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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 so we can get a view of some historical perfective, taking Fibonacci measurements from the highest high on the top left-hand side of the chart, and we’re going all the way back into early 2009, to the high at the top of the chart. Fibonacci measurement from that high down to the lowest low that we see on the chart puts the .382 Fibonacci retracement level of this previous downtrend right where this red line is, and that sits at 1.0800.
Okay, that red line would be our next resistance if the market continues to pressure higher. So, now that we could see where that red line comes from, let’s go ahead and take this information down to the Daily Chart. And as we get down here to the Daily Chart, I’ll squeeze in a little bit and you could see that .382 fib just above the current market price at 1.0800. Over the past several weeks, we have seen the market holding as resistance right around 1.0700. And it’s highlighted in green at the very top right-hand side of the chart. If I zoom in one more time, we could probably see that a little bit easier.
There’s that green-shaded area at the top right-hand side of the chart. It’s at the top of a longer-term uptrend. We’ve been in this uptrend – this leg of the uptrend, the black trend line at the very bottom of the chart – since September of 2012. Well, within that uptrend, we’ve seen many smaller legs of the uptrend. And we could see that here represented by the blue trend line coming from the lowest low you see on the Daily Chart as it continues to pressure higher. Of course we could probably go down to smaller compressions and find smaller legs of the uptrend, but for the most part we have been in an uptrend.
Of course now we know where our potential target is at 1.0800. Over the past several weeks, again, we have been holding as resistance just underneath 1.0700. And that’s most significant today because that’s where the current market is. And as long as it stays within or under that green-shaded area, there’s potential resistance, just like what we saw here and here and here. So let’s go ahead and put an arrow there. Staying within or under the green-shaded area, and we’ll call it 1.0700, there’s potential for resistance and reversal to go back down for the USDCAD. That’s significant because, if you’re looking for a sell and reversal for the USDCAD, this is your lowest risk, highest potential reward opportunity to sell it as it challenges underneath 1.0700.
Now, if you’re looking for a buying opportunity in the direction of the longer-term trend for the USDCAD, this probably isn’t the best opportunity to buy it because we’re sitting underneath a price ceiling. It’s obvious that this barrier here has been significant for the USDCAD and the market has been having a very difficult time breaking through 1.0700. So, as long as it’s sitting underneath the green zone, buying wouldn’t be the perspective that I would take today. Now, if it does eventually break above 1.0700 – and when I say a break above it, I don’t mean a temporary spike above it like what we see over here, where it spiked all the way up into the 1.0730s and turned right back around and went back down. I mean a clear open and close candle body above 1.0700.
So, at least have another day to wait before we could see a daily open and close above 1.0700. But if we finally eventually do see that break above the 1.0700-level, above the green-shaded area, and above those last resistance highs, we’ll likely look for the continuation to 1.0800, where we looked at from the Weekly Chart. So we’re at a critical decision point today. This is a make it or break it type of situation for the USDCAD. It either needs to break above it and start moving higher towards the 1.0800 or we’re going to look for another fall right off of here just like what we’ve seen over the past several weeks.
The best buying solution of course will be a breakout above 1.0700. The best selling solution of course is holding underneath it. If you take a look at the back, down at the bottom of the chart, we could see that the Forex Black Book trend bar has turned red, which could indicate that we could be looking for sellers to take back control of this currency pair from the 1.0700-level and this resistance barrier. What of course you’ll be looking for are new red arrows to imply that down on the 4-Hour Chart.
So let’s go ahead and go down here to the 4-Hour Chart. And we could see that rally back into the green-shaded area once again here on the 4-Hour Chart. I find this very interesting. Also, if I squeeze this green-shaded area in just a little bit, you could see that the bank flow levels yesterday – these are yesterday’s levels – sat right here between 1.0689 and 1.0729. So, there’s your three bank flow levels here. The orange, the yellow, and the blue line. Those are implying of course resistance here into the green-shaded area and into this 1.0700-level.
I’ve also connected the last two resistance highs here. We could see the highest peak high, the spike high at the top of the chart, and the last high here. I’ve connected those with the red trend line, showing that falling high pattern that we see here. And of course, on the bottom, we see a red trend line representing the rising lows. The bank flow buy levels from yesterday were all the way down here towards the purple-shaded area at the very bottom of the chart.
So, what I’m looking for today, again, is pretty clean and simple. As long as it holds within or under this green-shaded area, there’s potential selling opportunities with fairly minimal risk and higher potential reward to go back down to the yellow zone or even all the way back down there towards the purple-shaded area and the bottom of our range or consolidation for the USDCAD. Only if it opens and closes above there, most likely on the Daily Chart, because if you look here on the 4-Hour Chart, we’ve already seen candle bodies open and close above here and then it turned right back around and went back down. So, my preference is to wait for that open and close above 1.0700 on the Daily Chart. That gives me higher confidence that it’s going to continue towards 1.0800.
As long as it stays underneath here, I’m looking for opportunities to sell it as close as possible to 1.0700, into yesterday’s bank flow levels. We’ll see where today’s levels come out later on today. If we get a new red arrow, that could imply that sellers are taking back control in agreement with the Forex Black Book indicator. So, all of those things will help us identify, more likely, resistance here into 1.0700 for the USDCAD today.
