s very likely to be a significant decision zone here again because it’s done it many times before. The market typically repeats itself over and over and over, and so what we’re looking at is a significant decision zone. In this case, as resistance since it’s underneath that orange-shaded area.
A couple of other things here. I’ve taken Fibonacci. Top of the red trend line or the highest high on the chart, down to our most recent low, and I’ll put a little black X there to say right to that low right there. So, top to that low puts the 50 percent or halfway retracement point right smack in the middle of that orange-shaded area. So, that’s something else that gives us some confidence of resistance there, is that halfway point between the top and the bottom.
Third, we look at the trend line, the red trend line. Of course it broke the black trend line back here, but we look at the red trend line, capping out resistance high here and here, and now we see it settling out just underneath that orange-shaded area, the 50 percent retracement level, and now the red trend line. So, all of this tells us that this orange-shaded area likely to be a significant barrier that’s going to cause the market a difficult time to keep going higher. If it wanted to keep going higher, if the buyers were going to stay in control, this is going to be a difficult place for it to do it unless we get some specific or significant catalyst, some news, that’s very negative for the USD or positive for the EUR. Then we look for it to break through this barrier.
Of course if it breaks through the barrier, we already have ideas. We don’t want to stay in a short or we would maybe look to go long if it gets through that barrier because we know it’s going to the next resistance. It happens to be that purple-shaded area. I’ll get that pulled over later in the Trade Room, but all the way back up here at 1.1945, 1.1975 would be the area to look for.
Now, if it does bounce down, of course we do have a barrier here just underneath it, the green-shaded area. But a breakdown through the green zone, we’d look for the blue zone. Of course that blue zone becomes a significant target just like it was over here on the left-hand side. And of course if it breaks there, we’d look for a significant push lower. Now, I do want to mention another technical indicator.
A technical pattern here that we’re recognizing that we started talking about yesterday in the live Trade Room, and that is a potential head and shoulders pattern at the top of the black trend line. The blue box and the resistance high inside the blue box would be the left shoulder. The black box and the resistance high at the top of the chart would be the head. Now we’re looking for the formation or the creation of the right shoulder. So, we’re looking at this as a potential head and shoulders pattern.
Left shoulder. Head. Right shoulder. Of course the break of the blue zone, maybe even the yellow zone and the 100-period moving average. Breaking the neck level of the head and shoulders pattern could see a significant push lower. Forex Black Book is in our favor as well, so we’re looking for that to be a potential reversal zone.
Let’s take it down to the four-hour timeframe. Doesn’t really change it. Just shows us the market is already hesitating here a little bit into this orange-shaded area, so that’s definitely giving us some pause to think maybe this becomes an opportunity for us to go short. Now, I’ve already taken the short at 1.1860. Anywhere inside the orange zone, and even up as high as the 1.1880-level I think would be an appropriate area to get into the short, but I’ve already taken in at the bottom of the orange zone, looking for targets back down to the green zone or much lower down to the blue zone for the EURUSD over the next few days.
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.