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I’m going to begin the day today on the Euro versus the US Dollar [EURUSD]. Today I’m going to start all the way out on the Weekly Chart and get a larger perspective for this currency pair. For the past several months, even going all the way back into 2012, we have seen this currency pair in an uptrend. We began all the way down here at the bottom of this black trend line, down into the 1.2000s. We made our first leg of the trend, as it pushed up here, in towards the mid to upper-1.3600s. We fell back down. We saw the market stop down here into the 1.2700s, and made a new leg and a new high, as it climbed from down here, into the 1.2700s all the way up into the 1.3800s.
Well, of course, I have the black trend line representing that long-term trend and a blue trend line here representing the last leg of the trend. One last thing I want to point out here before I move on to the smaller compressions is the Fibonacci that we see here on this chart. I’ve taken Fibonacci from the lowest low all the way down at the bottom of the black trend line to the most recent high up here next to the red horizontal line at the top of the chart.
And in doing that, there’s two distinct Fibonacci levels I want to point out here. First off is the .236 fib of that longer trend range. It sits right here, right about, just underneath that blue trend line, right about the 1.3400-level. And of course that’s where the market has been challenging over the past few days; right around that .236 fib. The next fib down would be all the way down here into the 1.3140s. 1.3140s is the .382 fib, and that happens to sit down here, closer to this black trend line and into this area where we saw historical support and resistance lined up along that 1.3100/1.3140-level. So, definitely something to pay attention to are those two longer fibs that we see there from the Weekly Chart.
Let’s take that information down to the Daily Chart. And as we move down here to the Daily Chart, looking at those same fibs real quick, we could see the .236 right here at 1.3408. That is where our current resistance, by the way. This purple-shaded area acting as our current resistance; is that .236 fib, and also historical resistance. We look back to the left-hand side, along this purple-shaded area. We see the resistance here, where I just put that black X. I’ll put another one a little bit further back. You could see the resistance. Even farther back to the left-hand side of the chart, we could see some resistance underneath that purple-shaded area. And it’s my expectation: as long as we stay underneath that weekly .236 fib, the purple-shaded area, which is historical resistance, and the blue trend line that we’re likely looking for rallies into resistance for selling opportunities, looking for it to continue to pressure lower.
Again, down here, closer to this light blue-shaded area; in fact, I’m going to make that a different color so it’s easier to see down at the bottom of the chart. Let’s make it a little bit of a darker blue. And down here towards this blue color down here at the bottom of the chart – let me just move it over a little bit – is that .382 fib, down into the 1.3147-level. The black trend line sits down there. That’s the .382 fib from the Weekly Chart. Now let’s take here, on this chart, the Daily Chart. I’m also going to take a Fibonacci retracement level of the last uptrend. The blue trend that we see here from the low of the blue trend line to the current high. And in doing that, right to that high, we find, once again, Fibonacci overlapping at the top of the purple-shaded area. The .382 fib of that short range, the blue trend line sits right there into the 1.3419-level. Again, top of the purple-shaded area.
So, it’s giving me some higher confidence now. We have two fibs – a weekly and a daily fib – overlapping right there on top of that purple-shaded area, giving me high confidence that we’re looking for selling on rallies into this resistance. As long as we stay within or under this purple-shaded area, I’m looking for selling underneath there. We’ve broken the blue trend line. We’ve changed the pattern of the trend. Lower highs and lower lows being established. I’m still looking for this to go back down, targeting back down to the next level.
The next level down, of course, is the pink-shaded area. That happens to be the 50% retracement level of this blue trend, into that pink-shaded area. And once again, we have overlapping fibs, even of this short blue trend line – the blue trend line here, not the black one. The shorter leg of the uptrend, we see Fibonacci – .618 fib – sitting right there in the blue zone. So, not only do we have Fibonacci of the short leg here on the Daily Chart, but the longer leg from the Weekly Chart sitting down there where this blue-shaded area is. That rapidly becoming a stronger target to shoot for, and I will even widen it out so we could make sure we could see it really well, down here into the mid-1.3100s.
So, again, selling on rallies. This blue-shaded area becomes our longer target, as it challenges back down towards the longer-term trend line from the Weekly Chart. Let’s take all of that information down to the 4-Hour Chart. And we could see we’ve gone into a bit of consolidation or congestion here underneath the purple-shaded area. Yesterday, we’ve settled out underneath it. We see today challenging back into that purple-shaded area. Right now the current market sits right around the 1.3404-level or right into that area, right around 1.3400. I would expect, if you’re looking for selling opportunities into the purple-shaded area, your stop is, at minimum, above 1.3420. If not, higher towards the 1.3450-level, closer to the top of the bank flow range.
We could see our bank flow levels from yesterday. The top bank flow level is 1.3449 from yesterday. So, again, if you’re looking to sell under the bank flow levels, of course from yesterday, then your stop goes above that blue line of the bank flow levels. And of course, I don’t think we’ll see a whole lot of change today. With today’s bank flow levels, I expect they’ll likely be in a very similar area today for the bank flow levels. So, again, selling on rallies into resistance becomes our main focus. If it breaks through this purple-shaded area, of course the green zone is our next potential resistance that sits just underneath the blue trend line.
Follow it back in time; you could see the historical supports on the left-hand side of that green-shaded area. So, you go back here and that becomes our next resistance. If we break through this purple-shaded area, that becomes the next area to watch for as a potential resistance and selling opportunity. But I think in no way am I looking for buying opportunities right now. Mostly selling into rallies into resistance. Forex Black Book confirming that also. Its red trend bar giving us higher confidence in the sell side for this currency pair. We just need a breakout of the current consolidation that we’re seeing here for the EURUSD today.
