Transcript of Video
From Forex Traders Daily, this is your daily analysis with Ross Mullins, live from Richmond, Virginia.
Hello everyone, this is today’s video analysis for June 16, 2017. Today we’re going to be taking a look at the US Dollar versus the Canadian Dollar [USDCAD] for today’s trade analysis.
As we begin to look at this chart, there’s a couple of different trends that we have been studying over the past couple of weeks. First off, the blue trend line was a clear uptrend as the market went from all the way down here into the 1.2900s all the way to the top of the chart into the 1.3700s. So, quite a long uptrend that we saw there basically since the beginning of 2017. January was the bottom of the chart.
Within that trend we see this point in the middle. This intersection of the red and the black and the blue trend line. A little black circle there representing that area. The green-shaded area is what we want to note here between 1.3230 and 1.3210. Why is that so important? Well, that’s where we’re currently finding support for the USDCAD. Four days now finding support into that same support, green-shaded area that it did back here in the middle of the trend.
So, that’s definitely something that should take note of. Of course we have been in a pretty clear downtrend and some significant bearish momentum started last week here for the USDCAD, but it’s come to a complete stop here at that same support that we recognize back here inside the black circle. Four days now. We did get a little bit of a dip underneath there all the way back down to the 1.3170-level, but a significant return back above the green zone, so it was a very short-lived, not a sustained move underneath the green-shaded area.
Zoom it in a little bit here on the chart. You could see how it’s just been bouncing around between the green zone – again, 1.3230 is the top – and the yellow zone, 1.3270 to 1.3290. So, if we’re going to see a continuation of the downtrend, the first thing that we’ll need to occur – it’s an imperative that it breaks through the green-shaded area, which it really hasn’t done yet. If it’s going to turn around and go up and reverse the trend, it would need to break the yellow-shaded area, which for the past three days it hasn’t done that as well.
We do have of course the red trend line way up here above the market. Not anything that’s in jeopardy of being challenged today. The 100-period moving average sits up here closer towards the 1.3400-level in the upper-1.3300s. So, neither one of those things really a part of the scenario for the day today, but we are just watching the market in here.
One of the other caveats that we often look at with the USDCAD is oil prices. Oil prices, whichever way oil is going, up or down, we typically look for the inverse to happen on the USDCAD because rising oil prices good for Canada and this currency pair would go down. Falling oil prices not great news for CAD and this currency pair goes up. So, we take a quick peek at the oil prices.
Let’s, first off, look at crude. We see the downtrend. It broke underneath the orange zone and right now currently challenging 47.60, 48.00, the orange-shaded area as resistance. We spoke about that in yesterday’s Trade Room, the challenge of the orange zone and even into that underneath side of that blue trend line on the crude oil chart. I’ve added also the other chart here. Actually that was the Brent. This is the crude oil chart. I’ve actually added this one. We haven’t been looking at the crude oil. We’ve been looking at the Brent price, but in this case we also see it’s been in a downtrend.
We’re coming up underneath a significant area. Look at that green zone there. Let’s go zoom it in. Support back here likely to act as some resistance between 45.35 and 45.65, the blue trend line. So, again, we’re coming up into resistance on both the crude and the Brent oil price chart. So, if oil finds resistance and goes back down, then we look for the USDCAD to go back up. It would take a significant breakout above this green-shaded area, blue trend line. It would take a breakout above the blue trend line, orange-shaded area here on the Brent oil price chart to see this oil price reverse.
Only then would we look for the USDCAD to continue to go down. So, some interesting dynamics there with oil and the USDCAD. Anyway. We could see oil is on a little bit of a rise today, which has caused this to fall back down into the green zone. But if oil finds resistance and bounces off and goes down, this will likely bounce off the green zone and go back up.
Let’s go ahead and take it on down to the four-hour timeframe. As we get down here, we see the market challenging here now into the green zone. We saw the dip, the false breakout, a push back above the green zone, dip one time here, bounce to the yellow zone, and here we are again into the green zone. So, again, for the day today, as long as it sits on top or inside that green zone, I’m looking for a long scenario back to at least, at minimum, the yellow zone, if not much further. If it can break through that yellow zone, we’ll look for much further back higher again for the USDCAD.
And the only risk here is underneath the green zone. We just don’t want it to get underneath the green zone. So, your stop loss should be underneath the green zone. How deep you put the stop loss under the green zone really is going to depend on your risk management practices. I don’t think you want. The biggest thing is you don’t want it to break the green zone and you probably don’t want it to reach that last support low. But other than that, it just needs to be under the green zone. 45 to 50 pips may be a decent stop loss for the trade. We’ll target the yellow zone, and a break above the yellow zone, we’ll look for it to go higher on the USDCAD today.
From Forex Traders Daily, this has been your daily analysis with Ross Mullins. If you would like to get Ross’ analysis on all the currency pairs he’s watching and all the trades he takes today, join him in his live Trade Room by clicking on the link below. Please leave any comments you have about today’s video in the comment section below.