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 US Dollar versus the Swiss Frank [USDCHF]. Starting on the Daily Chart, we could see that this currency pair has been in a downtrend for quite some time. We have two different trend lines here. The red trend line coming from the higher high, connecting with this high right here, right around the 0.9240-level, into the purple-shaded area. And we can see that that red trend line is where the market is currently finding resistance at the bottom of the pink-shaded area.
The black trend line – a little bit shorter – coming from this high into September of 2013. We could see it connecting there – the top of the black trend line – into the mid-0.9400s. Once again, connecting with that same high here into the mid to low-0.9200 – bottom of the purple-shaded area. And that sits a little bit higher at the top of the pink-shaded area into the 0.9075-level. So, two different trend lines coming down into the current market value and both of them helping us identify resistance right now along those trend lines.
We define the trend as having lower highs and lower lows. So, as we can see, along those trend lines, that the current high is lower than the previous high. But we also see that it’s trying to break out and push above the most recent resistance high that we could see here in the yellow-shaded area. So, we may be seeing clues to a potential trend change if the highs continue to get higher and we start to see higher lows. But of course that’s going to take a breakout above these two trend lines, either the red or the black, for us to continue to see new higher highs being made.
If we zoom in a little bit here on the Daily Chart, we could zoom in and see that I’ve also taken Fibonacci measurements from the most recent high here in the purple-shaded area where both of those two trend lines connect here into the purple-shaded area into the mid-0.9200-level. Fibonacci from that high down to the most recent spike low we see down here into 0.8800, we find that the 50% retracement levels happens to also coincide with that red trend line – the bottom of the pink-shaded area, into the 0.9025-level. So, 50% sitting over here on the right-hand side of the chart of this downtrend range.
Then, just above that, the .618 Fibonacci retracement level sits at 0.9077. That happens to sit at the top of the pink-shaded area and where the black trend line sits. So it’d be my expectation that within or under these trend lines and the Fibonacci levels there’s potential resistance, which could send us back down in the direction of the longer-term trend. And really, only once we start to see a breakout above these resistance highs and the trend lines can we expect some further movement higher back into the orange-shaded area or possibly a breakout even further as it challenges the last resistance high we see over here into the mid-0.9200s.
So, if you’re looking for an opportunity today to trade the USDCHF, it could be looking for selling into resistance into the 50% retracement level. Red trend line into the 0.9025-level or even a little bit higher as it challenges into the 0.9075-level and the black trend line. Keeping in mind that your risk in either scenario is likely above the 0.9075-level – the black trend line – because, if it breaks above there, we’re likely looking for a continuation higher and that would of course be for a sell.
Right now I don’t expect you would be looking for a buying opportunity. There’s obvious potential barriers here. There’s potential resistance and a pull back down for the USDCHF, so buying right now really wouldn’t be part of the scenario. Buying into this price ceiling because there’s a high risk of resistance and a fall back. If you were looking to buy this, there’s really only two reasons you would look to buy it. A dip back into support, which could be the yellow zone or maybe down here into the green zone, or a breakout above the pink-shaded area and these two trend lines. So, we already have the area there above 0.9075, so a breakout above there, we look for it to go higher. The other opportunities to buy in the direction of the trend, maybe the yellow zone again, or maybe, once again, pushing all the way back down into the green-shaded area down here. So, buying on dips into support or breakout of resistance. Otherwise, looking for selling into resistance and into the trend lines.
Let’s go ahead and take that information down to the 4-Hour Chart. And we could see that so far, over the past several hours, we have continued to find support into the yellow-shaded area. So let’s bring this yellow-shaded area over a little bit. We’ve continued to find support over the past several hours into the yellow-shaded area. If you’ve already taken a buy into that support, then you’re now looking to protect profit from the 0.8980s. Now we’re back into the 0.9000-level, challenging into that resistance. You’re looking to protect profit on any buys that you might have taken as it dipped into the support.
And again, once it pushes down through that yellow-shaded area, or if it pushes down through that yellow-shaded area, we would look for it to challenge all the way back down to the green zone. Buying right now, again, down here into the yellow-shaded area becomes an opportunity. I suppose there could be a very short term opportunity to buy it on the breakout above 0.9025. 0.9025, again, is that 50% retracement level of the previous downtrend. It also happens to be that red trend line. So, a push above 0.9025, as we see it here on the 4-Hour Chart, could give you an opportunity to trade as it pushes back towards the pink-shaded area.
But again, at the current moment, as it sits underneath 0.9025 – the red trend line, 50% retracement level – it doesn’t become enticing to buy it because there’s too much risk of resistance and a fall back down. A breakout above it, open and close above 0.9025 does give you an opportunity to buy it with fairly minimal risk, targeting back to 0.9075 – the top of the pink zone. And of course we’ve already discussed – a breakout above there continues the uptrend. If you decide to buy it on a breakout above 0.9025, protect your profit as it reaches into the black trend line and the top of the pink-shaded area, because, again, there is potential resistance there. We’ve seen it in history. You can even see it on the far left-hand side of the chart. We have seen resistance into the 0.9075-level, so it’s not too hard to expect that you would see it there again.
If you decide to sell it here at 0.9025, which of course would be an appropriate action into resistance, your stop is just above there because if it breaks above there, of course, you already know that there’s potential for it to go all the way back to the top of the pink zone for the USDCHF today.
