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I’m going to get started today on the US Dollar versus the Canadian Dollar [USDCAD]. Starting here on the Weekly Chart, we can see that this currency pair has been in an uptrend for quite some time. We go all the way back into 2012, down here, bottom left-hand side of the chart. We’re looking all the way back to September of 2012. A couple of years now we have seen an uptrend for the USDCAD.
Capping out that uptrend all the way up here into the upper-1.1200s. Highest high that we see here on the chart is right around the 1.1278, 1.1280-level at the top of the chart. Then we saw a little bit of a pullback. It came back down, tapping right into the red trend line that comes up from the bottom. Came back down, hit that red trend line, and ever since then, back in June and July, we have seen a return of the uptrend, pushing back towards the highest highs.
This blue-shaded area up here at the top of the chart will be our major decision point for this week. As long as we hold underneath, within or underneath this blue zone, like it did the last time we were here, going back to the early part of this year, there’s potential resistance and potential reversal point here. If it hits resistance and falls back down from here, we look for it turning back down towards the 1.1000-level or maybe even back down towards the longer-term red trend line. That’s as long as it stays within or under that blue zone. If it breaks above the blue-shaded area, all that changes above the 1.1230s, 1.1240s, 1.1250s, above the blue zone, we’ll then begin looking for higher targets for the USDCAD as it pushes to the next resistance level.
So, the blue zone. Major, critical decision point this week and going into next week. Above it goes higher. Below it, potential reversal for the USDCAD. Let’s actually take this out to the Monthly Chart. I want to take a look at some of those higher potential targets and reasonings behind those levels to watch for. First off, taking Fibonacci from the highest high on the chart, we’re looking all the way back here into 2009. The highest high we see on the chart, down to the last low that we made, back again here into 2011, right here at the lowest part of the chart.
Not this low back here, but this low right here. So, Fibonacci high, down to low actually puts the 50% retracement level exactly at the top of that blue-shaded area we just looked at, right here into the mid to upper-1.1200s. 50%. So, that’s very interesting here for the USDCAD. Above that, if we get above that blue zone that we talked about there on the Weekly Chart, the next two levels that I think that we could push towards are 1.1380. That’s the first red line that we come to. You follow it back and you see some historical resistance and congestion back in 2006. And then above that we go all the way back up here in towards the mid-1.1600s. That is interesting because that is where the .618 fib of this previous downtrend is.
So, we’re at the 50%. The .618 sits all the way back into the 1.1600s. And again, you can follow it back and see some evidence of historical support, resistance, and congestion around that mid-1.1600-level. Actually also happens to be a Fibonacci extension, as it presses from this last little downtrend leg that we see right there. So, that sits up there at 1.618, into the 1.1600s. So, the two red lines will represent our next potential profit targets on a continuation of the current uptrend we’re in, but reversal takes it back down to new lows that we haven’t seen for quite some time.
Let’s take it back to the Weekly Chart. There’s the blue zone. There’s the 50% right at the top of the blue zone. Again, squeezing it in, we can see where our next potential target is. If we break through the blue zone, and of course lower lows would be seen if we start to reverse from this level. Let’s take that information down to the Daily Chart. And at least for Friday and today we have held underneath the blue-shaded area as expected as resistance.
Interesting the Forex Black Book trend bar is still green, which I would’ve expected, which tells us that we’d want to buy it on dips into support. That’s really the main focus behind that indicator. You want it to go down, find a little bit of bearish momentum. For entry points you’re looking for it to find support once again. So, at least at this point I don’t think we have an opportunity to look for a new signal with the Forex Black Book unless this makes a dip lower, and I think that would be back down here to the yellow-shaded area.
Zoom it out a little bit here. You follow it back in time along that yellow-shaded area and you could see the support and congestion around there, so that becomes our first potential opportunity to find support here for this pair. So, buying underneath resistance. Think of that blue-shaded area as a concrete ceiling. Right now it’s having a difficult time getting through that concrete ceiling. Until it does there’s a higher probability of resistance and potential intraday reversal bounces off of this level. So, anywhere, I think, between 1.1160 and even going back into the 1.1200s, the low-1.1200s, the entire blue-shaded area history tells us on the left-hand side of the chart that there is potential resistance. Only a breakout of the blue zone looks for continuation of the uptrend.
So, these three black arrows here really show you your potential opportunities. Resistance and potential clues to reversal into the blue zone. Breakout above the blue zone, we look for continuation of the uptrend. If you’re looking to buy the uptrend, buys on dips into support, which would be back down to the yellow-shaded area become your opportunity.
Take it down to the 4-Hour Chart. Get some more detail. It doesn’t change the outlook. Just gives you a little bit more detail to your outlook. First off, let’s take a little shorter-term Fibonacci retracement level. Let’s go from the last low we see right here, just underneath the pink-shaded area. Let’s go from that low to the current resistance high, and in doing that we find the .236 fib of that little, short range right there, right back at the yellow-shaded area. So, again, that’s becoming an attractive level for support for the USDCAD right now if you’re looking for buying opportunities. Again, buying right now under the blue-shaded area, as I’ve described becomes a little bit riskier. Only if it breaks out above the blue zone do you look for a continuation of the uptrend.
So, again, the three black arrows really showing you your opportunities for the day. Resistance and reversal now is a high probability trade for the intraday today. Support back into the yellow zone becomes a higher probability trade for buying in the direction of the trend. A breakout of the blue zone, we just look for a continuation of the uptrend, back into, again, there’s the red line way up here into the upper-1.1300s; becomes our next potential profit target on the way up or even higher into the 1.1600s.
So, if you’re trading the direction of the trend, dip into the yellow zone or break above the blue zone. If you’re looking for counter trend or reversal opportunities, here into the blue zone becomes those opportunities today for the USDCAD.
