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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, I’ve zoomed way out so we can see a little bit more of history for this currency pair. We go all the way back into September of 2012 – September of a year ago. We could see that this currency pair began an uptrend. All the way down here into the 0.9600-level, it began pushing higher, creating higher highs and higher lows. That’s the pattern of the trend that we’ve seen over the past year.
Along that blue trend line, we could see those higher lows, as it’s continued to pressure higher. And most recently, a few weeks ago, back into mid-part of September of this year, we saw the market touch down into that blue trend line one more time, as it dipped back down here into the 1.0190-level and now made a retracement all the way back up here into the 1.0300s.
Over the past few weeks, we have seen some support around two specific price levels of support. The pink-shaded area and the yellow-shaded area – both of those areas. Follow it back in time and we can see some historical areas of congestion along both the pink and the yellow-shaded area. And both of those areas of support sit above the blue trend line within the pattern of that up trend.
Let’s go ahead and zoom it in one time, so we could see a little bit more detail into this. And we could see, again, over the past several weeks, holding as support into this pink-shaded area. A few times spiking down to the yellow zone, but for the most part, finding support as it has been over the past couple of weeks. Again, going back in time, along that pink and that yellow-shaded area you could see some support back here into July. You could see some support all the way over here into May. You could see some resistance back here in April, and some congestion, support and resistance back into March of 2013. So, many times finding support and resistance along both that pink and that yellow-shaded area, which happened to sit above that blue bullish trend line that we recognize from the zoomed out view here on the Daily Chart.
So, it’s my expectation that as long as we stay above those areas or those levels of support and that blue trend line, I’m watching for dips into support and buying opportunities, looking for this to make a new rally in the direction of the longer-term blue trend that we discovered on the zoomed out view. Dips into the yellow and the pink-shaded area become buying opportunities.
Let’s go ahead and take this down to the 4-Hour Chart, and we can see that over the past few days, even with the oddball non-foreign payroll that we had on a Tuesday this week, we did see a little bit of a spike down here into the yellow zone, but for the most part, the market holding inside this pink-shaded area as support over the past several days, and we’ve now, over the past several hours, seen a new rally higher into resistance. The current resistance sits into this green-shaded area, right around the 1.0325-level. We could see it holding resistance there now.
If we’re going to look for a continuation of the uptrend, we of course will look for the breakout above that green-shaded area, above that resistance, as we look for the next surge to the next level of resistance, which would be up here towards this purple-shaded area. The purple-shaded area sits there because of a couple of things. We look back in time; we could see some historical congestion, but we also see some Fibonacci coming into play here.
And Fibonacci. I’ve drawn with the Fibonacci tool from several different trend ranges. One more time back out here to the Daily Chart. Actually, I don’t even need to go out to the Daily Chart. We can leave it there on the 4-Hour Chart. I’ll just scoot it over a little bit so we could see some more history for this currency pair. Just scooting it back just a little bit. Previous downtrend from the highest high on the left-hand side of the chart to the current low, and from that current low to the current high. Those are the two ranges – this downtrend and the uptrend – that I’ve drawn with Fibonacci.
And doing that, we find, first off, the .382 of the shorter range sitting here at 1.0325. That’s the bottom of that green-shaded area. It’s a little difficult to see the dashed line, but if I bring it out here like this, you could see that .382 sitting there. But what’s interesting about that bottom of that green-shaded area and that .382 fib is it’s actually the .382 fib of both the downtrend and the uptrend, overlapping on top of each other. And we can tell that because that line is solid here instead of dashed.
If you look over here to the left-hand side of that green-shaded area, it’s dashed, meaning that there’s two lines on top of each other on the right-hand side of the chart. So that’s our current resistance, overlapping fibs there. The next place we see some fibs overlapping like that, or very close to each other, is the purple-shaded area. So, it’s my expectation, as it has been over the past several weeks, that as long as we hold above the yellow and the pink-shaded area, I’m looking for support and opportunities to buy this to go back higher again in the direction of the long-term trend. The only thing that will change that outlook for me would be a break underneath the yellow-shaded area, a break underneath the blue trend line; then we’re likely looking for a complete change in the trending pattern, which has been up for over a year now.
So I’m looking for buys into support. If it takes another dip into the pink zone, into these last resistance highs, that becomes a buying opportunity towards the pink zone, being aware that there’s some risk that we spike down to the yellow zone, as we’ve seen over the past couple of weeks. We also see the bank flow levels, over the past four days, sitting down here into the yellow zone, giving you some opportunities for buying into the bank flow levels and an indication of support, again, along those same areas of congestion, support, resistance, and the trend line. Some Fibonacci down there also.
Buys on dips into support, watching for breaks of resistance. Breaking above the green zone goes to the purple-shaded area, into the 1.0360s. Above there, we could even take a push all the way up here to this blue-shaded area, into the 1.0400s. And of course, above that we’ll likely push back to the red trend line and the orange-shaded area that sits all the way up here towards the 1.0500-level. So, again, the main focus here for this currency pair: buys on dips into support, looking for breaks of resistance and a continuation of the uptrend. The only thing that will change that entire outlook for me would be a break underneath the yellow zone, the blue trend line, and a continuation of the downtrend for the USDCAD this week.
