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I’m going to begin the day today on the Australian Dollar versus the US Dollar [AUDUSD]. Starting here on the Daily Chart, we’ve been studying these two blue boxes that you see at the bottom of the chart for the past several weeks. We go over here to the left-hand side. We see resistance and support into that green-shaded area. Support on the left of the blue box. Resistance inside the blue box. Congestion into the pink-shaded area and support into the purple-shaded area, and that’s the left-hand blue box.
And we’ve been taking that same information and translating it over here to the right-hand side of the chart. We see another blue box over here with resistance into the green-shaded area at the top of the blue box. Pink-shaded area has shown support, congestion, and resistance inside the pink zone, and of course support down at the purple-shaded area. Most interesting today will be the green-shaded area because the market is, once again, challenging that green-shaded area as resistance.
And we can see that this has been several weeks. Again, this is the Daily Chart, so we’re going all the way from today, which is of course October 28, and we go all the way back to September 25. So, we’ve been about a month now, from the end of September now to the end of October, where we’ve been holding this green-shaded area as resistance, but we have not broken out of there. And this is what we’ll be looking for over the next few days; is if we’re going to see a change of this pattern, this charting or trending pattern, we’re going to need to see a breakout of this green zone.
Until that happens, I believe we’re going to continue to see resistance inside this green zone. The green-shaded area goes between around the 0.8820-level to 0.8865. That’s the entire green-shaded area. So, anywhere within there I would expect right now we’re going to find resistance. And the only reason I’ll believe we’re going to see a breakout is if it pushes through the top of that green zone, which would be above the 0.8860-level.
Let me see if I can pull that blue box over just a little bit. Get us a little bit more room there. And you could see as long as it holds in there, we’ll look for that resistance. Support right now. Of course the next support would be down here into the pink-shaded area. Quite a ways away from the current market. So, this is what we’re looking at. The next resistance higher of course would be this yellow-shaded area just above the green zone. That’s into the 0.8909, 0.8920-level. That happens to be the .382 Fibonacci retracement level at 0.8932, top of the yellow zone of this downrange.
I’ve taken Fibonacci from the high right here, right about where that black X is inside the red box at the top of the chart. I’ve taken Fibonacci from that high, down to the lowest low. That puts the ,.236 fib at 0.8821, bottom of the green zone, but the .382 at 0.8932, the top of the yellow zone. Above that we’d be looking for a little bit higher, and I’m going to see if I can get this blue-shaded area pulled over like this. You could see that that becomes our next area to shoot for. That happens to be the .618 Fibonacci retracement level at 0.8982, bottom of the blue zone, of the previous uptrend over here on the left-hand side of the chart.
50% of the downtrend sits at 0.9021 or so, right at the top of the blue-shaded area. So, yellow zone, blue zone become your next two resistance, but what’s it going to take to see it challenge those next two resistance levels? It’s going to take a breakout of the green zone, which we of course have not seen yet. And I’m not merely looking for a push or price squeeze through the top of there. I’m looking for a single candle body open and close above our resistance zone.
Take it on down to the 4-Hour Chart, and really it squeezes it out. It stretches it out a bit, but we could still see that resistance there into that green-shaded area. So, again, until it opens and closes outside of that green zone, I’m still looking for resistance here for the day today, into the 0.8840 to 0.8860-level. Any risk taken here, if you decide to take a sell here into this green zone, your stop loss would likely be just above the green-shaded area, above the 0.8865-level, because if it breaks out above there, we know it’s likely going back to the yellow zone or maybe even the blue-shaded area above the blue box that we see here. If you decide to take into a sell, then you’re going to target back down here to the pink-shaded area.
Now, here’s something different that we noticed yesterday in the Trade Room; is that the Forex Black Book trend bar, the bar at the very bottom of the chart, has turned green this week. It could be our signal or our first clue to a potential break of this trending pattern, this range that’s been developing here for this pair. We could see that the trend bar turned green. We can also see that there’s also been some rising lows within this box, so that could be our next clue.
We see rising lows. We see the trend bar turning green. The next thing we need to see is a breakout above the green-shaded area and the top of the blue box for a signal that it’s going to continue to pressure higher. Until it does that, I don’t feel as confident in it. Of course the best place to buy this would be back down here into the blue trend line, the pink-shaded area. That way you have lower risk and higher potential reward before it reaches into the top of the green zone.
So, for the day today, no buys unless it breaks above the green zone, which would, for me, mean an open and close above there. That’s what I would consider buying opportunities. More likely today we’re looking at resistance and reversal to go back down and target back down to the pink-shaded area, all the while watching for that breakout to the topside for the AUDUSD today.
