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 October 11, 2017. Today we’re going to be taking a look at the US Dollar versus the Canadian Dollar [USDCAD] for today’s trade analysis.
We’re taking a look at this currency pair on the daily timeframe. For the longest term, we could see that this currency pair was in a downtrend. We go all the way back to April of this year. It was clearly moving down. Pretty aggressively moving down. Found some support into the 1.2400-level, bounced up a little bit, and then made a second leg all the way down into the 1.2100-level.
Since then, and we’re, getting the crosshair, looking all the way back to September 8th, so I guess we’re looking a little bit more than a month now. We have been rising in an uptrend along the black trend line on the right-hand side of the chart. So, that’s the pattern that we’re going to go with for now. As long as it’s rising along the black trend line, we’re going to be looking for buy opportunities.
Of course that would imply that the USD continues to get a little bit stronger. It would imply that the CAD weakens against the USD. All of that has to happen for this to continue to go up. If anything and the opposite happens, USD sells off pretty quickly or the CAD rapidly appreciates, then we would look for the breakdown of the black trend line and maybe a return of the overall longer-term downtrend. But we’ve actually seen it on a pattern of an uptrend and that’s what we’re going to go with until the pattern changes.
Let’s go ahead and zoom it in a couple of times on that black trend line. There’s the pattern. I’ve highlighted it with some circles so we can really get a handle on what’s been happening. We found support again down here just above the 1.2100-level. It broke out above the blue zone, settled down on top of it as support, and then began to rally. Found some congestion around the yellow-shaded area. Pushed above it. Sat down on top of the 1.2335-level. Then made another rally.
Then it broke above the orange zone. And not quite all the way back down to it, but made a little bit of a dip and then a rally and a break through the green zone. So, now, just looking at the pattern of the trend, what we’re expecting, and of course there’s no guarantees with that, but with the trend, what we’re expecting is if the pattern continues, we’re looking for it to stay within or above the green zone and then start rallying to the pink zone in the direction of our current trend. Again, that’s going to assume that the USD appreciates against the CAD.
We do have FOMC meeting minutes coming up at 2PM later on today. That may have an effect on this currency pair as well. We have other news coming up this week that could affect this currency pair. We also know that oil has been making some moves over the past few days and that can affect the CAD. But right now the pattern of the trend hasn’t changed. The only thing that’s going to tell me the pattern of this trend has changed is that it breaks under the green-shaded area.
If it gets under the green zone and it gets under the black trend line, that changes the entire scenario. It changes the setup that we’ve seen for the past month or so, and then we’re probably looking for it to start heading back down in the direction of the previous downtrend, down to the orange zone or lower.
We’ve taken Fibonacci from a couple of different ranges on the chart. The two red trend lines specifically. Taking Fibonacci of those two red trend lines, we find that we have some Fibonacci overlapping here in the green zone. .786 and .886 of the two previous trend ranges sitting at the green zone. We see some overlap of Fibonacci at the orange zone. We even see some all the way down here at the yellow-shaded area. And incidentally, we also see some up here at the pink-shaded area at the very top of the chart.
So, we have Fibonacci overlapping with each one of these colored, shaded areas that you see here on the chart, so that gives us some confidence in these levels as barriers. Support and resistance. So, for the day today, I say as long as it’s above the green zone and maybe we see a little bit of a boost for the USD later today at FOMC meeting minutes, we look to target the pink zone. We look for buying opportunities at the green zone. Our risk is pretty simple. It’s not too hard to figure out that we don’t want it to break underneath that green-shaded area, so stop losses would go under the green zone in case and under the last low likely in case it breaks out underneath it.
So, as long as it’s down here in the green zone, our risk is smaller. Our potential gain, pink zone or higher if it breaks through there in the direction of the trend, is stronger. So, lower risk, higher reward. What we’re looking for is that long opportunity into the green-shaded area. All of that changes if it breaks down through 1.2500, the bottom of the green zone, the black trend line, and then we look for it to go lower.
Let’s take it down to the four-hour timeframe. Now, when we get down here, some of these indicators, like these circles, get a little wonky, but what we could still see is – it’s not too hard to see – that the pattern is still there. We have seen the rising pattern and that’s what we’re going to stick with. We’re going to stick with that rising pattern. It attempted yesterday, and it made an attempt, to get underneath this green-shaded area and it’s so far had a very difficult time staying underneath that green zone.
So, what I’m actually looking for today, and I’m going to zoom it in one more time. What I’m actually looking for today is a nice surge. An indication that the buyers are interested in this currency pair. There’s no indication yet that the buyers are interested. In fact, it could simply just break on down, kind of like what it did right here. Break on through the bottom of 1.2500 and go lower.
So, we need some indication before we go long in the direction of the trend that the buyers are interested. What that’s going to look like to me is likely a large bullish candle. A bullish candle back above 1.2535 gives me confidence that the buyers are interested, and then we can target back to the 1.2600-level. If it doesn’t do that and then suddenly gets back under the 1.2500-level with a bearish candle – let’s make that red so it looks like the bearish candles. If it suddenly turns back under and incidentally I think opens and closes back underneath 1.2505, then I think we’re looking for it back down towards the orange zone.
So, two things we’re looking for. Either it breaks 1.2500 and goes back down or we’re looking for some infusion of buy orders. We’re looking for indication that buyers are still interested in the currency pair, and then we look for it to go back above the green-shaded area and target the pink zone for the USDCAD today.
From Forex Traders Daily, this has been your daily analysis with Ross. 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.