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I’m going to begin the day today on the Euro versus the US Dollar [EURUSD], starting on the Daily Chart. I’ve zoomed quite a ways out so we can see some long-term history for this currency pair. We go all the way back here to the left-hand side of the chart into July of 2012, where we began this uptrend. We saw the first push all the way up here into February of 2013, pushing into the 1.3600s, a little bit of a fallback down here into the 1.2800s, 1.2700s, and then the second push pushing all the way to the highest high on the chart, close to the 1.3900-level at the top right-hand side of the chart.
So, for the past couple of years, we can clearly see the bulls have been in major control of this currency pair, as it’s driven much higher from the lows on the left-hand side of the chart. And I have three different trend lines here. The blue trend line representing that longer-term trend that we’ve seen since 2012. The red trend line – basically the last leg of the longer-term trend. We come here from the 1.2700s, here into July of 2013, and it’s made that push all the way up into the highest highs. And that is the red trend line that we see here on the chart.
The next trend line is the black trend line, representing the last short push, the last leg of the uptrend as it pushed into the highest highs the last time that we can see here on this chart. Let’s go ahead now and zoom in on the Daily Chart. And we could see those same trend lines. The blue trend line well below the current market. The red trend line connecting with the low that we see here on this viewpoint on the Daily Chart and the market coming down, pressing down towards that red trend line. And of course, over the past few days, we’ve now seen the breakdown of the black trend line – the shortest leg of the trend that we can see here.
Resistance right now finding the main key resistance all the way up here into the green-shaded area – the mid to low-1.3800s. That’s the green-shaded are at the very top of the chart. Incidentally, the same color is showing our next support, and that happens to sit right there at the red trend line. The green-shaded area right around the 1.3520s, 1.3500-level. That’s the green-shaded area and the red trend line just underneath the current market for the EURUSD. As we continue to pressure lower, I would expect that next green-shaded area would be our next support.
In the direction of the current momentum, the bears, over the past few days, have been in control of this pair, driving from the highest highs, as it’s continued to press underneath the black trend line, now pressing towards this red trend line and our next support. Let’s go ahead and move down to the 4-Hour Chart and describe our intraday strategy. Clearly, the bears have been in control over this currency pair over the past several days. We’ve even seen the bank flow levels now following the market down, as those levels now push down into the black trend line and just above the pink-shaded area for the EURUSD.
Take that pink-shaded area backwards in time and you could see some historical congestion, some historical support here into this pink-shaded area. That becomes our intraday resistance for the day today. We also take Fibonacci from the lowest low that we see here all the way at the bottom left-hand side of the chart to the most recent high that we can see here and we find the 50% retracement level sitting at the bottom of the yellow-shaded area. So, clearly, a break of that 50% on the Daily Chart, maybe here on the 4-Hour Chart. However, we’ve already seen a push underneath that yellow-shaded area today, but a clear break underneath the yellow-shaded area, we look to target back down to the green zone.
So let’s go ahead and devise a strategy. I would be looking for sells on rallies into resistance. Either the pink-shaded area here becomes resistance today. Those historical supports and just underneath the black trend line, and into the bank flow levels today becomes potential selling opportunities when those levels get published. If it pushes through the pink-shaded area, the blue-shaded area becomes our next rally point for resistance. A push into there becomes resistance and the possibility of continuing to pressure down. Getting above that black trend line and above that blue-shaded area, we’re likely challenging all the way back up into the green-shaded area at the very top of the chart.
So, those are our three resistance points. Potential selling opportunities. There is even a closer one, if you really take a close look here, right at the yellow-shaded area. We could see some resistance currently right underneath the 1.3625-level. That’s showing some resistance, holding there. If you follow it backwards in time, you could see even resistance on the left-hand side of the chart. Over here this would be – let me get the crosshair – right there into November 30, November 29. We could see resistance into that yellow-shaded area. So, follow that backwards from the current market and you could see resistance in the past helping us identify current resistance.
So, the yellow zone – some intraday resistance. Pink zone and blue zone would be your next longer-term resistance. All of that pointing to the market continuing to pressure down towards the next bullish trend line and into the next support down here into the low-1.3500s. We could even take that even further back down, towards the 1-Hour Chart. And again, you can see that resistance right there into the top of the yellow-shaded area – the 1.3620 to 1.3625-level. There’s our most recent bank flow level sitting just above the pink-shaded area. Bring this arrow down here closer towards the yellow zone. That becomes a selling opportunity.
Forex Black Book also implying that the bears are taking control because now we see today’s Forex Black Book trend bar has turned red. So, if the bears continue to stay in control, we can go back to the 4-Hour Chart and begin looking for a new red arrow to give us an opportunity to trade as a sell for the EURUSD. Our last red arrow was well up here above the current market. What I would expect is we need to see a pullback, maybe back to the pink-shaded area, and then a new sell or red arrow come into play for an opportunity to sell down towards the red trend line and the next, lower support down here into the low-1.3500s.
Zoom it in here one time on the 4-Hour Chart. One last Fibonacci. Let’s take Fibonacci measurements from the highest high all the way up here at the top of the chart down to the most recent or current low that we see here. That puts the .236 fib all the way back up here into the pink-shaded area once again. .236 fib of that last downtrend range sits right here into 1.3650 or so. That’s right there into the bottom of the pink-shaded area. .382 in between there. Right about the midpoint f the gray-shaded area between the pink and the blue. 50% sits all the way into the blue-shaded area.
So, I expect that any one of these points – yellow, pink, or blue – will be our resistance for a fall back down in the direction of the current bearish momentum. Continuing to watch for a change of that pattern. Right now we see lower highs and lower lows. That’s continuing to fall back down. Any higher highs or higher lows. As I mentioned, a break above the blue zone, maybe even the pink-shaded area, gives us some bullish expectation, a new challenge and test of the highest highs – the key resistance that we see up here in the green-shaded area.
All in all, to summarize all of that, I’ll be looking for selling opportunities in the direction of the bearish momentum, targeting back down into the 1.3525-level, the green-shaded area, and the red trend line at the bottom of the chart for the EURUSD today.
