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I’m going to begin the day today on the US Dollar versus the Canadian Dollar [USDCAD]. I’m going to start all the way out here on the Weekly Chart because I think it’s important for us to understand what the longer-term trend for this currency pair has been. If you take a look here on the Weekly Chart, just take a look at the red trend line that you see here.
The beginning of that red trend line happened all the way back in September of 2012, so we’re nearly two years out from the beginning of this longer-term uptrend. So, it continued from all the way down there into the 0.9600s, pressuring all the way back to the top of the chart, into the 1.1200s. So, that’s an important trend line for us to keep in mind as we go through some of the other timeframes here for the USDCAD.
Now let’s take that information down to the Daily Chart. And as we get down here to the Daily Chart, there’s that same red trend line coming in from the bottom of the chart. You could see several days ago or a couple of weeks ago, challenging down there, close to that red trend line, holding above it as support, and recently we have seen another turn back up in the direction of that longer-term uptrend.
Several days ago, pressuring above the blue, bearish trend line, which represented this retracement or this leg of the downtrend, and then we pushed above that. We also, over the past few days, in the Trade Room have been studying the 100-day or 100-period moving average here on the Daily Chart. That’s the green line that you see waving through the chart here, and we could see that just a few days ago we broke above that 100-day moving average. So, being above the red trend line, above the blue trend line, a retracement back higher, and now above the 100-day moving average gives us a clue to a bullish bias here for this currency pair.
Not only that. You look down at the bottom of the chart. The Forex Black Book trend bar is also green. Has been green for a few weeks now, but it’s green, giving us a bullish momentum or bullish bias right now also for the USDCAD. So, a couple of clues there to that. Now let’s take a look at some historical support and resistance. First off, let’s take a look at the green-shaded area at the very top of the chart. That’s the highlighted zone at the top, going between 1.1015 and 1.1048. That’s the green-shaded area. Follow it back in time. Of course we haven’t reached there yet, but you follow it back here, back into April. We could see some resistance back here into early part of April, late part of March.
You could see some congestion. You see support. You see a breakout here, support before that, a breakout here, and on the other side of it a break above it we see continue higher. So, historically, the green-shaded area, support, resistance, and congestion we’ve seen back in time. Between there and the pink-shaded area that sits just underneath it, there’s not a lot of evidence of support and resistance. There’s some minor areas, but for the most part there’s a clear zone between the pink-shaded area just underneath the green zone and that green-shaded area.
Looking at the pink-shaded area, we go back into January of this year. You see congestion on the way up, came up several days, congestion, broke out, went above the green-shaded area. Came back down, found support in the pink zone. We see support here in the pink zone, into early March. We go back here. We see congestion around the pink-shaded area. We go over here. We see June. We see resistance. So, historical resistance does what for us? It helps us identify future resistance, and so over the past few days, we could see the pink-shaded area, resistance helps us identify future resistance, but it also helps us identify future support because once it breaks above that resistance, that same historical resistance then becomes support.
And as we could see back here in time, any time it gets above that pink-shaded area, there’s a good chance or high probability that it goes to the green-shaded area. So, that’s a lot of historical information to look at. Take it down. Just zoom it in a little bit here on the Daily Chart, and you could see that right now we are above that pink-shaded area. That pink zone, again, goes between around the 1.0935-level and 1.0955. So, between 1.0935 and 1.0955 we’ve seen resistance over the past few days, now sitting on top of it. If today’s candle closes above the pink zone, for me that will confirm the breakout and we’ll look for the continuation higher towards the green-shaded area.
So, breaks of resistance, we look for the market to go to the next resistance, and I also have that bullish bias based on the trend, the moving average, Forex Black Book trend bar. The bias is for the upside. Buying on dips into support, breaking above resistance is really the main focus here for the day now on the USDCAD.
Take all of that information down to the 4-Hour Chart. And as we get down to the 4-Hour Chart, we take a look at last week or basically Friday’s bank flow levels, sitting right here into the pink-shaded area. So, we could see them sitting there. As long as they sit underneath the pink zone, even today if we see new bank flow levels today above the pink zone, could give us a clue that we’re looking for this to go back higher. Of course we’ll want to see a breakout above this area of resistance that we’re seeing right now. 1.0980, 1.0985, somewhere in that area we’re seeing some resistance. Potential double-top, so we’ll definitely watch for that.
If it breaks down through support, of course that will confirm the change in direction for this to go back in the other direction. You know, there’s potential clues to reversal and there’s actual reversal. And so, what we want to see is not just a clue to potential reversal, but we want to see actual reversal taking place. What would be a reversal of an uptrend? That would be a downtrend. The clues for an uptrend are higher highs and higher lows. So, if we’re going to look for a change in the pattern of the uptrend, we’d look for lower highs and lower lows. Just because we have a double-top or what could be a double-top doesn’t mean we will actually see reversal because otherwise we would never see an uptrend, because we see double-tops all the time.
So, double-tops could be broken, so what we want to see is a change in the pattern of the trend, lower highs and lower lows to begin to develop if we’re going to look for a change for this to go back down. I think today as long as it stays above this pink-shaded area, there’s a good chance that we see another rally back higher, targeting back to the green-shaded area that we studied on the Daily Chart. The bank flow levels will help confirm that today. Buys on dips into the bank flow levels. Forex Black Book.
I don’t think we have an opportunity today to see a new green arrow or a buy signal with the Forex Black Book trend bar. I think it would have to come down significantly. Our supports today will be the pink-shaded area, which we’ve already highlighted. If it is able to breakdown through that pink zone, the orange zone and the blue zone down here will be our next supports. The orange-shaded area, down closer towards the 1.0900. Underneath that, 1.0850 is the blue zone, down here closer to the green trend line.
Those are our buying opportunities in the direction of the current trend. Selling, I don’t think there’s any reason to sell it unless one of two things happens today. Either it breaks back underneath the pink-shaded area. That would be one opportunity to sell it, or a challenge back to the green zone. So, sellers kind of being patient right now, back to the green zone or under the pink-shaded area would be a potential intraday selling opportunity, but I think the trend is still up, so keep that in mind. Buyers right here into the pink-shaded area or maybe a dip down into the bank flow levels becomes an opportunity to buy it, targeting the green-shaded area today for the USDCAD.