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I’m going to get started today on the US Dollar versus the Canadian Dollar [USDCAD]. I’m going to start all the way out here on the Weekly Chart and get a longer-term perspective for this currency pair. I’m going all the way back here to the top left-hand side of the chart, back into 2009. Top left-hand side of the chart, taking Fibonacci measurements from that highest high on the chart down to the lowest low that is down here into 2011. Measuring that range with Fibonacci, we find the 50% retracement level, and that’s the most important level for the day today. The 50% retracement level sits at 1.1233. So, basically the 1.1230-level is the 50% retracement level of this previous downtrend.
I’ve placed a red horizontal line right on that level, and that’s the bottom red line. There’s three red lines here. The bottom one is that 50% retracement level. That’s the most important one for the day today. However, as the market continues to pressure higher, we can then find the 1.1395, 1.1400-level as the next red line. That will be significant. And then, beyond that, we’ll go all the way back up here into the low-1.1600s. That’s the .618 fib of this previous downtrend and also where this last historical resistance high is.
If I scroll back just a little bit more, we could see the market back here on the left-hand side. We’re going all the way back in 2006. There’s that 1.1395, 1.1400-level as resistance and support back here in time. So, you could see the significance of those three horizontal lines here on the Weekly Chart for the USDCAD. Now, of course, bringing it back to current time, you could see that the market is now challenging that 50% retracement level and the 1.1230-level for the USDCAD.
Let’s go ahead and now bring this back down to the Daily Chart. And of course, over the past several weeks in the Trade Room and in my videos, I’ve been talking about the uptrend and not giving up on the uptrend because that has been in place since 2012 and there was no real clues to a change of that trend. I’ve also had this blue trend line on the bottom, showing you, for the past couple of weeks, rising lows. So it shouldn’t be any surprise that we’ve now seen a breakout. In fact, yesterday I had this additional blue line there and we’ve been talking about the triangle pattern that was developing here on the USDCAD, and the fact of the matter is we knew that one of those directions was going to breakout.
It was either going to break to the top side and continue the trend or break to the bottom side and reverse the trend. And that’s what we were looking for. A breakout of this triangle pattern. Well, we can easily see that it broke the top side and now even challenging that 50% retracement level from the Weekly Chart. So, now I’ve taken that line off because we’ve broken above that triangle and now breaking above the 50%.
For the day today, the blue-shaded area up here at the top. That 50% retracement level. 1.1200 to 1.1230 will now be our support. As long as we stay above that, I think we’re bound to continue the longer-term uptrend. The uptrend that’s been in place. So, I will be looking for new buying opportunities into support and a continuation of the uptrend. Now, I expect that over the next few days, likely going back into Sunday and Monday, we will now see this trend bar for the Forex Black Book change over to green, because we’ve seen the continuation of the uptrend. During this period of congestion or consolidation, we saw it turn red, but I expect now that we’ve seen the trend continue, likely next week this trend bar will turn green.
Let’s go ahead and take it down to the 4-Hour Chart. And as we get down here to the 4-Hour Chart, we’ll also see that 50% retracement level at the very top of the chart. But also what I want to take note of is the fact that over the past few days we’ve seen challenges of the bank flow levels – the bank flow sell levels – and then the market continuing to pressure in the direction of the trend. So, what we would want to do to give us more confidence – let’s say that. To give us more confidence in the bank flow levels now what we’d like to see is some price action that implies that the trend is reversing.
Right now we see nothing telling us that the trend is reversing. We saw the bank flow levels hit it here and hesitate just for a period of time and then start going back up. We see it hitting it here. Now we’re above there again. Note no real clues to reversal. In fact, we only see – you take away the bank flow levels. There’s only really clues to trend continuation rather than reversal. So, we’re going to really need to see some trend reversal indicators before we can really trust the bank flow sell levels again, or at least a cap into resistance. And I just don’t think we see that quite yet.
In fact, over the past few days, we have also seen the bank flow buyers coming back into the market. You can see the buy levels down here. I was hoping earlier this week we’d see it challenge down there into the bank flow buy levels before the rally higher. It just didn’t happen. It just continues to pressure higher. So, again, the support now is into the blue-shaded area. The blue-shaded area anywhere between 1.1230 and we’ll call it even 1.1200. So, anywhere within or above this blue-shaded area, we’ll be looking for support and the potential continuation of the longer-term trend.
I suspect that the bank flow levels will be much higher today, again, for the USDCAD. Beyond that blue-shaded area, if it gets back underneath the blue-shaded area, then maybe we can begin looking for some trend reversal. But that’s a long ways away and likely into next week, before we see it back underneath this blue-shaded area again or if we see it back underneath that blue-shaded area. So, continuing to focus on the buy side. I don’t really think yet there’s any reason to sell this currency pair. I don’t think there’s any clues to reversal or even that we’re challenging into one of these major resistance levels. I don’t think yet there’s a reason to sell this currency pair. I think it’s going to have to change the pattern of the trend – lower highs, lower lows – before I would even consider a new sell. I expect, over the next few days, the trend bar will turn green with this bullish price action.
So, for right now, continue to focus on buys on dips into support in the direction of our momentum, in the direction of the trend, and a continuation of the longer-term trend for the USDCAD today.
