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I’m going to begin the day today on the US Dollar versus the Canadian Dollar [USDCAD]. Starting here, on the Daily Chart, and I’ve zoomed way out so we could see further back into history. We go all the way back to the left-hand side, into September of 2012, where we began the uptrend. During the past year or a little bit more than a year, we’ve seen higher highs and higher lows, as the market has climbed along this bullish blue trend line, capping out all the way up here into the upper 1.0500s, towards the 1.0600-level.
Now, over the past several months, we’ve seen a little bit of a change, where, here, we saw higher highs and higher lows; in the most recent timeframe, over the past several months, we still continue to see those higher lows, but we also see three distinct lower highs along this bearish red trend line. We see the high here, into July of this year. We could see the high here, into August. And then, most recently, the high here in October and early November, where we cap out here into this orange-shaded area, just underneath the 1.0500-level.
Let’s go ahead and zoom this in a little bit so we could see that a little bit better. There are our last three highs along that red trend line. Now, over the past few days – several days, I guess it should be -, we have been ranging or consolidating between this blue-shaded area as support and the orange-shaded area as resistance. The blue-shaded area sits down here into the 1.0400-level to 1.0420. That becomes our support for the day today and, really, for the past weeks or so, we’ve found support into that blue-shaded area.
Follow that back in time. Consistently, over time, we’ve seen resistance into this level. Here at the beginning of October. Resistance over here into August. Resistance here into July. And even some resistance over here into May of this year. We find one last spike support here. Into June, we saw a spike and support on top of that blue-shaded area. So, consistently, over time, that blue-shaded area has been a significant decision point, and at is has been over the past week or so, into that blue-shaded zone as support and the consolidation that we see here for the USDCAD.
The orange-shaded area. Of course, follow that backwards in time. Not only do we have the bearish red trend line. We follow this back in time; we could see some consistent support back here into August of this year and we can see some further support back into July. So, July/August finding support, where the market went into a period of consolidation here, between the orange and purple-shaded area. Once again, here, between the orange and purple-shaded area, and again, as I mentioned, resistance right now into that orange-shaded area.
The orange zone goes between 1.0475 and 1.0500, so about 25 pips in the orange-shaded area holding as our resistance. Let’s go ahead and zoom down to the 4-Hour Chart here for the USDCAD because we want to get the closest view we can and still have confidence in the areas of support and resistance. Here, on the 4-Hour Chart, there’s the same blue-shaded area. And there’s been multiple opportunities this week to look for buying opportunities into that blue zone, as it took a dip down here into the low-1.0400s and a rally into the mid to upper-1.0400s, looking for resistance into the orange-shaded area.
So, if you did that, you should be protecting profit. Moving your stop up to protect your trades. Looking for a potential breakout of the orange-shaded area and the continuation of the longer-term uptrend. The other side of the story, of course, is that if it continues to find resistance in the orange-shaded area, we could see a turn back down towards the blue zone. A breakout underneath that support looks for a continuation back to the purple zone or lower, possibly down towards the blue, bullish trend lines, down here towards the bottom of the chart.
I find interesting today that the trend bar for the Forex Black Book has turned bright green, which leads me to believe that the bullish side is the direction I want to focus my efforts on, because the shorter and longer-term trends have now come into agreement to go higher again. So, as we look at that, if that is the case, if we are looking for it to go higher, we definitely will need to see a breakout of our resistance, the orange-shaded area, the red trend line. A breakout above that, we look to target all the way back up into the purple-shaded area, into the 1.0550s to 1.0600-level. And of course, above that, we’ll look for targets higher as it pushes through the 1.0600-level.
The orange-shaded area will be the breakout. So, here, as long as it stays under the orange-shaded area, we continue to consolidate between the blue and the orange-shaded area. If it breaks above it, we look for a continuation higher. Now, yesterday’s bank flow levels sat all the way here into the 1.0509, all the way up into the 1.0559-level. So, it was about a 50-pip zone with yesterday’s bank flow levels. I really doubt we’ll get new levels today before non-foreign payrolls. We never do.
We usually don’t get them until about 10AM.
So, I would expect that if non-foreign payrolls, or Canadian employment data for that matter, causes this to break out above the orange-shaded area, our bank flow levels will dramatically change from yesterday’s levels, pushing much higher for the USDCAD. On the bottom side, if it continues to hold here and Canadian employment data, non-foreign, causes this to go down today, we look for support, of course, into the blue zone. But a breakout under the blue zone continues to pressure lower.
Yesterday’s bank flow levels sit down here into the purple-shaded area. Again, if we see a breakout to the bottom side during that news at 8:30AM Easter Time, we’ll likely see these dramatically change, probably closer down here, towards the pink-shaded area and the blue trend lines for the USDCAD. So, a breakout is really what we’re looking for. We’re seeing consolidation between the blue and the orange-shaded area over the past several days. A breakout of those levels, we’ll look for a continuation.
If you’re already in a buy from the blue zone, protect that profit prior to the news. If you’re in a sell from the orange-shaded area, hopefully we’ll see a push down. You’ll have the opportunity to protect that profit before it either breaks out higher or lower outside this. One last look at the Daily Chart, and I’m going to take the arrows off real quick. Really concentrating on this consolidation breakout. If it gets above the orange-shaded area. I’m going to add them back in. Above the orange-shaded area with the news, we’re back into 1.0550 to 1.0600, the purple-shaded area, and the red trend line at the top of the chart. Breaking above there, we’re likely looking for one last peak all the way up into 1.0680.
That’s the next level of resistance that we discovered during the Trade Room yesterday. On the other side, of course, if news causes this to go down, which is a possibly, underneath the blue zone, we begin to challenge back towards the bullish trend lines for the USDCAD today.
Appreciate the recommendation. Will try it out.