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I’m going to begin the day today on the Euro versus the US Dollar [EURUSD]. Starting here on the Weekly Chart, over the past several weeks, we’ve studied the historical Fibonacci level over here on the left-hand side of the chart. From the highest high of this last downtrend that we see here, the high all the way back up here into the mid-1.4900s, and the fall that went all the way down towards the mid-1.2000s.
Taking the Fibonacci retracement levels of that previous downtrend, over the past few weeks, we’ve studied the fact that the point .618 Fibonacci retracement level sat right at 1.3830. And as long as it sat underneath that 1.3830-level and that .618 fib, we expected resistance and potential bounces back down. Once it got above there, we expected there was potential for it to rise or rally higher. Well, as we zoom it in here on the Weekly Chart, we could see that last week we finally did break above that 1.3830 Fibonacci retracement level and now are sitting above it.
Well, that same Fibonacci level that last week and the past several months has been resistance now will likely become support for us for the EURUSD. As long as it stays above that now, we’re going to be looking for support. So, the historical resistance. The Fibonacci level from the Weekly Chart now becomes potential support for the EURUSD.
Let’s go ahead and take that same information down to the Daily Chart, and of course there’s that same Fibonacci level. The dashed line that sits just above the darker blue, thicker blue line here, into the 1.3830-level. You could see where the current market is compared to that 1.3830-level. You could go back in time and see that over the past several months, going back even all the way into October of 2013, we have seen several instances of resistance. All the way back in October. Made a fall. Came back up here into early December. Made a fall. Came back into late December. Made a fall.
We even see that a couple of weeks ago we challenged here into late February. Fell back down here into the 1.3700s. Then, finally, the market got enough motivation and pressured right through the 1.3800-level, all the way back up here into 1.3900. Currently the market is finding resistance up here into this pink-shaded area, and I have it highlighted between 1.3890 and 1.3913. That happens to be the last spike high we see here. 1.3913. And we could see, when we get down to the 4-Hour Chart, some historical resistance here into 1.3895 or so. You could even go back to the left-hand side of the chart, where this spike is on the left-hand side of the pink-shaded area, and you could see that that’s where the market settled out as resistance over here on this spike. Right there into the 1.3895-level.
So, highlighted in pink, that is our resistance. So, as I mentioned, the yellow-shaded area, the .618 fib all the way down here now becomes potential support. Where it was resistance historically, now becomes potential support. And of course currently and over the past few days, we have now seen resistance into this pink-shaded area. As long as it holds in the pink zone, there’s potential sells on rallies into resistance to target back down to that historical support into 1.3830 and 1.3800. Once it reaches back down there, that becomes our opportunity to buy it in the direction of the trend.
So, if you’re looking to trade in the direction of the trend, there’s really two opportunities here. It must fall back down to the yellow-shaded area and into the low-1.3800s to give you a better buy price, or it breaks above the resistance. And that’s very similar to what we spoke about over the past several weeks into the yellow zone. Either it stayed underneath it and went back down or it broke above it and went back higher. So that’s the same thing here in the pink zone. As long as it stays underneath it, potential to go back down. Break above it, about 1.3900, 1.3915, we likely look for the continuation towards the 1.4000-level for the EURUSD.
Buying it on dips into support or breaks of resistance. Otherwise, staying underneath the resistance does become some fairly low risk, high potential reward selling opportunities as we look for that short-term reversal or intraday reversal back down into the support and into the 1.3800-level.
Forex Black Book trend bar at the very bottom of the chart is bright green. Of course because of the longer-term uptrend and the most recent momentum we’ve seen has been bullish, so it is bright green this week. So that tells us that one of two things. We either want to focus on the uptrend and we’re looking for buys, but also we want to wait for a dip lower. We want for the dip to happen. We want to see it go down into support, go down to the 4-Hour Chart, and then look for a new green arrow to give us a buying opportunity.
Let’s go ahead and take all of this information down to the 4-Hour Chart here. And we could see, of course, both the pink and the yellow-shaded area are our support and our resistance. I’m going to squeeze it in so I can move these arrows over. There’s our resistance of course. We’re seeing that now into the pink zone. We squeeze this over and we know that if it breaks above here, potential to go higher. And of course our support is down here into the yellow zone and into the 1.3830 down to 1.3800-level.
Your best buying opportunities will be on dips into support. To get a new green arrow with the Forex Black Book, similar to what we got last week to get a new green arrow with the Forex Black Book, it needs to go down. Just like it did here. See how it went down, found support into the orange-shaded area, gave you a green arrow, and then started going up. Oh, even over here on this last green arrow. It went down, found support into the blue zone, started going back up, gave you a green arrow and continued that bullish pressure.
So, if you’re going to see a new green arrow over here on the right-hand side with the Forex Black Book, then it needs to go down. It needs to go challenge back down to 1.3800. So that’s presents some selling opportunities into the pink-shaded area. And over the past several days, we have also seen the bank flow levels helping us identify this pink-shaded area as resistance. Take a look at last Friday’s bank flow levels. We could see them here in between 1.3868 and 1.3909. I expect today’s bank flow levels will be right here into or just above the pink-shaded area, between the 1.3890 and 1.3913-level. That’s where I expect the bank flow levels to be. Right here into the pink-shaded area today.
Now, I don’t know that for sure because I don’t put those out and they’ll be published later on today, but I would definitely expect that. Unless we see a dramatic change over the next hour and a half, two hours, that’s where I expect the bank flow levels to be, indicating where potential resistance is today. So, watching for selling opportunities on sells on rallies into the pink zone or buying opportunities into the yellow-shaded area become our possible opportunities to trade early this week for the EURUSD.
