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Transcript of Video
I’m going to get started today on the US Dollar versus the Canadian Dollar [USDCAD]. I’m starting all the way out here on the Weekly Chart because I think it’ll give us some assistance as we’re looking to take new trades today because historical price action could give us clues and point to what we might expect to see during the week or during the day today.
If we go back just a little ways, of course this currency pair has been in an uptrend. I don’t think anybody would argue that. We have the longer-term trend and even a shorter leg of the trend right here, as it’s been rising all the way up here into the 1.1400s. I think the place that we need to look at, and I’m just going to get a little box shape here. The place that we need to look at is right here in this timeframe that I have highlighted in the blue box.
You could see it was a long run up. We had a leg of the uptrend pressuring higher here into the 1.1200s, and then it went for a period of time. And again, this is the Weekly Chart, so we see a couple of months where it bounced around inside of this blue box. Eventually the buyers became disinterested in this currency pair. The sellers became more interested. It broke through the bottom of the box and made a new low, challenging back towards the red trend line that you see coming up from the bottom of the chart.
And that’s going to be important I think as we look at, and I’m just going to add on another box. Let’s just do it like this. If we take another box and put it up here at the top of the chart, and it’s going to be important as we look at our current timeframe because we see a lot of similarities going between these two blue boxes. The box on the left. The box on the right. And currently we’re at the very top of. Well, not very top, but very close to the top of the top right-hand side blue box. So, as long as it stays within there and primarily underneath the highest high on the chart, there is potential for us to see dips back down towards the bottom of that secondary blue box, similar to what we saw over here on the left-hand side.
So, up at the top of this we potentially look for it to go to the bottom. If it goes to the bottom, then we look for rallies back higher. Eventually we will see a breakout of this period of congestion. All right, let’s take that information now back down to the Daily Chart. Let’s get it on down there to the Daily Chart. Of course we’ve already talked about the box on the left-hand side, so let’s take a look at the box on the right-hand side.
For the past several days, we have seen resistance here at the green zone. May even call that a double-top, but we’ve seen resistance here between 1.1440 and 1.1465. That’s the green-shaded area at the top. So far been unable to break above that. If, at some point over time, we see a breakout above that green-shaded area, we’ll look for it to go higher again. Underneath it of course is resistance. Then back down towards the bottom, which is what we’ve talked about in the Trade Room for several days. Back down here towards the purple-shaded area has been our support. At some point in time, if we see a breakout, and I might even put that a little bit lower, down here closer to the bottom. Underneath that low and under the pink-shaded area, the 1.1200-level, we’ll look for it to go lower.
In between then we have the orange and purple-shaded area. The orange-shaded area now holding as a period of congestion. You could see yesterday’s attempt to breakout above it. Unable to, came right back down below it, and now we’re holding in the orange zone. Take a look at this. Let’s just squeeze this in a little bit. Let’s just bring it in like this. If you just take a look right here, where we saw the market for several days bounce around in a period of congestion inside that orange-shaded area, and basically that’s where we are today. We’re bouncing around in a similar area like this.
So, it came off the high, bounced around for a few days inside the orange zone, eventually breaking and continuing lower. So, that’s where we are today. So, the top of the orange-shaded area will be our resistance for the day today. So, let’s take that off, that blue box, and we know now 1.1380 historically was resistance here; will likely be resistance here. We even see resistance over here on the left-hand side. So, for the day today, 1.1380 will be our resistance. As long as it stays within or under there, we look for resistance and the potential to go back down, off of reversal from the double-top up here at the green-shaded area.
If it breaks 1.1380, we already have a known risk; is that it goes all the way back up towards the green-shaded area. I don’t think this is your opportunity to buy it. I think it needs to go a little bit lower, maybe down to the purple zone or maybe even deep as this pink-shaded area down here. Let me see if I can pull that over a little bit further to the pink zone. Could be even as deep as that pink-shaded area before we look for a new buy scenario, similar to what you saw over here on the left-hand side of the chart.
So, buyers, you probably need it to go much lower. Sellers are very interested in this. Let’s go ahead and take it on down to the 4-Hour Chart and you could see the historical patterns, and I really particularly want to point out one area here. I’m going to get that triangle back, where you saw the fall off the high, the push under the orange-shaded area here, the rally back to the top of it – I’m looking inside the blue box. The rally back underneath 1.1380, and then the fall back down. So, if you take that as a clue right there inside the blue box, you take that as a clue. If I just drag it over a little bit like this, you could see it’s a very similar situation.
So, take that as a clue, bring it over here, and it could tell you what you might be looking for today. So, for the day today, under 1.1380 I believe will be an intraday selling opportunity. A breakout above 1.1380 looks for it to go back to the green-shaded area. That’s your risk in this scenario. If you decide to sell 1.1380, I probably would set a stop a little bit higher than this last high over here, 1.1401. So, let’s go with 1.1405. A sell into 1.1380, put your stop at 1.1405 to 1.1410. Above this last high over here, you look to target back to the 1.1330-level, bottom of the orange zone or lower, back down here towards the purple-shaded area at the bottom of the chart. So, selling into this resistance, like what we see over here on the left-hand side of the chart, placing the stop loss just above the 1.1400-level.
If it breaks 1.1400, if it breaks 1.1380 and the 1.1400-level, we’re looking for it back to 1.1440. So, that’s your risk in this scenario. We have seen also bank flow levels over the past few days capping the market. If the market stays down here underneath 1.1380 and we get new bank flow levels today, I don’t think it’d be too difficult for us to see them fall back down here towards the top of the orange-shaded area.
Take a look at the Forex Black Book trend bar real quick. Forex Black Book trend bar did turn green this week, and I think that’s just a cause because of this little run up that we saw last week. We saw this run back towards the green zone and that caused it to go from red to green. If that’s going to be the case and if you’re going to buy here, I still think you want it to go down. Find support down here. Purple zone. Maybe the pink zone. Down here at the lower lows of the chart. You don’t want to buy it at the top of the trend. You want to buy it at a lower point. So, even if this green trend bar cause you to want to buy this, I think it needs to go lower before you do that. For the time being, I think 1.1380 today will be our trading opportunity for the USDCAD.
