First off, starting here on the NZDUSD, we talked about this black box over here on the right-hand side of the chart, where the market was in congestion or ranging between the top of the black box at the green-shaded area into the upper-0.6500s, down to the orange-shaded area at the bottom of the black box into the low 0.6500-level. Yesterday, we mentioned that we’d basically be looking for a break out of that black box. You could see a push through the top side, through 0.6600. So, if you decided to take a buy above 0.6600, it is now reaching 0.6650, 0.6660. This is our next resistance level. It happens to be the 50 percent of the previous downtrend leg, right there at the yellow-shaded area. Look over here where the red circle is. You could see much support and resistance around that same area highlighted in yellow.
#AUDUSD did push outside of our congestion zone, but I just wanted to take this viewpoint. We’d studied yesterday. We cleaned up the chart a little bit. Studied this triangle pattern developing between the two red trend lines. What’s important about those two red trend lines is we’re coming towards the top of that consolidating or contracting pattern, the triangle pattern. If I take Fibonacci from the last high that sits here I where the red trend line touches to the most recent low, we find the .886 fib sitting very close to the purple-shaded area. That’s coming up there towards the mid-0.7300s, 0.7350, right at the bottom of the purple-shaded area. The .886 is closer to the 0.7330s.
You come back down here to the four-hour timeframe. Zoom it out just once, and you could see we are a little ways of course from that, so you have an opportunity, if you are in a buy, above the yellow-shaded area, or if you bought down here at the orange-shaded area, you could target that purple-shaded area up into the 0.7340, 0.7450-level as a target on the way up. But just note once it reaches there, there’s potential reversal coming for the AUDUSD.
#USDCAD dipping into the support zone. We talked about the intersection, where the short, blue trend line and the longer, red trend line come together right here into the 1.3300-level. That will be an interesting area to watch for the day today, coming into 1.3300. If it touches down into there, we might have an opportunity to take into a buy in the direction of the longer-term trend here for the USDCAD.
#GBPUSD made a little bit of an attempt into the resistant zone. Only if it breaks out above that blue zone do we look for a continuation higher. Right now just kind of hanging out just underneath the 1.5075-level. Support for the day today is also down here in the green-shaded area into the 1.5025-level. So, at this point, if you take into a sell into the 1.5075, 1.5080-level, target the green zone. If you’re not in a sell, maybe look at that area as we go through the day today. We do have some U.S. news coming up in a little while. A push above 1.5115 likely looks for some more reversal here for the GBPUSD.
#USDCHF reaching into multi-year highs. Be very cautious about going long here. Probably need a little bit of a dip back down towards the rising blue trend line before we take into a buy. Otherwise, no real indications of reversal to sell this currency pair, so just be cautious about buying at multi-year highs. Be cautious about selling. No indications of reversal. It may be prudent just to stay out of that pair for a little while.
#EURUSD similar situation here on the EURUSD that we just spoke about on the #USDCHF. We are at a significant low point here. If I zoom out one time here on the daily, you could see the multi-month lows going back to March of this year into the green and yellow-shaded area at the very bottom of the chart. We’re into that right now, so be cautious about selling because we are into multi-month lows. Beyond that though, we look for a deeper push.
You take it out here to the weekly chart. We could see that if it gets underneath those lows right there, we’re likely looking for a significant push lower for the EURUSD. Maybe even back to the parity level if it can get through that low, and of course we get the appropriate announcement about interest rates out of the U.S. We’ll likely look for the parity level to be reached as it continues to pressure lower. So, that’s the direction we’re focused on anyways, looking for it to break through those lows, continue the downtrend. So, selling rallies to resistance become our overall opportunity.
So, what we need to do is identify resistance. I’m going to zoom it in a couple of times here on the daily first. We cleaned this up a little bit. Actually added some levels because the market has been kind of just slowly drifting down. Added some levels in yesterday to give us a little bit more precision with what’s happening. Of course clearly we’re in a downtrend. Forex Black Book trend bar is red. That gives us a direction to focus in, selling rallies to resistance. But the question is which resistance, because we have a lot of them right now. We obviously are at our first zone of resistance, which is this orange-shaded area between 1.0600 and 1.0625.
So, there are several resistance levels that pique our interest within this little downward leg that we see here. The green zone of course is your current support. Yellow-shaded area would be the next and really the ultimate support level, the last support level, and then beyond there, which is beyond the upper-1.0400s, towards the 1.0500-level. Beyond that, we look for a significant dip lower.
The shorter, red trend line shows us that we have a little bit of a falling trend here, and that comes right into play right here at our orange-shaded area. So, if you have that shorter falling trend line, it gives you a clue that you’re coming into resistance right now, into the orange-shaded area, 1.0600 to 1.0625. A breakout above the orange zone, a breakout above that short, red trend line likely looks for the pink zone to be the next resistance level. Look at these. Congestion and resistance right here. That’s important for the day. We’re back down to 1.0565, and then beyond there, we’re down towards the 1.0500-level if it breaks through that zone.
Let’s take a couple of different short fibs here just to give a little idea of what we’re looking at right now. Actually I don’t want to zoom it out that much. Let’s take a fib from where the red trend line starts, down to our most recent low. Here’s something interesting. .236 fib right at 1.0622. That’s the top of our orange zone. .382 is at 1.0662. Bottom of the pink zone. .618 all the way up here at the blue-shaded area. So, our Fibonacci of our short range highlighted by the red trend line. Orange, pink, and blue all highlighted using Fibonacci of that range.
Fibonacci of course is subjective to the timeframe you’re looking at. If you’re looking at the weekly or the daily timeframe, Fibonacci is going to be quite a bit different than if you’re looking at the 30-min, 15-min, or 5-min. So, a little bit subjective. We have kind of a medium range here with the four-hour timeframe. Again, you take it out here to the larger timeframe.
Let’s go out here to the daily. Take Fibonacci from the high, down to the same low. Now we take it back to the four-hour. Now that we’ve done that, we could see Fibonacci of that long range doesn’t come into play until it reaches all the way back up here towards the 1.0800-level. So, again, Fibonacci a bit subjective, but I think right here. Orange zone may be our area to watch for the day today, giving us an opportunity to go short in the direction of the longer-term trend here into the orange-shaded area.
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José Ricaurte Jaén is a professional trader and Guest Editor / community manager for tradersdna and its forum. With a Project Management Certification from FSU – Panama, José develops regularly in-house automated strategies for active traders and “know how” practices to maximize algo-trading opportunities. José’s background experience is in trading and investing, international management, marketing / communications, web, publishing and content working in initiatives with financial companies and non-profit organizations.
He has been working as senior Sales Trader of Guardian Trust FX, where he creates and manages multiple trading strategies for private and institutional investors. He worked also with FXStreet, FXDD Malta, ILQ, Saxo Bank, Markets.com and AVA FX as money manager and introducing broker.
Recently José Ricaurte has been creating, and co-managing a new trading academy in #LATAM.
During 2008 and 2012, he managed web / online marketing global plan of action for broker dealers in Panama. He created unique content and trading ideas for regional newspaper like Capital Financiero (Panamá), La República (Costa Rica), Sala de Inversión América (Latinoamérica) and co-developed financial TV segments with Capital TV.
He is a guest lecturer at Universidad Latina and Universidad Interamericana de Panamá an active speaker in conferences and other educational events and workshops in the region. José Ricaurte worked and collaborated with people such as Dustin Pass, Tom Flora, Orion Trust Services (Belize) and Principia Financial Group.