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I’m going to begin the day today on the Euro versus the US Dollar [EURUSD]. Starting here, on the Daily Chart, taking a look at a couple of levels that we’ve been studying over the past few weeks, we’ve been look at support here, into this green-shaded area and, over the past several weeks, going all the way back here into September 20th, we have been finding support between the 1.3480s and the 1.3470s. Finding support there multiple times on challenges into that level of support.
Our level of resistance that we’ve been studying over the past couple of weeks is this blue-shaded area. Even over the past five or six days, we have found resistance into this blue-shaded area between the 1.3550s and 1.3580s. And it’s found resistance there multiple times. Even, again, going back to the left-hand side, into September 19th, September 20th, we have found resistance there.
Now we see a little bit of a change in the price pattern that we’ve seen here over the past few weeks for this currency pair and a new challenge. A pretty strong bullish movement, as it’s now pushed all the way up to the last high that we see here, into the mid to low-1.3600. Follow this yellow-shaded are backwards from the current candle and, of course, back here, into October 3rd, we could see that challenged there, all the way into the 1.3640s and a repel as it went all the way back down into the 1.3400s.
Even following that yellow-shaded area back further in time, we could see the last time we were here is all the way back in February of this year. We could see it found resistance there. We never saw a clear body open and close above the 1.3650-level and quite a dramatic turn back down, as it went all the way back down here, into the 1.2700s. The last time we were here, of course back in February, we also saw a quick spike all the way up here into the 1.3700-level, so definitely something that we’ll want to pay attention to on a breakout above this yellow-shaded area.
So, what do we do with all this information today? Well, we obviously know that there is resistance – historical resistance – here into this yellow-shaded area, just underneath the 1.3650-level. And as long as it stays within or underneath that yellow-shaded area, there’s still potential for this to find resistance and turn around and go back down towards the blue-shaded area, the green-shaded area, and even the blue trend line that sits down there at the bottom of the chart. If it breaks above 1.3650, we likely look for a continuation, as it pushes toward 1.3700 or, higher, up into the 1.3800s on a continuation above our current resistance.
So let’s take that information down to the 4-Hour Chart. And again, we’re going to take a look at this yellow-shaded area at the top of the chart and recognize, of course, that first off, that we have seen resistance here before, as we’ve just looked at on the Daily Chart. The zone of resistance that I have highlighted here goes between the 1.3625-level and 1.3645. So, you’ve got about a 20-pip zone highlighted in yellow here at the top of the chart. And as long as it stays within it, again, I expect there’s potential for it to go back down I’m not really excited about buying it yet.
I know that it’s hard to look at this if you’re not already in a buy. If you didn’t buy it down into the green zone, if you’re not already into a buy, then it’s hard to look at this strong bullish movement and not get into a buy, because we see a lot of bull or buying behavior for this currency pair. But until it breaks through our resistance, think of that yellow-shaded area as a brick wall. Until it breaks through that brick wall, there’s risk that it finds resistance there and bounces back down. So, any buys that you take carries risk that it finds resistance again and goes back down to the blue zone or even lower.
So, what you want to do, if you’re looking for a buy for this currency pair is that you want it to break through that brick wall. An open and close outside or on the opposite side of that brick wall gives you confidence, and it’s kind of like a safety trigger that tells you, yes, it’s satisfied a break and it’s going to go higher. We don’t want to fall prey to a false break. That’s going to be very frustrating if you get in as you see price push through there, and then it turns right back around and goes right back down, because it was a false push above there and we fall prey to that false break. So, that’s what I’m going to try and save myself from.
So, I’m going to wait for a clear open and close above this yellow-shaded area before I even consider buying it right now. Now, on the other side of that story is that if it doesn’t break through here, we could be looking for a reversal point, just like it did the last time we were over here on the left-hand side. So, definitely watching for that. Bank flow levels. Of course we’ve seen the push through yesterday’s bank flow levels. I will expect to see today’s bank flow levels much higher, just above the yellow-shaded area or higher when they come out later on today. Probably up into the 1.3650s or 1.3660s is where we’ll see those bank flow levels today.
That’s speculation at this point, but I would expect, with the bullish movement we’ve seen, we’ll see them much higher than they were yesterday, or into or just above the yellow-shaded area. But then again, if we see those bank flow levels come out above the yellow zone, that also indicates potential resistance and the possible reversal points from those bank flow levels. So, for the day today, as we challenge the historical resistance – major resistance here -, if we get an open and close above that yellow zone, I’ll look for a breakout and a continuation higher towards 1.3700 initially, and then, above that, towards the 1.3800-level.
If it can’t do that and we start to see, on the smaller compressions, lower highs and lower lows, you could take this information down to the 1-Hour, the 30-Min Chart; and if you start to see lower highs and lower lows from this yellow-shaded area, it gives you a clue that we’re looking for this to turn back down towards the blue-shaded area. And then, of course, we’ll expect some support here, but a break underneath the blue-shaded area, we look for a continuation back down to the green zone. So, definitely some things to watch there. The key point is that yellow-shaded area. Challenging historical resistance, if it breaks through it, we look for a continuation higher. If it holds here, once again, we look for a turnaround heading back down towards our supports for the EURUSD today.
