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 14, 2018. Today we’re taking a look at the US Dollar versus the Swiss Franc [USDCHF] for today’s trade analysis.
Now, of course we have been in an uptrend for quite some time here for this currency pair. Going all the way back to February, we started down here at the bottom of the blue and the green trend line. Starting rising. We saw this significant pattern. We studied this quite a bit in the Trade Room. Pullbacks. Rises. Pullbacks. Rises. You could see all these short black trend lines, where it did that.
Finally broke through the 100-period moving average and stayed above the green line and the pink-shaded area and a significant leg of the uptrend along this black trend line as it continued to rise all the way up just above the parity level, 1.0000. Now, over the past week and a half or so, we’ve gone into a period of congestion or ranging up here at the top of the chart, where the market is trying to figure out.
Are we going to continue this uptrend? Is the USD going to continue to rally or is it time for a little bit of pullback or retracement? If you look back to the left-hand side, let’s study these black boxes for a moment. The black box on the left-hand side of course was a significant reversal point. The market came up. Found resistance around the parity level. Just above. Just below. And eventually started turning into a downtrend, the blue trend line.
But we saw this breakdown of the pink zone at the bottom of that black box. These black circles along the blue trend line, where it started creating lower highs and lower lows, changing essentially what was the rising trend pattern, turning into a falling trend pattern. And I’m talking about what’s happening up here, top left-hand corner of the chart. I mention that because we’re at a very similar area and situation over here on the right-hand side.
I have the black box, top of the black trend line on the right-hand side. We touched the yellow-shaded area into the 1.0050-level a couple of days ago. Actually, for four days in a row, we challenged into the mid-1.0000s. And then it’s turned back around the last three days, challenging 0.9970, the bottom of the pink-shaded area, again, which is the same pink-shaded area as the left-hand side of the chart.
So, let’s go ahead and zoom it in on this now a little bit and see what’s going on. So, we saw it challenge the yellow zone. Had some congestion around the green zone. The red line by the way is parity, 1.0000. We’re just underneath that right now, but the pink zone is very interesting. 0.9970 to 0.9985 is that zone. You see some congestion and resistance around it back here.
So, for the day today, if we’re watching for further reversal of the trend or further pullback of the trend, I believe it’s going to need to get under that pink-shaded area for us to have confidence in that. As long as it stays above that pink-shaded area, then we still have potential to continue the trend. Of course we’ll be watching the USD for strength or weakness this week. Does it continue to pullback? Does it return the rising trend? We just don’t know yet.
But this will be a clue to that around this pink-shaded area. Breaks it. Goes lower. Holds it. May attempt to go back higher towards the yellow zone. I don’t think we’ve seen a significant change at least here for the USDCHF in the direction of the trend.
Let’s take it down to the four-hour timeframe. And as we get down here, here’s that same pink zone. So, this is really why I am studying it. Look at the support we’ve seen over the past couple of days around the pink zone. Look at the congestion and resistance. The left side of the black box. Left side of the chart. Resistance underneath 0.9970. Support on top of 0.9970. All that happening back here on the left-hand side of the chart.
So, we know with some confidence this is a significant decision point for the USDCHF. Above it, we have a higher expectation of a continuation of the trend. Below it, we look for further pullback. So, what we’re looking for: evidence of buying pressure. We need to see sudden rallies. We need to see blue candles or bullish candles here for the USDCHF around this 0.9970, 0.9985-level.
The other side of that of course is if it’s able to get under the 0.9970-level. That will increase our confidence, increase our expectation of a continuation lower. So, we’re watching for either candlestick formations that imply reversal to go back up or continuation of the longer-term trend, or a breakout under the pink zone continues the downside for the USDCHF 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.