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I’m going to get started today on the US Dollar versus the Canadian Dollar [USDCAD]. Starting here on the Daily Chart, we’re looking at a long-term uptrend previously on the left-hand side of the chart, going from all the way down here into the 1.0178-level, bottom left-hand side of the chart, all the way up to the top right-hand side of the chart, into the 1.1280-level. So, quite a long uptrend on the left-hand side of the chart.
Over the past several weeks, and we’re starting all the way back here into mid-March, top of the chart, we began a downtrend that has now pushed all the way from the top of the chart back down here, into the low 1.0700s. The pink-shaded area here in the middle of the chart showing us where our current support is. If we follow that same area back in time, just above the 1.0700-level, we could see historically this has been a significant price level. There was a several-week period back here on the left-hand side that found resistance under that same 1.0700-level.
We started back here into December of 2013, and we didn’t break above that resistance until into January of 2014. So, there was several weeks where it found resistance underneath that pink zone. So, we can come to expect, with some pretty decent confidence, that since there was that historical resistance there, back on the left-hand side, we’ll likely find some support, especially on an intraday basis here, into that same 1.0700-level.
I’ve also taken Fibonacci retracement measurements from the low at the bottom of the trend to the current resistance high. So, taking that Fibonacci retracement tool and measuring from low to high, we find the 50% retirement level, the halfway point of that previous trend, sitting at 1.0730. The top of that pink-shaded area. And you can see that 50% sitting over here on the right-hand side of the chart. So, not only is it challenging historical resistance back here, we’re also challenging the 50% of that previous trend range.
And if there’s any question whether or not that’s the right trend range to look at, you could look up here. Just over the past month or so, we found support on top of this blue-shaded area. The blue-shaded area just above here, and we could see much support over the past several weeks, about a month, and the .382 fib. 1.0859 was sitting there. And you could see the congestion around that .382 fib. 50% here. .618 at 1.0600. Follow that back and you could see that’s where our support of that same area of congestion over here on the left-hand side sat into the 1.0600-level.
So, there’s some historical significance to each one of these levels that I’ve just measured with the Fibonacci tool on the left-hand uptrend here. So, if you’re looking for opportunities today, I think, at least for the intraday today, maybe even going through the rest of the week, as long as it sits within or above this pink-shaded area and the 1.0700-level, I believe there’s a greater expectancy of intraday support here. So, what we’re looking for are temporary bounces. We’re looking for holding as support, bouncing back up. Very similar to what happened during this period back here, where it found resistance. It found resistance. Bounced down. Resistance. Down. Resistance. Down. Eventually did breakout above and continue to pressure higher. So, just like this, yet opposite, we’re going to look for support.
Well, similar to what happened here in the blue zone. Support. Bounce. Support. Bounce. Eventually, after a several-day attempt there in the blue zone, it did breakdown. So, in a similar fashion as the blue zone as support, as similar fashion as the pink zone as resistance on the left, we would expect intraday support here. So, that gives us lower risk, higher reward opportunities to actually buy this and then sell it. Now, I know it’s going to be difficult to say buy it during this pretty strong downtrend that we’ve been in, but the key information that we’re looking at is historical support here into this pink-shaded area. And as long as it stays above it, I think your lowest risk, highest reward opportunities are for buying on an intraday basis.
Selling right now, your risk is pretty high. Just trying to decide where to place a stop loss if you were going to sell is pretty difficult because stop losses, unless you have just a set stop loss that you always take. Let’s say every trade you always take has a 30-pip stop loss. Then maybe you could do that, but if you’re looking for a technical reason for a stop, a resistance or the last high, then it’s going to be very difficult to suggest a stop loss because that’s very high up there, above the blue-shaded area. So, your risk is very high for selling right now and your potential reward is very low because you’re challenging into a target of support right now.
So, your risk on the other side, if you were to buy it right now, is very low. Just underneath the pink-shaded area. And your potential ratio for profit is pretty decent, pretty high, as you would target back to the blue-shaded area and maybe back to the blue trend line as another clue of resistance. So, for the day today, maybe even into tomorrow, I think your lowest risk, highest reward opportunities may be for buying here into the pink zone, targeting back to the blue zone. Your risk is just underneath the pink zone.
Take it down to the 4-Hour Chart. And as we get down here to the 4-Hour Chart, you could see that blue zone up here. You can see the pink zone and the support that we’re now finding here into the pink-shaded area. That gives us a pretty decent clue what we’re looking at right now. If we go underneath the pink zone, of course we’ll look for a continuation lower.
So, what about the sellers? If you’re thinking, “Hey, I think this is a better selling opportunity than buying opportunity,” that’s perfectly normal and legitimate. I think you would want to sell it closer to the blue-shaded area. I think you’d want it to go up. I think you’d want it to find resistance, and that becomes your sell. And I think that’s much better suited, all the way up there into or just underneath the blue-shaded area, into the 1.0800, 1.0825-level.
So, if you’re looking to sell it, I think you’re looking for one of two things today: a rally to resistance, the blue zone, or a break of the pink zone for a sell. Otherwise, until it does one of those two things, I’ll be looking for opportunities for buying into support with fairly minimal risk and a high potential profit target for the USDCAD today.
