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I’m going to get started today on the US Dollar versus the Canadian Dollar [USDCAD]. I’m going to start all the way out here on the Monthly Chart. Get a larger-term overview of this currency pair, and then we’ll go down to some of the smaller timeframes after that.
First off, here on the Monthly Chart, taking Fibonacci from the highest high on the chart, all the way up here towards the 1.3000-level, all the way down into the lowest low, down here into the 0.9400-level. Fibonacci of that last downtrend range puts the 50% retracement level of this last downtrend right at 1.1233. And that’s going to be important as we get down to some of those smaller compressions. At the top of this little blue-shaded area over here on the right-hand side of the chart is that 50% of this previous downtrend.
The next Fibonacci level that we see of that previous downtrend higher would be all the way up here towards 1.1665. That’s all the way up here towards this top red line that you see, so quite a long ways before we would reach into that .618 fib beyond the 50% fib or retracement level of this previous downtrend. Just wanted you to see that first.
Now let’s take that info down to the Weekly Chart, and here’s the most important part about that. That’s the top of this blue-shaded area. 1.1233 is the 50% of that monthly range. So, I just wanted you to see that first, and note the fact that since the beginning of 2014, the beginning of this year, we have found resistance right around that low-1.1200-level. And you could see that here, back into January, finding resistance, reversal back down to the 1.0600s. Here we are again.
So, the question of course is are we finally looking at a breakout above here and we’re going to look for it to continue the uptrend, which obviously this pair has been an uptrend for a long time, going back to 2012. Are we going to look for the breakout of 1.1235 or so, the 50% retirement level from the Monthly Chart and a continuation of the uptrend, or is this a place like it was back in January of this year, where we look for, once again, market reversal here for the USDCAD? And I think we haven’t really answered that question yet.
Over the past week or so, we have just challenged it, but we haven’t really seriously broken out of this blue-shaded area yet, here for the USDCAD. Forex Black Book this week has remained green, so that’s not too much of a surprise. We have seen it continue to push in the direction of the trend. Now let’s take that info down to the Daily Chart, and here we are again. I’m going to zoom out a little bit so we could see the historical resistance here into this same 1.1230s. You could see the resistance back here in January. We saw an attempt to breakout above that 50% retracement level. 1.1233. We saw an attempt to breakout above it, couldn’t sustain it, didn’t really seriously open and close above it, even here on the Daily Chart, and then you see reversal.
So, here we are again. Here’s the question here about this. Have we opened and closed, broken out above 1.1230 and that 50% retracement level? Well, I don’t believe we have yet. We see today’s candle open above it. That’s the little, red candle that we see right now open above it, but we’ve seen that happen before, and now it’s back inside. So, I think that as long as it stays within that blue-shaded area and doesn’t open and close one single daily candle above that blue-shaded area, then we potentially look for reversal.
It could be short-term reversal. It could be long-term reversal, but we look for some reversal, maybe back to the bottom of the blue zone or maybe even back to the yellow or the green-shaded area and the black trend line, but we could be looking for reversal for the USDCAD if it stays within that blue zone by the end of day today. Now, the other side of that story is if by the end of day today, which is that little red candle right there. If it breaks out and closes above 1.1230, that could be our first piece of evidence, our first clue because we haven’t even seen that yet this year, that we’re looking for the continuation of the uptrend.
First off, we go back to that top red line into 1.1310 or so, or higher, but we can now look for those clues of resistance and reversal, which is staying within the blue zone or lower, or breakout, which is getting an opening and closing above 1.1230. Let’s take that information down to the 4-Hour Chart. Now, as we get down to the 4-Hour Chart, it changes it a little bit because we can see we have seen four-hour candles above that blue-shaded area, but it hasn’t sustained it on the Daily Chart. So, what we’ll be looking for is for the end of day today to either stay above that blue zone or get back underneath that blue-shaded area.
We are challenging right now into this little area of resistance right here. Let’s put a horizontal line right here, right at 1.1213. If it stays on top of that today, we could be looking for a continuation higher. This could be the blocking point that keeps it from going lower and having that reversal. We’ll have to watch how this handles. If you’re looking for a buy today, this is probably your very best opportunity to buy this. If you’re looking to buy the USDCAD, this is probably your very best opportunity today to buy it because I believe if it gets through 1.1200, 1.1213, then we’re likely looking for it all the way back down here towards at least the bottom of the blue zone or maybe even deeper down here towards the yellow-shaded area.
So, this will be a critical decision point right now, right around the 1.1210, 1.1213-level. If it stays above it, we look for it to go back up. If it breaks underneath it, like I said, we look for it to continue to go down. So, this is a critical decision point. Right now, if you’re looking to buy it, this is the spot to buy it for the day today. If you’re looking to sell this, I don’t think you want to sell it yet. I think you’d want it to break underneath that red line, underneath the 1.1210-level, and then you look for it to go down. So, I don’t think this is a sell opportunity quite yet, but more likely on an intraday basis, a clear buying opportunity.
We don’t yet have a buy signal from the Forex Black Book, and we may not get one today because it hasn’t really come down very far, but green trend bar. If we get a green arrow, that becomes a buying opportunity. Let’s also take a trend line from this low to this low with a green trend line. You could see it here on the chart. We’ll just connect our last two lows there with the green trend line. That sits down here towards the 1.1160s, 1.1160, 1.1165, right into the bottom of the blue zone. So, that clearly becomes a potential support if it breaks down through that red line. So, clearly the red line is a critical decision point today. Staying above that and the blue-shaded area by the end of day today, we look for continuation of the uptrend. If it gets down underneath this, limited risk for buys would be underneath there, underneath 1.1200 or so. Then it looks for it back down to 1.1160s. Beyond that, beyond that green-shaded area, we could be even looking for deeper reversal back down here into the 1.1000s once again for the USDCAD this week.
