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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. Get a longer-term viewpoint of a few different trend lines that we could see here on the chart. The first trend is the red trend. We start all the way back here in September of 2012.
So, quite a while ago, we began an up trend that started all the way down here into the 0.9640-level or so. Maybe a little lower into the 0.9620s. We started down there at the bottom. We began moving higher. Started seeing higher highs and higher lows developing within the uptrend, pushing all the way up here to the top of the chart. Just into March of this year, we settled out into the 1.1200s, up in the upper-1.1200.
Then, over the recent weeks, we have seen a fall from March. We saw the fall taking it all the way back down here into the 1.0600s, and that happened just there at the end of June, beginning of July. And you could see the blue trend line representing that down trend. So, we have a longer-term up trend and we’ll call it a mid-term down trend. Just kind of a retracement of this previous up trend as it started moving back down towards the red trend line.
And of course we found support above the red trend line and now, over the past few days, we’ve seen it moving back higher again, pushing now into the 1.0900s again. And that green trend line represents the shorter leg of the trend. So, three different trend lines showing you three different major trends that have developed. Mostly we could see the red trend line long-term. The green trend line is an up trend. So, two up trends and one down trend. Really the direction that I’m focused on right now would be the up trend side since we’ve broken above that blue trend line.
Taking all that information down to the Daily Chart, you could see all those three trend lines still where the market settled out above the red trend line, broke above the blue trend line, continued to pressure higher, now challenging through resistance. What we’ll need to be doing now is trying to identify where our resistance are and where will this short-term up trend maybe slow down or come to a stall before continuing the up trend or potentially reversing and going back down again.
Zoom it in here on the Daily Chart. You could see the blue trend line coming down, several days hesitating underneath the blue trend line, finally breaking above it. I have highlighted several different support and resistance levels here on the chart. The yellow, blue, orange, pink, and green. Let’s take a look at all of those. First off, you go back in time. Let’s take a look at the blue one first. You go back in time along the blue one and you could see support here and support here. Then you take the orange-shaded area. You see congestion and support on top of the orange-shaded area here, resistance, resistance, congestion, support along the orange-shaded area.
The pink-shaded area. Of course you follow that back in time. You see some resistance back where the blue trend line connects. Let me get the crosshair right here. And you could see some resistance here, support here, and congestion along that pink-shaded area, and even support on the far left-hand side of the chart. And then of course we’ll go to the green zone. You follow that back in time and you could see congestion and resistance, support and support on the left-hand side of the green zone.
So, we know that the pink, the green, the orange, and the blue-shaded area represent historical support and resistance. Then I’ve also taken Fibonacci retracement measurements from the highest high of the blue trend line down to the lowest low. I’ve also taken a Fibonacci retracement measurement from this high right here, where the black X is, down to the lowest low. I point out those two fibs because of where they come in contact with those shaded areas. First off, we could see the pink-shaded area. We have the 50% retracement level of the longer-term down trend and the .786 retracement level of the shorter trend right there right around the 1.0950, 1.0960-level, and you could see that at the top of the pink zone.
We’re attempting a breakout of that now. The next Fibonacci retracement levels higher are right here at the green-shaded area, where you see the .886 at 1.100 and the .618 of the longer trend range at 1.1025, and that is right here at the green zone. So, if you look at history, what happens when we get above the pink zone is that we go to the green zone. Historical support and resistance. Fibonacci tells us that if we get above the pink zone that we’re likely going to the green zone because Fibonacci is there also. So, in the direction of the trend, the up trend, the current up trend, if you’re looking for opportunities to trade in that direction, then you’re looking for dips into support and buys in the direction of the current trend as it rallies back into the next resistance.
Of course the closer it gets to that next resistance becomes a potential stalling point for the market. So, let’s take an arrow here. We know that we’re targeting the green zone right now as the Fibonacci and historical resistance level. We’re targeting that as our next resistance target. Right now our support, as we have lined it out here, will be the pink-shaded area. So, pink zone is support today. Green zone is resistance. We’re going to buy on dips into support and look for rallies to resistance.
When it hits that target, the green-shaded area, we can either protect profit, close profit, or look to exit our trades completely. Of course if it can ever break above that green zone, we’ll look for a continuation of the up trend, as we’ve seen, through the blue zone, orange zone, pink zone, and so forth. If we get above the green zone, back into the 1.1100s is likely our next potential target. We could see that over here on the left-hand side of the chart.
Let’s go ahead and take all that information down to the 4-Hour Chart. If I squeeze it in. Actually let me zoom out a little bit, and then squeeze it in. If I squeeze it in a little bit, you could see the bank flow levels over the past few days have been following along the market. Yesterday’s bank flow levels right here into the orange-shaded area. We saw the bank flow levels right around 1.0898, just underneath 1.0900, all the way down into the 1.0867-level. That’s the blue line down to the green line of the bank flow showing us support yesterday. I would suspect, with the upward movement we’ve seen, we’ll likely see today’s maybe inch a little bit higher again.
We have no sell levels. The sell levels disappeared several days ago, and we have no sell levels now. So, still no levels. If we get sell levels today, I think they would likely be here into the green-shaded area at the top of the chart. If you’re looking for a buy scenario, I think right here into the pink zone is your buy scenario today. I don’t think it’s had a retracement enough to give us a new green arrow with the Forex Black Book, which of course is showing strong green color there. The bright green color. So, if you’re looking for a trade with the Forex Black Book, I really don’t think there’s an opportunity to see that today, but I do think there’s a possibility that as long as it stays above the pink zone and those fibs, you’re looking for buys.
If it gets underneath the pink zone, of course that’s the risk in the buy scenario. It’s likely to challenge back to the orange zone and 1.0900, where the bank flow levels were yesterday. Let’s go ahead and zoom it in a little here on the 4-Hour Chart. You could see where the current market is holding above the pink zone. It’s my expectation, in the direction of the trend, we’re buying support, which would be the pink zone, targeting the green zone. The closer it gets to the green zone would discourage me from buying it any more as it approaches that resistance target.
So, the pink zone is probably our main focus today, looking for buys on dips, targeting the green zone. The risk in that scenario is that it breaks underneath the pink zone and starts that retracement that we’re anticipating for the USDCAD.