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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 here in a minute on the Weekly Chart, but first we need to recognize that all day today, starting at 8:30AM Eastern Time and throughout the day, almost all day long we have news out of Canada. News and data coming out of Canada. Some speaking. Some press conferences. Some data. Just a whole slew of news and data coming out today for Canada, so you definitely want to pay attention to that and how that affects all of these levels that I’m going to talk about here during the analysis today.
So, starting here on the Weekly Chart, we can clearly see that this has been in an uptrend. It’s been moving higher and higher from back in 2012, bottom left-hand side of the chart. It was all the way down here, bottom left-hand side, into the 0.9600s, and then over the past couple of years we’ve seen a rise all the way back into the mid to upper-1.1300s. So, quite a long-term uptrend. We did have a significant retracement or reversal back here at the beginning of this year, 2014. Went from the 1.1200s all the way back down here into the 1.0600s, and then we’ve seen that full retracement and a continuation as it pushed all the way up into the 1.1300s.
So, quite a significant long-term uptrend for this currency pair. So, we need to pay attention to that and of course the data today could completely change that outlook, or we look for a continuation of the longer-term uptrend. The orange-shaded area at the very top of the chart is our current long-term resistance, and we could see that’s a multiyear resistance. We go back, I believe, into 2010 or 2009 since the last time we were here into this price zone, so it’s been a long time since we’ve seen these price levels here into the mid to upper-1.1300s. If we can break through there, there is another area of resistance I have picked out, but that’s just there into the 1.1475-level. That’s the red line at the very top of the chart.
A long way up from the current market price, but definitely something we’ll want to pay attention to if it can break through this orange-shaded area with the news that we have coming out today for the USDCAD, or Canadian Dollar. Long-term uptrend. That’s the main thing we need to take away from the Weekly Chart. Take it down to the Daily Chart. We could start to get some more detail to the market.
I have a couple of Fibonacci levels drawn here on the chart. One from the lowest low on the chart to the current resistance high, and one from this low right here at the bottom of this short, red trend line to the current resistance high. In fact, I need to move this one over just a little bit, so it connects with that high. And now that I do that, you could see we have some overlap of Fibonacci right here into the bottom of that purple-shaded area. We could even, if we wanted to, pull this down just a little bit more to match up with some of those Fibonacci levels.
So, that purple zone is clearly our support for the day today. We’ve seen that over the past six days now. This purple-shaded area has been support. Previously was resistance right here. If we get through there, the blue zone could be some support as we see some congestion here into the blue-shaded area at 1.1145 to 1.1170, but I think even down here into the yellow-shaded area would be a significant support, and you could see further Fibonacci levels overlapping down there into the yellow zone and closer to the black trend line that you see here towards the middle of the chart.
So, clearly a break of the purple zone with any momentum, we look for it back down towards the 1.1100 or even into the 1.1000s, the yellow-shaded area for the USDCAD. Holding here, if it continues to hold here as we’ve seen for the past six days, then we look for reversal. We look for it to go back up, challenging the orange-shaded area. The orange-shaded area clearly is our current resistance. That’s 1.1320 to 1.1375. That’s the resistance zone. We could see what happened the last time the market challenged this area. We found resistance and reversal back down to the purple zone.
Clearly a break above that and a push through that resistance high, we look for it to continue higher. One last arrow. Let’s just put this one here. If it gets under the purple zone, we know it’s likely to continue to pressure back down once again for the USDCAD. Just scroll it back just a little bit, or in fact, let me just zoom out a little bit. Take a look at that purple-shaded area. You go back to the left-hand side. We know that that was resistance back here. We can see it at the beginning of the year into February of this year. January of this year. That was resistance. We’re now holding there as support. Continued support, we look for the continuation of the uptrend. Reversal, we look for it to break down this red trend line and continue to go back down, again, likely back down towards the yellow-shaded area and the black trend line would be a good spot to shoot for if it does break down lower today for the USDCAD.
Take it on down to the 4-Hour Chart. 4-Hour Chart, we could see that there has been selling pressure with the bank flow levels. If you take a look here, we’ve studied this in the Trade Room for the past week or so. We have only seen sell levels above the current market. Even yesterday we saw sell levels above the market for the USDCAD and no buy levels underneath the market. Last buy levels we saw are all the way down here at the bottom of the chart. So, currently we only have sell levels, which could be a precursor to what we’re expecting to see with that news today. We’ll have to find out in just a short while. About 45 minutes from the recording of this video we’ll know what some of that new is going to do to the USDCAD, but clearly the bank flow levels have been pressuring this to go back down and I would suspect that that would also provide some resistance for the day today, into those levels as it challenges back into the 1.1300s, if it challenges back into 1.1300s.
There’s the red trend line coming up from the bottom. It’s a shorter red trend line. Of course the longer-term black trend line sits down here towards the yellow zone as we spoke about a few moments ago. Holding here as we’ve seen over the past several hours, we look for it to go back above 1.1250, is the top of the purple-shaded area. Above 1.1250 we’re back up here towards the orange-shaded area. Progressively we’ve seen the highs getting lower here at the top of the chart. If that continues, we look for the break down of the purple zone and the continuation lower.
So, if we’re looking for lower risk, higher reward scenarios prior to the news, keeping in mind there’s quite a lot of volatility that I would expect to see here on the Canadian pairs today. But keeping that in mind, if we’re looking for low risk, let’s wipe the news out for a second. There’s no news today. If there was no news today, what would we be doing here? I think it would be more likely a buying opportunity here into the purple-shaded area into the red trend line. It would be more likely. That’s a lower risk, higher reward scenario, would be buying right now in the direction of the trend into support.
So, if you’re looking for a trade prior to the news or even after the news, then this becomes a lower risk scenario. The risk is of course that it breaks the purple zone, the red trend line, and goes lower, so that provides a lower risk. If you’re looking for a low-risk selling scenario, I think you want it to, at minimum, go back to the top of the purple-shaded area, which is right here at 1.1250, which that’s probably another 20, 25 pips up from the current market price, or you’re looking for it to go back up here into the orange zone.
So, if you’re a seller, if you think this is time for reversal or if the news comes out in selling posture, then you’re looking for the breakdown of the purple zone or selling into resistance, top of the purple zone or orange zone. If you’re a buyer and the news comes out, causing this to go back up, then you’re buying the bottom of the purple zone, red trend line, and you’re looking for the breakout above 1.1250 and, again, targeting back up to the orange zone or higher.
Forex Black Book right now has been green as the market has been going up for quite a long time. It’s been green for a while. So, if you’re looking for a new signal there, of course it’s good news that it came down, because you need it to go down into support. I would suspect if we start to see some bullish behavior today, we will likely see a green arrow and of course it would be much better if you were going to see that green arrow to be in a buy at the lowest point, which is of course primarily right now as it targets just above the 1.1200-level.
So, you could see the levels that are there today. How they’re going to be affected by the current news we don’t know yet, but definitely watch for these levels and that news later on today for the USDCAD.
