Want FULL ACCESS To
ROSS’ DAILY TRADE ROOM?
Simply Click The Get Started Button Right Now!
Transcript of Video
Click Here to receive an email alert when Ross posts a new daily video
I’m going to begin the day today on the New Zealand Dollar versus the US Dollar [NZDUSD]. Starting here, first off, on the Daily Chart, I want to establish a range that this currency pair has been in since late October. I’m going to go ahead and get the highlighted shape, the rectangle, and highlight this area between the green-shaded area and the yellow-shaded area. So you this orange box now that pops up between the green-shaded area up into the upper-0.8300s. 0.8370 to 0.8400. That’s the green zone at the top of the orange box.
The yellow-shaded area at the very bottom of that orange-shaded box is 0.8158 down to 0.8111. So, we can highlight this as a range. And this range has been in place, going all the way back to October 25. That’s the vertical, dashed line you see over here in the middle of the chart, left-hand side of that orange box. So, we’ve been bouncing around in this range for quite some time. A couple of months now for the NZDUSD.
So, your best opportunities. If you’re looking for low risk opportunities and high potential reward opportunities within a range, of course you would prefer to sell towards the top and target the bottom or buy at the bottom and target the top. Well, over the past few days, we’ve been kind of stuck in a contracting area right in the middle of this wider range. Of course we see the wider range there, top and bottom of the orange box, but we’ve been contracting within that range where the highs have been getting lower and our lows have been staying fair steady.
And I’ve highlighted this with these two blue trend lines. You could see the bearish blue trend line coming down, representing the highs. Most recent highs over the past couple of weeks. And the lows staying very steady right here into the low 0.8200, right around 0.8225. And we’ll highlight that as we get down to the 4-Hour Chart with a different color, but we could see the contraction, the lower highs, steady lows. We don’t see higher highs and higher lows that we would expect in an uptrend or lower highs and lower lows that we would expect in a downtrend. We see some contraction, where the lows and highs are getting closer and closer together within somewhat of a descending triangle pattern, but all of that remains within that wider daily range between the green and the yellow-shaded area that’s been happening since October 25.
Of course our preference here is to trade within that range, but eventually we’ll look for a trending move outside of that range. A trending move would take it above the green-shaded area and above the top of the range to go back up in the direction of an uptrend or, as reversal, we would look for a breakout underneath the yellow-shaded area and a turn down in the direction of a downtrend. And eventually it will break out of this box, but for the time being we’ll watch for opportunities within the overall range that we could see here for the NZDUSD.
Now let’s go ahead and take this information down to the 4-Hour Chart. Now I’m going to take that orange box off, because I don’t think we need it here. We can understand where that larger daily range is. But as we get down here, you can see of course the yellow-shaded area at the bottom that I discussed as a potential breakout to go in a downtrend. The green-shaded area at the top, as I discussed, as a potential breakout in the direction of an uptrend. And there’s that contraction. That consolidation or contraction as the highs have been getting lower along the blue trend line here. The lows have stayed fairly steady over the past couple of weeks.
We could see three times challenging here into the pink-shaded area as support. Fairly horizontal support and diagonal highs getting lower, contracting within a descending triangle. The expectation is potentially that the sellers do retain control. The sellers have dominated this currency pair over the past few weeks because the rallies have been very muted and getting smaller and smaller and smaller as we see within here. So, the expectation is we’ll look for a breakout of this contraction.
If it breaks down under the pink-shaded area and under that blue line and these last supports, we’ll look to target back down to the bottom of the larger range that we looked at on the Daily Chart back into the yellow-shaded area and the 0.8150s. If we break out to the other side and we turn back above the blue trend line, particularly above the blue-shaded area because that represents historical resistance highs, we’ll likely look for a turn all the way back up to the top of the range and into the green-shaded area at the top of the chart, into the upper-0.8300s, towards 0.8400.
So, the best opportunities, I think, are looking for a breakout above the blue zone or below the pink zone. Now, obviously, over the past few days, we haven’t seen a breakout and it’s just been contracting within this triangle pattern between the two blue trend lines. So, what I would expect is if you’re looking for shorter intraday opportunities, you’re selling on rallies higher towards the 0.8300-level and the blue-shaded area and the blue trend line, or you could be looking for buys on dips into the pink-shaded area and dips into the low-0.8200s. 0.8250 goes all the way down to 0.8225. That’s that pink-shaded area that you see there.
So, if you’re looking for buying opportunities on dips into support, that would be the pink-shaded area. If you’re looking for selling opportunities on rallies into resistance, that would be the blue-shaded area. And eventually one of those we’re going to see a breakout and a turn in the direction of the trend. My preference right now would be for selling because of the descending pattern that we can see here. The descending triangle pattern that we can see here. My preference would be for selling.
So, selling on rallies into the mid to upper-0.8200s. 0.8270 is the current price, but even closer towards the 0.8300-level would give you a higher sell price with lower risk and higher potential reward to go back down towards the pink zone, or the other side of that would be watching for a breakout underneath the pink-shaded area. Until or unless it breaks above that blue-shaded area, I’m going to continue to focus on the sell side for this pair, looking for sells on rallies into resistance or breaks of that pink-shaded area and the supports there seen within that descending triangle and the last lows that we see there into the 0.8220s. A breakout there, look for it to target back down into the mid-0.8100s for the NZDUSD this week.
