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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, over the past several days, we have continued to see support here into the blue-shaded area in the middle of the chart. We’re looking between the 1.0838-level and 1.0850-level. So, about ten to 15 pips highlighted in blue down here in the middle of the chart we could see has held as support the past couple of days.
Then we go back here. We see six or seven days holding as support here into the blue-shaded area back into May. We go back a little bit farther, mid-May, and then a little bit farther, early May. So, the entire month of May continued to find support here into this blue-shaded area. We made the rally all the way to the pink-shaded area, into the mid-1.0900s. We’ve then, once again, fallen back down to the blue zone here in the most recent days here in June. So, as long as it continues to hold here in the blue-shaded area as support, then we’re looking for potential reversal and the turn back in the direction of the previous uptrend.
And if I zoom it out one time, you could see what I mean by the previous uptrend. You go over here. Left-hand side of the chart. It was an uptrend. We’ve had the retracement. We’ve continued to find support in the blue-shaded area. If it continues to find that support, we potentially look for a return of the previous uptrend. All of that will change, however, if we break underneath that blue-shaded area.
Let’s go ahead and take Fibonacci measurements of the low down here, bottom left-hand side of the chart, to the current resistance high. Let’s bring it all the way up here. Let’s make sure it gets attached to the lowest low down here at the bottom. And in doing that, we find some Fibonacci overlapping in a couple different places.
First off, interesting enough, the .382 Fibonacci retracement level is at 1.0859. Now, I know it’s a little hard to see here in the midst of all this noise, but if you look to the right-hand side of the chart, you see the .382, the 1.0859-level. That’s where we’re currently finding support. 50%, if it falls through this blue-shaded area, sits all the way down here, and let me put a highlight down there so we can really see where it is. We’ll just take this and highlight it like this. So, this pink-shaded area happens to be where the 50% retracement level is. All the way down there into the middle of the chart and the 1.0700-level.
So, if we break the blue zone, that becomes our next target, but we haven’t broken the blue zone yet. So, for as long as it stays above that zone today, intraday buying opportunities will continue to be the efforts for the day today. Buying, looking for returns back to the orange zone as resistance, the pink zone, or possibly a breakout of resistance and a continuation all the way back here to the green-shaded area. If we breakout underneath the blue-shaded area, then we’ll look for a continuation back down to, like I just said, the pink-shaded area, down here at the bottom of the chart. Let’s put one more line right about right there. So, that pink-shaded area becomes our support on the break of the blue zone. Above the blue zone, we go back to resistance.
Let’s go ahead and take it down to the 4-Hour Chart here on the USDCAD. And during this timeframe, the entire month of May and the time it’s been into this blue-shaded area, we’ve seen very consistent support along that blue zone with the bank flow levels. Take a look at where the bank flow levels have been for the past month or so, going all the way through the beginning of May. Right there into that blue zone.
Several days ago, we were studying the fact that it was very interesting. The market was well above those bank flow levels. Look it was way up here and the bank flow levels were down here towards the blue zone. Very interesting there, but now we’ve seen the market come right back down like a magnet to those bank flow levels and continuing now to find support here. Yesterday’s levels bottoming out here into the mid-1.0800. So, again, that gives me a little bit of confidence to say that as long as we hold above that blue zone, the last historical supports that have been there since May, the bank flow levels, I’m going to begin looking for efforts to buy this currency pair today. In fact, I’ve already bought it. That shouldn’t be a surprise. If you were in the Trade Room yesterday, I told everybody in the Trade Room that I bought it.
So, I’m in a buy here from the blue zone, from the bank flow levels, and I’m looking for it to go back up towards the orange-shaded area as the first target. Beyond that, we’ll go to the pink zone. Beyond that, potentially the green zone. The risk in that scenario is likely if it breaks down underneath the blue zone and particularly underneath the bank flow levels, yesterday’s bank flow levels. Let me take this blue trend line off for a moment. Yesterday’s bottom bank flow level was 1.0826. So, worst case scenario, you’re placing your stop underneath that bottom bank flow level, ten pips or so, ten, 13 pips underneath that bottom bank flow level and you’re looking for the reversal to go back up to the orange or the pink zone.
All of this is telling me that there’s a lot of indication of support here, and I just don’t want to sell it right now. Where would I sell it? If I was a seller, where would I sell it? Well, I would sell it underneath the support. It needs to breakout. Think of that blue-shaded area as somewhat like a barrier in the market. It’s a brick wall in the market. And as long as it stays above that brick wall, you don’t want to sell it. If it breaks through the brick wall, then you expect acceleration lower. So, when do you sell it? A break through the blue-shaded area, that brick wall, or a rally back to resistance, which would be right back up here towards our orange-shaded area.
So, those are your two opportunities to sell it. Under the blue zone or back to the orange zone. So, if that being the case, we’re sitting on top of the brick wall. We’re sitting on top of that barrier. The bank flow levels. Above the last lows. So, that becomes your opportunity to buy this currency pair.
One last thing. Let’s zoom it in here on the 4-Hour Chart. Let’s take Fibonacci measurements from the lowest low that we see down here. The last low we see to the current resistance high, and in dong that, we find the 0.786 Fibonacci retracement level at 1.0851. That’s the top of the blue zone. Bottom of the blue zone is the 0. 886 fib. So, of that trend range right here, the last up leg, the .786 and .886 fib are top and bottom of the blue zone, confirming support there. So, again, the only thing that I think is a possibility today is a buy here into the blue zone, target the orange zone. If it breaks the blue zone, that’s the risk. Then we look for it to go lower for the USDCAD today.
