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I’m going to get started today on the Euro versus the US dollar [EURUSD]. Starting here on the Daily Chart, going back to last Friday’s live Trade Room, we started looking at these three different trend lines and I wanted to remind ourselves about these, first thing, beginning of this week. Starting on the bottom left-hand side of the chart begin the blue trend line all the way back here into July of 2013. We started at the lowest low. We connected it with the low here into early February of this year, right into the upper-1.3400s, and we can see that over the past couple of days, the market has found support there right into that blue trend line and the pink-shaded area we see at the top right-hand side of the chart.
The black trend line being a little bit shorter, starting here in September of last year, connecting with the same low that the blue trend line connects with. Little bit lower than the current market. Never really challenged that yet. Never really pushed through the blue trend line. If it does, that becomes a potential support for the EURUSD. And then, one last trend line is the red trend line coming down from the highest highs. We could see it’s representing the short downtrend that we’ve seen for the EURUSD.
Before we move on, the Forex Black Book trend bar indicator at the bottom of the chart is indicating bearish price action, being red at the bottom of the chart. So, that tells us that we potentially are looking for sells on rallies into resistance. Again, taking a look at the red trend line, that may be into the resistance that we see along that bearish trend line at the very top of the chart.
Now let’s go ahead and zoom it in. Now that we see where those trend lines come from, as we zoom it in, we could see where the red trend line comes into play, into this yellow-shaded area. Follow the yellow-shaded area backwards in time a little bit. You could see the historical support here. You see a little bit of support here. You follow it even further back. You see congestion and resistance back here into February of this year. You could see that resistance here. You go back even further to the left-hand side of the chart and you could see some support and congestion in that yellow zone.
That’s likely our intraday resistance today. As long as we stay within or under this yellow zone, potential to fall back down in the direction of our current bearish momentum, the current bearish trend, and the red trend bar with the Forex Black Book. If, at any time, we break above that red trend line and that yellow-shaded area, we’re likely looking for a turn back higher for the EURUSD. The yellow-shaded area. It goes between 1.3735 at the bottom and 1.3765 at the top. So, we’ve got about a 30-pip zone highlighted in yellow.
So let’s go ahead and put a couple of arrows here just to represent that yellow zone. That is our current resistance for the day. We could see the current market trying to challenge that 1.3735-level right now. As long as we stay within or under the yellow zone, potential to reverse and go back down. Breaking above it, again, we look for the continuation higher, likely back towards this blue-shaded area, into the 1.3800-level. And of course the pink-shaded area and the blue trend line, as we just discussed, are our local or closest support here that we could see for this currency pair. Anything underneath that continues the bearish trend in the direction of the red trend bar and the current red trend line that we see here on this chart.
Let’s take all of that information down to the 4-Hour Chart. Get a little bit more precision to this vantage point that we’re looking at. The bearish trend here not too hard to see here on the 4-Hour Chart. The bearish trend that’s been in place for quite some time. We’ve got the red trend line there helping us identify this as resistance. Over the past week and a half, now two weeks almost, we could see that the bank flow levels over the past couple of weeks have been implying bearish pressure for this currency pair. The bank flow levels have been fairly steady, right here into this blue-shaded area. Of course now we’ve seen the market pressuring even lower, making a new low underneath the last support low into the 1.3730s. So, that now, again, is our resistance.
Let me zoom out one time so we could see the entire scope of that downward trend. There’s the downward pressure. There is our current resistance. So, once again, this yellow-shaded area will be critical today for the EURUSD. Staying underneath 1.3735, 1.3740, underneath these last historical supports, and even if you take that yellow-shaded area, you could adjust it a little bit to bring it closer. I might even bring it down like this, like we could put this here. Bring the yellow-shaded area. And this just changes up the vantage point, the viewpoint just a little bit. If you bring it in here like this, you follow that yellow-shaded area back in time, now on the 4-Hour Chart, and you could see, again, there is your support right here that’s becoming resistance. There’s your support right here. You go back in time. Left-hand side of the chart, you see this period of support and congestion. Left-hand side of the chart.
So, this yellow-shaded area, once again, becomes a critical decision point. Staying within it or under it, and it now goes between about 1.3725 and 1.3740. That’s the yellow zone. As long as we stay underneath it, potential to go back down. Challenge the lows, which of course would be the blue trend line, the pink-shaded area. Anything underneath the pink-shaded area, again, we look for it to continue the bearish pressure. If you’re looking for a sell opportunity today, this yellow zone becomes that opportunity.
Now, I’ve just narrowed in a little bit. I do think it might be a little bit wider here, in towards the 1.3745-level, but you get the idea. This is a zone of resistance. It’s a decision point that the market has made before. Whether it’s a buy or a sell scenario, as long as it stays within there, potential to go down. Anything above it goes back up. I would expect I would look for the bank flow levels today a little bit closer to the yellow-shaded area. If it breaks above that yellow zone, I don’t think we want to stay in it too long because it’s likely pushing back to the blue-shaded area.
One last thing here on the 4-Hour Chart. Fibonacci from the high, down to the current low. The high, down to the current low, puts the .236 fib right here at 1.3741. That’s right at the top of our yellow-shaded area. Again, that confirms resistance there, but it also tells us that if it breaks above the yellow zone, we’re likely pressuring back higher in towards the 1.3780s and 1.3790s. That would be where the .382 fib resides, just closer to that red trend line and likely the blue-shaded area. You can probably, again, just like we did with the yellow-shaded area, adjust this blue-shaded area a little bit. Bring it closer to the current market. I think that blue-shaded area might be a little bit wider, but that becomes our areas of resistance. If we break above the yellow zone, the blue-shaded area becomes our resistance.
So, for the day today, in the direction of the most recent momentum and trend that we’ve seen, the red trend line and the downtrend. The Forex Black bar being red. That would be the direction I would focus on. Selling on rallies to resistance. Breaks of those resistance, look for changes in the trend for the EURUSD today.
