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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, over the past several months, we’ve been studying this longer-term uptrend. Coming from the bottom left-hand side of the chart is all the way back in September of 2012. Since September of 2012, we could see that the market has been moving higher and higher as it capped out into the 1.1200s.
Now, over the past several weeks though, we’ve gone into a period of ranging or congestion at the top right-hand side of the chart, where the market’s found support into the mid-1.0900s and resistance towards the 1.1200-level. Let’s go ahead and take a closer look at that range at the top right-hand side of the chart, and I’ll zoom in two times so we can see it much closer. If you take a look at this, the green-shaded area at the very bottom, into the mid to low-1.0900s, has bottomed out here.
It was coming up from the uptrend. Several days found congestion into the green zone. Finally broke above it, pressuring towards the 1.1200. Found support once again here into February of this year. Found support. Made a move higher. Came back down. Challenged very close to it. Made a move higher, back into the 1.1200s. Now we’re here once again into this green-shaded area, into low-1.0900s.
But I wouldn’t get too fooled by today’s candle. I see today’s candle is pressuring underneath the 1.0930-level, which is the bottom of the green zone, but we’ve seen this before. If you go back here to the left-hand side of the chart, we’ve seen the market spike lower here on this candle. Let’s go ahead and put the cursor right on the top of that candle. The low of that candle is 1.0909. So, we could see, back on February 19th, the market pushing all the way down towards the 1.0900-level and then retreating and turning back higher once again towards the 1.1200-level.
So, not getting too excited about this yet. Over the next couple of days, if we see a full candle body open and close underneath this green-shaded area, underneath the 1.0930s or 1.0900-level, then of course we have a higher confidence that it will continue higher. If, by the end of day today, it gets right back above the green zone and starts to give us clues to reversal, we could be looking for a turn back inside the range or back towards the higher highs on the chart for the USDCAD.
Now, the Forex Black Book is red. The Forex Black Book trend bar is red, which gives us a bearish bias, but again, our opportunities to trade with the Forex Black Book often come after a rally higher. We go down to the 4-Hour Chart. Look for an uptrend. Look for a rally higher. Find resistance. Then that’s when you’re going to look for a new signal to sell with the Forex Black Book. Unless you’re already in a sell, you’re likely not going to find an opportunity to sell with the Forex Black Book today.
So, for the day today, we’re watching for potential clues for reversal for this to get back above the green zone and start working its way higher or, by the end of day today, if it stays underneath the green zone, then that gives us confidence. Over the next several days, we may be looking for a continuation back down to the next level of support, which is all the way back into the 1.0800-level.
Let’s just go ahead and put a couple of arrows here on the Daily Chart and then we’ll go down to the 4-Hour Chart. Within or back above the green zone, we start working our way back higher for the USDCAD, similar to what happened over here on the right-hand side of the chart. If, by the end of day or over the next few days, we see an open and close underneath this green zone, we’ll look for the continuation back down to the next support, which will be into the blue-shaded area.
Now let’s take that information down to the 4-Hour Chart, and there once again is that green-shaded area and we could see today’s candle pressuring down underneath the 1.0930-level. The question is: will this candle sustain a hold underneath here or will we eventually see it starting to move back higher? Well, yesterday we saw our bank flows pop up right here into this green zone. We could see several hours of candlesticks. This is, again, the 4-Hour Chart. Several hours where the market held just above the bank flow levels. Now challenging and pressuring back down into the lower parts of those bank flow levels and just underneath yesterday’s bank flow cap, which sat at 1.0929.
I would suspect that if we don’t see further bearish movement over the next few hours, we could see those bank flow levels right surrounding the low or maybe just underneath the low, giving us some more implication of bullish pressure or potential buying pressure, or at least some support that could continue to hold it from breaking through the 1.0900-level, so definitely something to watch. If you’re looking for a selling opportunity for the USDCAD, that’s a possibility. I mean the trend has been going down. If you’re looking for a selling opportunity, I would actually prefer to see the breakout underneath the 1.0930, 1.0950-level, underneath this green zone. I’d like to see an open and close underneath it.
If I go here on the 4-Hour and zoom out, and just take a look at the last time over on the left-hand side. We looked at it on the Daily Chart, but here it is over here on the left-hand side of the chart. The last time we were here into the green-shaded area. You see the spike underneath the green zone. The leaving of the hammer candlestick over here on the left-hand side. Close to where the green arrow is on the left-hand side of the chart, there’s a hammer candlestick. Turn around and start working its way higher.
So, definitely want to see an open and close, clear candle body, underneath the green zone to give me confidence it’s going to continue to pressure lower. If it doesn’t do that, we indeed could see some pressure back higher once again. So, if you’re looking for a sell, an open and close underneath this green-shaded area will give you confidence it’s going down. Remember: buy low, sell high. We’re at the very lowest point right now of the downtrend, so it’s likely that you’re not looking to sell it at the current moment, until it gives you a clear clue of continuation, which would be the open and close under the green zone. More likely, we’re watching for clues to reversal, maybe back above the green zone. Watching for the bank flow levels later today, or simply a change in the pattern.
Right now we see lower highs and lower lows within the downtrend that we’ve seen over the past few weeks. We’d be watching for higher highs and higher lows. So, I think right now you’re looking for one of two things. The breakout. The clear breakout underneath the green zone. 1.0930 or so, and you’re looking for a continuation clue if it’s going to continue to pressure lower. Otherwise, you’re watching for clues to reversal and a possible change of the trend back to an uptrend for the USDCAD for the next few days.
