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I’m going to get started today on the Euro versus the US Dollar [EURUSD]. We’re going to start here on the Weekly Chart, but before I begin with the analysis, keeping in mind about 45 minutes from the recording of this video, we have US non-foreign payrolls, which could impact the outlook of this currency pair, going a longer period of time.
Now, back to the currency pair, if you look here on the Weekly Chart, and I want to, first off, look to the left-hand side of the chart. I’m just going to kind of pull it over a little bit further, so we can see this. You see the blue box here in the middle of the chart. And I know looking at a longer-term compressions sometimes doesn’t seem important for intraday traders, but I think it will be important as we go through our day today.
You take a look back to the left-hand side of the chart. We could see historical price action around the bottom of the blue box. The yellow-shaded area. You see two horizontal, red lines back there also, showing us support in this area right around the 1.2400-level. We saw this day here back on – that’s actually a week. Back in May of 2012, that spiked underneath 1.2400, all the way down to the 1.2275-level and then rapidly returned through that week there back in 2012.
Then you saw it bounce back up, finally pushed underneath it. We’ll talk a little bit more about that push underneath it here in a moment on the smaller compressions. Went back down to the green zone. Settled out there for several weeks, a month and a half or so. Then finally was the reversal, but sent this back higher. This is going to be important information back here as we look to the right hand side of the chart because that’s the current market price and where we are right now for the EURUSD.
We’re challenging the support. Historical support. We’re challenging that now. It’s been quite a long time since we’ve seen it here, since 2012. If it continues to pressure lower, we already have an idea, looking back here, where we could target, and that’s all the way back down here into the upper-1.2200s. We could see that as historical information back here on the left-hand side of the chart. So, keep that in mind. Under 1.2400, potential to challenge all the way back to 1.2200, but we want to be sure that this is a real breakout and today’s non-foreign payrolls could be the clue that we need to see if this is a real breakout to continue lower or possibly some reversal that could send it back up again like what we saw back here on the left-hand side of the chart.
Let’s take all of that information. Let’s go ahead and zoom on down to the Daily Chart, and we can see today’s daily candle is the first candle to actually open underneath that support, and this is something important that we talk about in the Trade Room on a daily basis, about what’s a real breakout. How do we classify a breakout rather than a false breakout? Because if you go over here, just not too far back, you see over here, where the market actually the blue candle here opened underneath this blue-shaded area very close to the 1.2500-level, and then a rapid return back higher again.
So, we can’t classify this as a breakout, and I don’t think we can yet classify this as a breakout. Only an open because if non-foreign payrolls comes out in 40 minutes or so and turns this back higher, we don’t see a breakout here. So, keep that in mind. We’d like to see today’s candle close underneath this support and underneath 1.2400-level. Where does it go? We take it all the way back down to the green-shaded area.
Let’s go back in time. I want to study again back in 2012, this breakout scenario. And as we go back in time, you’ll see the same blue box pop up here and we’ll see back in 2012, right in this area. Again, we’re going to look right here and over here we could see the market did breakout underneath it. It continued down to the green zone, and then eventually hit the support in the green zone and reversed. Right here. We’re going to, again, go back here into 2012 on the 4-Hour Chart in a moment. I want to keep in mind where that circle is on the chart. If it breaks underneath there, we go down to the green zone. That’s all historical evidence.
Back above the yellow zone, we turn back higher once again for the EURUSD. We take it back to the current timeframe. We have the potential for the breakout. I think as long as it stays underneath 1.2400 today, we should be looking for selling opportunities. There’s no real reason at this point to buy the EURUSD. Take it on down to the 4-Hour Chart, and we’ll have to zoom it out a little bit, so we can get some more history for this pair. And let’s go back in time. Again, I want to go back to 2012. I know it takes some time to get back there, but I think it’s important for us to see this as we go back in time.
And there’s that circle again that I had on the Daily Chart, and this is probably the most important part about this. Right there, where the circle is, we opened and closed on the 4-Hour Chart, under the yellow zone, under this last support. What happened when it did that? It got underneath here. It continued down to the green-shaded area. Let’s keep that in mind as we go back to our current timeframe, where the current market price is here for the EURUSD. And let’s get it back there.
There it is. Back here into current time, take a look. We are underneath 1.2400. We’re underneath that yellow-shaded area, just like we were back in 2012. So, for the day today, I have no reason to look for a buy yet. We’re looking for sells underneath this yellow-shaded area. Now, that yellow zone goes between the 1.2408 and 1.2460-level. That’s that zone highlighted in yellow. That’s our current resistance. As long as it stays underneath there, we already have an idea. What we’re going to look to shoot for is that green-shaded area down here at the bottom.
Again, all of this could change in 40 minutes from now, when non-foreign payrolls comes out, but at least at this current moment, this is what we expect to see for the EURUSD today. All that changes of course, like I said, if we get back above here. We start to make higher highs and higher lows. Right now we see lower highs and lower lows. Even if I take a trend line here, go from this high to this high, we could see we’re in lower highs and lower lows. That’s the direction of our current trend. That’s the direction you should be focusing your efforts on for the day today. Selling underneath the yellow zone, targeting the green-shaded area. Again, that goes between 1.2410 or so and 1.2460. That’s the yellow zone.
Your risk. Evaluating risk to reward, your risk is above the yellow zone. Stop loss would go above the yellow zone, targeting the green-shaded area at the very bottom of the chart. That only changes if we see a break above the yellow zone after non-foreign today for the EURUSD.
