Want FULL ACCESS To
ROSS’ DAILY TRADE ROOM?
Simply Click The Get Started Button Right Now!
Transcript of Video
Click Here to receive an email alert when Ross posts a new daily video.
I’m going to begin the day today on the US Dollar versus the Swiss Frank [USDCHF]. Starting here on the Daily Chart, we could see over the past several months this currency pair has been in an uptrend. We start all the way down at the bottom of the chart, bottom of the trend, the red trend line. Down into the 0.8700-level, we started a climb.
We see the first leg of the trend pressing all the way here into the 0.9000s. A little bit of a dip back down. Came back down. Challenged the 100-day or 100-period moving average here on the Daily Chart as support down into the 0.8860s. Found support there. Began a second leg of the uptrend, pressing all the way up here into the 0.9100-level. Then we went into this period of congestion, where the market ranged for a period of time, finding support here into the low-0.9000s, and we begin the third push of the uptrend, pushing now all the way back into the 0.9200-level.
So, quite an impressive uptrend here for the USDCHF. So, within the uptrend, what we’re typically looking for are buying into support. We’re looking for opportunities where it pulls back, away from the resistance highs, giving us a lower risk, higher reward opportunity, because if we’re going to buy it, we want to buy it at a low price and sell it at a high price. So, we want it to come down, very similar to what did the first two legs. Where it fell down into the moving average, it would’ve been an opportunity to buy it down here into the 0.8860s, and then you look for profit as it starts working its way back higher.
Then, as it went into this period of congestion here, buying into the green zone would’ve been your best opportunity to buy it because your profit targets become larger, your stop or risk becomes much smaller. So, in that same sense, up here at the top of the chart, as it’s challenging close to resistance into the pink-shaded area, it becomes very discouraging about buying it right now, but as it pulls back down, as it comes back down into support within the overall trend, those become your buying opportunities in the direction of the trend.
A couple of different things that we can use to identify those buying opportunities, and first off are historical support and resistance. And I have two shaded areas here. We looked at them both in the Trade Room yesterday. First off, the orange-shaded area has been there for several weeks. We’ve had that there as the market was coming up underneath it as resistance. So, we had that orange-shaded area there. You follow it. That’s about 0.9100 to 0.9125. That orange-shaded area. You follow it back in time. You could see the resistance back here on the left-hand side of the chart.
Now, yesterday I also put this blue-shaded area just on top of it, signifying an area of congestion, support that we’ve seen. Also, just on top of that you could see over the past week or so we’ve seen support here on top of that blue-shaded area. A little bit of gapping from two weekends ago. The market came down into the 0.9125-level, found support inside that blue-shaded area, and then made that next leg higher. If I was to take that blue-shaded area and draw it back to the left-hand side, you can even see over here on the left you see resistance and congestion within that blue zone.
So, the blue and the orange-shaded area anywhere within that zone, and that goes from now 0.9100 to the bottom of the orange-shaded area to 0.9150 at the top of the blue-shaded area, where would be where I would expect to see support within the overall uptrend, very similar to what you see here at the green zone or down here at the bottom of the chart. So, what we’d be looking for is something very similar.
Let’s put a couple of different shapes on here. Let’s put a couple of circles here, because I’ve done this on several currency pairs in the Trade Room over the past few days and it really gives you a great sense of what you’re looking for within the overall uptrend. You could see the fall back down into the trend line, moving average, and whatnot support found the rally higher. Then you take another one and you could stick it right here and you know that it found a little bit of congestion, a little bit of a fall, and then a rally back in the direction of the trend.
So, thirdly, we could watch for something very similar up here at the top of the chart. Now, we don’t know where it will come to an end. It could be the blue zone. It could be the orange zone. But that’s where we would be looking for those opportunities to buy it. Sitting on top of the red trend line would be perfect. The historical support and resistance into that area. We also see the Forex Black Book trend bar is green, signifying an uptrend bias right now. So, all of those give us opportunities as it challenges up here towards the red trend line, blue-shaded area, or the orange-shaded area.
Also, I’ve taken Fibonacci from the high here in the middle of the chart, where the black X is here. The first leg of the uptrend. Fibonacci from that high, down to the low puts the 1.27 Fibonacci extension level at 0.9124. Well, that’s important because we’re now sitting on top of that Fibonacci level. The 1.27 Fibonacci extension. The next extension level actually sits – 1.618 – all the way at 0.9240, top of the pink-shaded area. So, there’s still some upside that could be expected.
Now, I could take several fibs here on this uptrend. I could take Fibonacci from the highest high, down to the low. The highest high, down to the first low that we see within the uptrend. We could take Fibonacci from the high, down to here. All of those are going to sit there and clutter up the chart, but I think what’s going to happen if I was to do that, and we may do that later on in the Trade Room today. If I was to do that, you’re going to find an overlap of some Fibonacci levels right there into the blue and the orange-shaded area.
So, for the day today, my expectancy is to buy on dips into support. As it challenges back down here into the low-0.9100s, 0.9150, even as deep as 0.9100, the blue and orange-shaded area is your buying opportunity here in the direction of the trend. Then we look for a challenge once again. Our first target becomes the pink-shaded area as our resistance target. Any time it breaks out above the pink zone, we’ll look for a continuation of the uptrend. If, over time, we see a break under the red trend line, we may be looking for a change in the trend. New lower highs, lower lows. It could be a change of the trend. We don’t have that yet right now, but that would be what we’re looking for.
So, for the day today, I think your best opportunities will be buying on dips into support. Even if we take this down to the 4-Hour Chart, it’s not really going to change the expectancy. We didn’t get new bank flow levels yesterday. I was kind of hoping to see them pop up and confirm the orange and the blue-shaded area as support. Hopefully we’ll get those levels again today, but if you just take a look at last week’s levels, down here in the green zone at least, they were in an uptrend bias or an upward-facing bias. So, what I’m looking for again here is buying on dips into support, which today, for me, is here into the blue and the orange-shaded area for the USDCHF today.
