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Transcript of Video
I’m going to get started today, taking a look at the US Dollar versus the Canadian Dollar [USDCAD]. But before I do that today, I want to do a little bit of a recap of some of the trades from earlier this week, prior to the New Year’s holiday.
If we start over here on the AUDUSD, on Tuesday, we suggested selling the AUDUSD as it approached the 0.8200-level. It’s the orange-shaded area that you see down here, bottom right-hand side of the chart, where the black arrow is. If we go down to the 4-Hour Chart and if you took a suggestion as a sell there into the orange-shaded area, sitting with a pretty decent profit, as it fell from just about the 0.8200-level, 0.8195, all the way down now into the 0.8100, 0.8110-level. We’re sitting with about 80, 85, 90 pips of profit.
If you took those sells, then you should be protecting the profit, as it is approaching an obvious support point here into the 0.8100-level. So, that was one of the trades that we suggested earlier on in the week. Another trade that we suggested on Wednesday, the New Year’s Eve holiday, may be a little bit difficult time for you to be trading during that New Year’s holiday, but if you go back to the video from Wednesday, you’ll note that we were talking about selling on rallies into resistance and specifically the green-shaded area just around the 1.5600-level.
So, let’s take it on down to the 4-Hour Chart. And if you get down here to the 4-Hour Chart, and you could go back to Wednesday’s video on ForexTradersDaily.com. If you go to the 1.5600-evel, you’ll note that we were suggesting sells into that green-shaded area. And again, if you decided to take those suggestions for sells into 1.5600, you’re now sitting with about 170 to 180 pips of profit, as it now challenges the yellow-shaded area. You should be moving your stops and limits to protect profit.
We do have kind of a different day today. You know, I think today, being the Friday after the New Year’s holiday and going into the weekend, we don’t have our typical jobs report out of the US with non-foreign payrolls, so it’s a little bit of a different day. I think most traders are still kind of in holiday trading mode, so just be very cautious with your trading today if you trade at all, and then we’ll come back on Monday and be more normalized trading, if you want to call it that.
All right, now let’s go to today’s analysis. We do have a little bit of US news coming up later today, but other than that, nothing really major on the calendar. You see the previous downtrend. We’re sitting here on the Weekly Chart, and I think it’s important for us to go here because we haven’t seen this currency pair into these price levels for quite a long time. You see the previous downtrend. We’ve measured that with Fibonacci over the past several weeks and noted the Fibonacci, .618-level, sitting into 1.1665. We’re a little bit above that right now, but I still think it’s important.
I think probably the most important thing is to look at what happened the last time the market was at this price level. And the two red, horizontal lines – 1.1715, 1.1779 – are indicative of what happened the last time we were here, into this price level. And even if you go all the way to the left-hand side of the chart, pretty important level for the USDCAD.
All right, so now that we know that from history, let’s zoom in a little bit here on the Weekly Chart. And I’m going to scroll back a little bit. There’s the last time. Let me get it to where it’ll stay back there. There it is. The little circle was the last time we were here into this price level. Zoom it in again and you can see what happened. Right there, where the circle is, the red, horizontal line, right around 1.1714, you could see what happened. It found resistance and a dramatic turnaround. It doesn’t mean that’s what’s going to happen now, but it would be very difficult to suggest buying underneath those two red lines.
Not until we see the market break above those two red lines do we have confidence that it’s going to continue to pressure higher. Until then, it stays underneath there as resistance. It doesn’t mean we can’t buy it in the uptrend. It means we want to wait for it to get away from that. If that’s our price ceiling. If that’s the resistance, then we want to be far away from that red line before we decide to take a buy on the USDCAD.
All right, now let’s take it over to current time. We could see where we are here on the Weekly Chart. Very close to those red lines, so that’s pretty important information. Let’s go ahead and go on down to the Daily Chart. By the way, the .618 fib that we pointed out from the Monthly Chart, the 1.1665-level. We’re just challenging that today. It’s just a quick challenge. Not a real breakout. Of course we’re pushing above our period of congestion. Probably a good clue we could be looking for a breakout, but we want to wait for the right timing. And I will go back to always saying buy low, sell high.
You want to buy into support. You don’t want to buy into resistance. And I still don’t think that this resistance has been satisfied, has been really seriously cleared yet. Until we get an open and close above 1.1665, I could even expect this might be a false breakout. We’ll have to wait to see what happens by the end of day today. We’ve been suggesting buying on dips into support here for this pair in the direction of the trend. The best opportunity of course was down here into the blue-shaded area. 1.1590, down to 1.1575 was the best opportunity to buy this. If you did, protect profit. If you didn’t, I think you need now to wait for the open and close breakout above 1.1665.
Let’s go ahead and take it on down to the 4-Hour Chart. We could see those same levels here on the 4-Hour Chart. The blue zone. The yellow zone. We see the dip into the blue zone earlier this week. We see the gap. You know, for those of you that are looking at that gap, thinking the market has to come down and fill it, the market doesn’t have to do anything. Keep that in mind. It doesn’t have to do anything. If it does, great. If it doesn’t, that’s okay too. We’re still looking for buys on dips into support.
The blue zone clearly a support. The yellow zone, a resistance, has not become support. How do we know that becomes support? When the market opens and closes above it. So, if we see that open and close, I’ll likely look for a dip back down, maybe going into early next week. Monday, Tuesday. A dip back down on top of that yellow-shaded area as support, after it breaks out above it, then we could look to buy this current pair. What about sellers? I don’t think there’s any real reason to sell this yet. We don’t see it challenging even the high here.
Remember those two horizontal, red lines. 1.1714 and the one just a little bit higher, 1.1780. Still a little bit higher. No real reason to sell this. We don’t see any clues or evidence of reversal. So, no reason to sell it. Only really still focused on the buy side, but watch for the open and close above 1.1665. Watch for the dip into support. That becomes your opportunity because literally the next 4-hour candle could turn right back underneath that yellow zone. If it does open and close back under the yellow zone, I suppose that does provide a fairly low risk, high reward scenario for selling it under the yellow zone. But at least at this point, no real reason for that. Watch for clues and evidence of reversal before you decide to think about selling this currency pair again.
If you’re trading in the direction of the trend, preferred direction, you’re waiting for the open and close, breakout of 1.1665, above the yellow zone, dips back on top of it become low risk and high reward, or maybe eventually someday we look for even a further push lower for the USDCAD.