Want FULL ACCESS To
ROSS’ DAILY TRADE ROOM?
Simply Click The Get Started Button Right Now!
Transcript of Video
Click Here to receive an email alert when Ross posts a new daily video.
I’m going to begin this week on the US Dollar versus the Canadian Dollar [USDCAD]. I’m starting here on the Weekly Chart, and I’ve zoomed way out so we can get a longer-term perspective for this currency pair because I think there’s some interesting things that we need to make note of here on this long-term viewpoint.
First is the previous downtrend. We look over here on the left-hand side of the chart and we see this previous downtrend coming from back here into March of 2009. I know that’s a long time ago. March 2009 we were all the way up into the 1.3050-level, top left-hand side of the chart. Then you take Fibonacci from that high down to the low of the downtrend. That was the last low within the downtrend, down here into the 0.9390s, 0.9400-level. That was in July of 2011, so it was a couple of years where it was in a downtrend.
So, taking Fibonacci of that previous downtrend we find the 50% retracement level. 50% of that previous downtrend right here in the middle of the chart right around the 1.1230-level. So, that’s going to be our first important clue. 1.1230 is the 50% of this previous downtrend, give or take a few pips here and there. I’ve also connected a couple of the highs within this chart with the blue trend line. You see the highest high of course with the blue trend line, and I’ve connected it with this high right here.
The last highest high that we’ve seen in most recent weeks for the USDCAD, and that happens to be also right there into the 1.1230-level. So, some interesting things there on this viewpoint. Now let’s begin zooming it in a little bit. Zooming it in, now we can see the current uptrend we’ve been in. The longer-term red trend line starting from down here into 2012. We’ve been going up since then, moving higher. We challenged there, over here into – what was that – July of this year. We challenged that long-term red trend line and starting bouncing back up again.
Now we’re coming into an interesting area because now we’re starting to come back into the area where those weekly resistance levels identified by the trend line and the Fibonacci might be coming into play. So, we’re back into our last resistance highs here. So, you could see the blue trend line, our last resistance highs, and actually that Fibonacci sitting into the 1.1230s right here at the very top of the chart. So, very interesting there.
Let’s go ahead and take it down to the Daily Chart. So, now we can see a little bit more detail within the chart. We could see the blue trend line. There’s that .618 fib sitting all the way up here at the top of the chart. Sorry, not .618. The 50% level from the Weekly Chart sitting up there into the 1.1230-level. Guess what. That matches very close with our last resistance highs. So, we’re coming into an area where we might look for one of two things. It’s either going to break out of here and we’re going to see a continuation of the uptrend and probably likely to much higher levels. The 1.1300s, 1.1400s, or maybe even the 1.1500s, or this becomes the point of reversal, where it turns back down in the other direction.
Remember, within an uptrend, we have higher highs and higher lows, and that’s clearly seen over the past few weeks, as we’ve seen higher highs and higher lows. But within a downtrend, you would look for lower highs and lower lows. So, if this current high stays lower than this previous high over here on the left-hand side, then that could be signaling that we’re looking for a turn back down for the USDCAD. We don’t know yet, but that’s definitely an area where we would take note of that.
Let’s take Fibonacci from this last high right here at the highest high of the chart, down to the current low. And doing that we find the .786 fib right at 1.1138. That’s basically the bottom of that blue-shaded area. So, bottom of the blue zone. .786 fib of this downtrend here. That’s interesting. Zoom it in one time and we take Fibonacci of the lowest low that you see now, here, on the chart and this viewpoint. Lowest low to this high right here. And I’m going to put a black X right there. This high where the black X is. Taking that fib of that leg of the current uptrend that we’re in, from the low to this high, puts the 1.27 Fibonacci extension level at 1.1099. We could call it probably 1.1100 if we wanted to, right at the top of the yellow-shaded area.
That’s where that blue trend line comes into play. We already know the .786 is a little bit higher than 1.1138. So, we’re in that zone again, where there’s a potential reversal point to see a little bit of a pullback of the trend, similar to what we saw right here, where it just went into this period of congestion, ranging inside this blue circle, where it pulled back a little bit before making another run. Definitely one of those areas we might consider that here as we approach the 1.1100-level.
Let’s now take it down to the 4-Hour Chart. As we get down here to the 4-Hour Chart, let me squeeze it out a little bit. And as we get down here, take a look at last Friday’s bank flow levels. Last Friday’s bank flow levels sitting right here into that same area. Yellow-shaded area. We’re looking between 1.1083 and the top level, 1.1108. So, there’s Friday’s bank flow levels. We could see the hesitation here into the yellow-shaded area. Again, there’s the 1.27 fib extension of that previous leg of the trend that we just mentioned here at 1.1099.
A lot of reason for resistance here. So, potential reversal point, watching for further clues of reversal, lower highs and lower lows. Those would all be things that we’re looking for from this type of price level. Now, clearly if it breaks out of the yellow zone and continues to pressure higher, we know that there’s the blue zone right above here that could also provide us some resistance. Remember if you’re looking to buy a currency pair in the direction of the trend, so if you look at this as an uptrend, where’s the best opportunities to buy it? I believe into support.
So, what we’re looking for now is support on a pullback. Green-shaded area potentially becomes that spot, which we look for that pullback. Now, we could take multiple other Fibonacci measurements on this chart. I could take Fibonacci from this low right here to this high right here. Actually I want to do it the other way. Let me flip it around here. Let’s take Fibonacci from that high, back to the low. And when I do that, we find the 1.27 Fibonacci extension right at 1.1088, and that’s right here of course in the yellow-shaded area.
Lots of reasons to believe right now that we’re into resistance into the yellow-shaded area, coming all the way from the Weekly Chart. So, for the day today, staying within or under that yellow-shaded area, potential resistance and reversal to take it back down into support, which we’ve now identified here into this green-shaded area. Historical resistance here also implies that as support. If you’re looking to buy it, I would prefer of course a dip back down into that green-shaded area. I could also put another trend line here from this low to this low, and we could see that’s back here, down towards that green-shaded area also.
The two reasons to buy this of course, and I’d be very cautious about buying on a breakout above that yellow zone with that blue zone just above it and the bank flow levels here. I would prefer to buy it back down into the green zone, watching for further clues of reversal. A breakout underneath 1.1070, underneath that yellow zone, we’re likely to see it back down here into the low-1.1010s, back down towards the 1.1035 or even into the 1.1000-level, down at the bottom of the green-shaded area as our next potential support for the USDCAD today.
