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 July 9, 2018. Today we’re taking a look at the US Dollar versus the Canadian Dollar [USDCAD] for today’s trade analysis.
We’re starting here on the daily timeframe. A couple of significant indicators that I want to point out to you. First thing, looking back here on the daily, where the black circle is, you could see significant resistance in this area. Black circle. Top of the blue trend line. Top of the green trend line right around the 1.3065, 1.3095-level.
So, the market came up along the green trend line. For about three or four days found resistance there. Began a reversal and the downtrend, the blue trend line. So, black circle: significant resistance. What we want to recognize about that is often we associate future support with historical resistance. So, where we see factual, actual resistance back in time, we look for future support when the market returns back to that level.
And if you look along that yellow-shaded area right inside the middle of the black circle, that 1.3065, 1.3095-level, follow it to the current time to the right and you could see Friday falling into this yellow zone. Today holding steady right inside that yellow zone. So, we know with fact that that historical resistance is now offering a clue to some intraday or maybe longer-term support here for the USDCAD.
Also, along that same line, we’re looking at the black trend line. Rising from the bottom of the blue and black trend line. Connecting with a couple of lows right here in the middle of the black trend line. You could see three times touching into that black trend line. And now the current market sitting into that same rising up trend line. It’s sitting right on top of it, which incidentally coordinates right there. Converges right there, where the current support is.
So, we have the yellow zone. Historical resistance acting as support and we now have the black trend line stacking right into that same level. Also, here on the daily timeframe, I have taken Fibonacci from the bottom of the blue and black trend line down here at the bottom into the 1.2540s. I have taken Fibonacci. Actually, it’s down at 1.2527, is where the actual low is. Taking Fibonacci from that low up to the most recent highest high that we’ve seen here on the chart into the 1.3390-level, low to high, puts the .382 Fibonacci retracement level right at the 1.3058-level, which is right underneath our yellow zone.
So, we have the .382 Fibonacci sitting in that same area, where our other indicator is coming in line. So, let’s go ahead and put a black circle there just so we can know exactly where we’re talking about. So, we put that circle there. And right into that black circle on the right-hand side, we could see the historical resistance acting as support. The black trend line coming into play and now the .382 Fibonacci retracement level also sitting into that same level, 1.3060 or so. Bottom of the yellow-shaded area.
So, very important level. As we look for trade opportunities today, I think as long as it sits on top of that yellow zone, it’d be a difficult place to go short. I know the past couple of weeks have been bearish. We saw the selloff of the USD on Friday after news. We’ve seen oil going up. But I think it’s a difficult place to sell the USDCAD as long as it sits within and above that yellow-shaded area.
Let’s zoom it in on that. So, as we get down to this yellow zone, where all these indicators converge together, there’s really two potential outcomes that we’re going to look for here into this level. And that’s really all there is to trading, is looking for a level that the market has made significant trading decisions and looking for one of two outcomes. It’s either going to bounce off of here – the trend line, Fibonacci, support – and go back up. Maybe intraday back to the blue zone, but that’s one scenario, is it bounces off and goes back up.
The second scenario is it breaks through and continues to go down in the current direction. Down further goes down to the pink zone at least. 1.3025, 1.3005. Closer to 1.3000. And rising goes back to the blue zone. So, we focus in on this yellow zone. We look for one of those two options. It bounces off to go up. Breaks through to go lower. You can use every indicator there is known to figure out one of those two things.
Whether you’re using the stochastic, MACD, Bollinger Bands, RSIs. Any indicator you’re using, some conglomeration of moving averages, pivot points. Any indicator you’re using is really to figure out one of those two scenarios. Is it going to bounce off here and go back up? Is it going to break through here and continue to go down?
Our Forex Black Book currently – the indicator I have on the bottom of my chart – indicates bullish. Well, it’s been bullish for the past several weeks, so that’s not too difficult to see. The long-term trend, the black trend line has been bullish. So, that’s still indicating that. I know it’s been going down for two weeks and it’s still green, but it is still showing that. Now, if it was to break the black trend line, the yellow zone, the .382 and continue to go lower, over time I would suspect that will turn red, but currently it’s green. That’s the direction we’ll focus our energies on.
Four-hour timeframe. At least today, we don’t see any price action yet that would indicate one of those two things. Remember it’s really all about those two scenarios there. It’s either going to bounce off of it and go back up, or it’s going to break through it. Look at the past four, eight hours. Just these small bodies. Opens and closes right on top of each other. No real wicks on here. So, what we’re looking for is a push above the yellow zone to indicate intraday pullback to go back up or break below the yellow zone to continue lower 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.