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I’m going to get started today on the US Dollar versus the Canadian Dollar [USDCAD]. Starting on the Daily Chart, we could see that this currency pair has been in a downtrend for a while now. We look back to the left-hand side of the chart, back into March of this year. We were all the way up into the upper-1.1200s. Over the next several months, we saw the push all the way back down here to the bottom of the chart, into the 1.0600s.
Several days ago, we saw the market bottom out down here, went into a period of congestion between the orange and the green-shaded area. Happens to be just above a longer-term trend line that we’ve studied in the Trade Room from the Weekly Chart. That’s the red trend line you see peaking in from the bottom of the chart. Just above that trend line we see the market went into congestion and now, over the past few days, since last Friday, we see a return back higher for the USDCAD, moving from the 1.0600s, back now into the low or mid-1.0700s, into this yellow-shaded area.
Now, through this downtrend, we have studied several Fibonacci levels. We can take Fibonacci from the highest high, down to the current low. We’ve taken Fibonacci from the high here where the green-shaded area is, down to the current low. And Fibonacci here into this pink-shaded area, where the blue trend line connects down to the current low. In doing all three of those fib ranges, we could see some Fibonacci retracement levels coming into congestion right here into this yellow-shaded area.
So, we highlighted this yellow-shaded area as a potential resistance based on Fibonacci, but interesting is that it also comes in contact with this down trend line here from the previous downtrend. So, right here into this yellow zone today will likely be our intraday resistance. We’re going between 1.0770 and 1.0790, which is the top of that yellow-shaded area. So, in this yellow zone, we would expect to find resistance. So let’s go ahead and put an arrow there showing us there is our resistance for the day today.
And it would be expected that if you’ve been buying over the past three or four days, if you bought it down here in the green zone or bought it on the break above the pink-shaded area, that this was a profit target and you’re protecting profit now. Either closing some trades, closing some profit, or at least moving your stop to protect the trade from going negative once again if you’ve been buying this currency pair. It would also be expected that if you aren’t in a buy and looking to trade it that you wouldn’t buy it right now because you’re running into a price ceiling. You’re running into a resistance. There’s really only two reasons to buy this again. Not right now, but if it takes a dip back down to support, which, at this point, I believe is down here towards this pink-shaded area would be your closest support, or it would have to break above this yellow zone, above the yellow-shaded area, and then we’d look for it to go back higher again.
So, the only two reasons to buy this pair today would be a dip to the pink zone or a break above the yellow zone. The other opportunity today, if you’re not in a buy or not looking to buy it, is that you could possibly be looking to sell it here into this area. Again, there’s multiple Fibonacci areas or levels congesting into this area, this yellow-shaded zone from three different trend ranges. We see Fibonacci there. So, that becomes a high probability resistance point along with the trend line. Definitely a spot where you’re considering a sell if you’re not in a buy and not managing profit in buys here into the yellow-shaded area.
Forex Black Book trend bar is red, representing of course the current downtrend. If that’s going to be the case, then of course we’d look for a new red arrow on the 4-Hour Chart. So, this zone highlighted in yellow is our major decision point today. Above it, we continue the uptrend. Below it, we potentially look for sells to target back to the pink-shaded area today for the USDCAD.
Let’s take all of that information down to the 4-Hour Chart, and here’s something else that would confirm resistance here. We can see yesterday our bank flow levels right here into the yellow-shaded area. Well, just above it. Our first bank flow level yesterday sat here right around 1.0793. Top of the yellow zone. So, again, we’re seeing sell orders accumulating above this yellow zone, telling us that there’s a potential resistance here. Even above there, into the 1.0800, 1.0829, the blue line, all the way up to the blue zone. Between the yellow and the blue zone, high probability of resistance.
You could see the Fibonacci levels from the three different trend ranges in the yellow zone, in the blue zone, so that confirms all of that for us. So, for the day today, again, if you’re looking to trade a USDCAD, if you’re not already in a buy, you need one of two things to happen. It needs to go down to the pink zone or break above the yellow zone. That’s the only reason to buy this pair. I would not suggest buying it under the yellow zone. The other opportunity is for a sell here. There’s no guarantees it will breakout to the top side. In fact, there’s a high probability it could find resistance and turn back down because of the trend that we’ve been studying on the USDCAD.
So, likewise, if you’re looking for a sell, you’re selling into the yellow-shaded area. As close as possible gives you lower risk. Your risk in selling it here is just above the 1.0790-level, just above the top of the yellow zone. That way, if it does break, you have a minimal loss on the trade. So, if you sell it in the yellow zone, stop losses are above and you look to target back to the pink zone or lower. Bank flow levels yesterday on the buy side were way down here in the orange and green zone. So, there’s well balanced in the favor of the sellers at the current moment, since we’ve made this rise here for the USDCAD. Another red arrow here in the yellow-shaded area with the Forex Black Book would also give you a reason to expect that the momentum is changing once again to the sell side for the USDCAD today.
