Forex

Prodigy Trader DNA: Weekly Forex Majors Overview by Ross Mullins

  It’s important to note one thing is that this is our last trading day of the month of November. It’s the last day of November, so that could increas

 

It’s important to note one thing is that this is our last trading day of the month of November. It’s the last day of November, so that could increase the volatility in the market. Tomorrow we start the last month of the year, December, so that, again, could increase the volatility. Taking a quick peek at the news calendar here on ForexFactory.com, we can see that during the U.S. trading session today, there’s not a lot of news to happen during the U.S. trading session. Some medium impact news may or may not have any significant impact on the currency market, and we have to go much later in the day, maybe even tomorrow, depending on where you are in the world. 8PM. 8:45PM. We have some news out of China, which of course will likely affect pairs that trade with China, like the AUDUSD and so forth. And then, at 10:30PM, we do have some news out of Australia. Interest rate news. So, you’ll want to watch for that. That is all Eastern U.S. time. Maybe even the next day, depending on where you are in the world. So, let’s get started taking a look at each of the U.S. currency pairs.

#USDCHF, and I’ve zoomed out to the monthly chart first because it’s important to do this because we haven’t been into the recent highs that we’re seeing today since many years ago. We have to go all the way back here. The last time we were close to these highs was all the way back into 2010. We could see that here on the monthly chart. We go back before that. We’re back in the 2009. We even go further back, and that’s all the way back in 2008. So, you see last top shaded area, the double red lines that you see up here. We have to go back to 2008, 2009, and 2010 since the last time the market was in these same price level. Multi-year highs being reached for the day today.

Let’s begin to zoom that down. Weekly timeframe. You could see that double red line at the very top of the chart. That’s where we’re coming close to, and again, 2008, 2009, and 2010 was last time we were here into these levels. If I just scroll back a little bit, just look at the double red lines. We go back to that timeframe, into 2008, 2009, and 2010. You could see where the market was. When you look back here, you could see it going all the way back to the left-hand side of the chart. You could see the congestion there. You see some resistance here. Resistance here. Some support right here in 2010. That’s important to note. That support right there likely to show us where our current resistance is.

On daily timeframe, you could see the market pressuring higher. I always tell folks in the live Trade Room. If you’re going to buy a currency pair, you want to buy low and not at a high point. So, not really a good opportunity to go long today as it approaches this resistance level. That arrow needs to be changed to a darker color, so we can see it. That is our resistance, so it doesn’t make sense to buy into resistance. For me, if I’m going to look for a buying opportunity, it’ll have to go back down. Settle down into the support, likely as deep as 1.0200 before we would look for a new buy scenario here. As it approaches here, we’ll watch for clues to resistance and potential reversal as it tackles that multi-year high for the USDCHF.

#EURUSD not quite as multi-year lows here on the EURUSD, but we are reaching some significant lows that we see here on the daily timeframe. Back at the beginning of this year, into March and April, we saw the market tackle down here into the 1.0500-level, the green-shaded area at the very bottom of the chart. That’s where we are now. Again, buy low, sell high. If you’re looking to go short, if you’re looking to sell in the direction of the current trend, not a very desirable place to sell it into the support, because the last time we were here, we could see what happened. It bounced off there and went up. So, a desirable place to take a short. Potential area to look for reversal from this area.

Now, we do know that if it breaks through there, of course we’ll see a significant continuation of the downtrend. Zoom it on in here on the daily timeframe. Couple of times, so we can really get a good handle on how close we are to that low. Take a look. 1.0500. We’re about the 1.0570s right now. Could see a little bit of a continuation, but again, if you’re going to look to sell, I would prefer to sell into resistance, which at this point is closer to the pink-shaded area. You take it down to the four-hour timeframe. Squeeze it out a little bit like this and zoom it out. So, now you could see where that pink-shaded area is. The green-shaded area. Little bit of a congestion zone right there. Let’s zoom it one time.

#GBPUSD we’re at the bottom of the trend. We’re seeing support into this green-shaded area right here. Let’s put two arrows here. One arrow showing support at the green-shaded area. One arrow showing that if it breaks there, we look for a continuation lower. You follow it back in time, just to the left-hand side, back earlier this year into December and January of last year. We see support here. It bounced up, eventually breaking through it and continuing to go lower. So, that shows us that this green zone is a significant price level right around the 1.5000-level.

So, 1.5000 is an easy number to remember. If it breaks 1.5000, you look for it to go lower. Staying above 1.5000, potential to rally back higher. We are at the bottom of this falling channel that we see here. The red line. The black line. We’re at the very bottom, so there is potential to find support. I of course would say that the trend is still down though. We could see the market challenging that green zone today. Again, not a very desirable place to go short. There’s only two reasons to go short on this pair in my book. We’re looking for it to either break through this area or it rallies back into resistance before you look to sell it. So, not a desirable place to go short here as it challenges down into the support zone. I needed to either go up before it goes down or break through the current barrier of support for the GBPUSD.

#USDCAD challenging highs here. We could see multi-year highs sitting all the way back here. Just a couple of months ago, September, October, you see it challenging the multi-year high. Took a dive down. Now we’re coming back up. A few days ago, we saw it challenge that high again. Bounced off of it. Now we’re coming back to challenge back higher once again.

You could see the black box representing somewhat of a period of congestion or a range here that this pair has been in. This isn’t much different than what we looked at late last week. If you took a buy at the green zone, of course you’re protecting profit. You’re looking for the breakout of the congestion zone, which at this point would be about a breakout of 1.3370. Open and close above 1.3370, which it’s attempting to do, but not doing right now, we look for the continuation into the multi-year high. That’s there into the mid-1.3400s, the blue-shaded area. If, by the end of day today, it turns back underneath that pink-shaded area, the green zone becomes the target. And of course, if at any time it breaks under the green zone, well look for it to go lower. So, interesting. We still have the upside expectation. Need the breakout of our zone of congestion here between the green and the pink zone before we can have confidence it’s going to continue to pressure higher for the USDCAD.

#USDJPY similar situation here on the USDJPY that we just looked at on the USDCAD. We have a period of congestion. We’ve studied the trend over the past many weeks. Rise. Congestion. Rise. Congestion. Now we’re looking for a break of that congestion. Right now it’s finding support at the orange zone. That’s not too hard to see. Over the past week or so, we’re finding resistance at the purple zone. Past couple of weeks have found that. We need a breakout here for this currency pair. Zoom it back in again. We see support at the orange zone. So, if you bought it, if you happened to buy it at the orange zone, you’re protecting profit as it goes back up towards the purple-shaded area. That becomes your resistance target.

Four-hour timeframe doesn’t change it at all. Let’s zoom out a little bit. Doesn’t change it. I still think buying the orange zone, breakout of the purple zone in the direction of the trend is the focus direction that you’ll want to look for here on the USDJPY, but also watching for signs and evidence of reversal from the mid-123s, the purple-shaded area for the USDJPY this week.

#AUDUSD we have seen maybe a contraction pattern developing here. The triangle. It’s shown by the green trend lines. A little bit hard to see because there are so many lines on the chart, but the green trend line coming down from the top shows falling highs. The green trend line coming up from the bottom shows rising low. So, if you were to highlight this with a triangle pattern, it might be easier to recognize. Let’s take a triangle from here to here, and we’ll just kind of draw it out to about here.

You see falling highs along the top of that triangle. Rising lows. So, right now we’re in somewhat of a contraction pattern. This is what I mean by that. We’re in somewhat of a pattern that shows falling highs and rising lows. So, pull it out just a little bit more. See if we can get it closer. Falling highs. Rising lows. So, we’re right in the middle of that right now. We have seen a little bit of a push above the long-term down blue trend line. If I go out to the weekly timeframe, you could see that blue trend line coming from the longer downtrend.

If you are going to go long, there’s two reasons to do that. It either breaks above the resistance or goes back down here to the support, and that’s where I would prefer to go long. If you’re looking to buy this currency pair, the preference would be to do it down here towards the orange-shaded area, into the mid-0.7100s.

#NZDUSD period of congestion. Last week, we started studying the potential of a head and shoulders here. If I take a couple of black X’s, we have one on the left, we have one in the middle, and we have one on the right. So, we look at a potential head and shoulders developing here. The orange-shaded area becomes your support and the shoulder level there for the currency pair. The confirmation of reversal comes on the breakout of the green zone and the push through. Maybe 0.6590 to 0.6600 gives you an upside expectation. You look for it to head on back up here into the yellow zone as your first area of resistance beyond the potential head and shoulders. But on the other side of that, we have not seen that breakout. We see resistance here at 0.6570, 0.6590, the green-shaded area. A push back under the orange zone invalidates the head and shoulders and we look for it to go lower.

Either above it to go higher or below it to go lower. Zoom in a little bit. You could see that black box. You could see the congestion. Eight days now been just bouncing around in here. You could see what we need. A breakout either below the orange zone or above the green zone for a continuation pattern here for the NZDUSD this week.

Prodigy Trader DNA is a weekly and daily publication in association with FTD all rights reserved. We encourage traders/investors to review the original update with following link:

http://bit.ly/RossMullinsForexOverview48

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