Want FULL ACCESS To
ROSS’ DAILY TRADE ROOM?
Simply Click The Get Started Button Right Now!
Transcript of Video
Click Here to receive an email alert when Ross posts a new daily video
I’m going to get started today on the US Dollar versus the Canadian Dollar [USDCAD]. I’m going to start here on the Daily Chart. Taking a look at this currency pair, we could see that it has been in an uptrend for quite some time. Just this viewpoint, going all the way back to the left-hand side of the chart, into June of 2013, we could see it started the uptrend down here. But if we were to zoom out even further, we could see that really the uptrend began all the way back in 2012.
So, it’s been a long time that this currency pair has been in an uptrend. Now, over the past several weeks, we saw the cap out up here into the 1.1200-level. Just underneath that red horizontal line at the very top of the chart. The blue-shaded area also highlighting our last historical highs. We could see that back here at the end of January, testing right underneath the 1.1200-level. A dramatic fall off of 1.1200, pushing it back into the 1.0900s. A rise, a challenge once again underneath 1.1200. And since then, going all the way back here into – and I’ll just put the cursor right on the candle that sat inside here.
It was back in February 20. We have been within a range. A pretty tight range since February 20. It’s about 100 pips between the yellow-shaded area that we could see here in the mid-1.1000s and the pink-shaded area that we could see here in the mid-1.1100s. And we could see about 100 pips bouncing around over the past several days since February 20. What we’re watching for, of course, is a breakout. Anything underneath the yellow zone begins a fall back to the 0.9000s or lower. Anything above the pink-shaded area challenges 1.1200 or higher.
Now, keeping in mind, over the next few days, today included and then going all the way through Friday of this week, we have quite a bit of news out of Canada this week that could highly influence this currency pair and potentially be the catalyst that finally breaks it out of this range or out of this congestion and we see a trend continue. Well, the question is: is it going to be an uptrend or a downtrend? Are we going to see a continuation of the previous uptrend that we see on the left-hand side of the chart? Are we looking for a change in the pattern of the trend?
I don’t think we can know that for sure, but we can look for opportunities to trade based on the indicators that we’re seeing and look for lower risk, higher reward opportunities, no matter what the news does. So, currently holding between the yellow-shaded area and the pink-shaded area. That’s our range right now. A breakout of either one, we look for a continuation in that direction.
Let’s, first off, highlight our longer-term or wider support and resistance. First off, the blue zone is of course our last resistance high, right around the 1.1200-level. Then we go down here to the bottom, into the 1.0900s, and we could see our support. That’s our wider support and resistance. But since then, we’ve seen a contraction of support and resistance. We could see the resistance getting lower. We could see the last resistance high up here into the 1.1200s. Then this one here just under 1.1200. I put a black trend line there to show you a lower high.
So, that could be a sign of things to come. Of course a new lower low would be a downtrend developing here for the USDCAD. Anything above that, we look for a continuation of the uptrend. So let’s also go ahead and put two other arrows here. Above the blue zone, above 1.1200, we likely look for a continuation of the longer-term uptrend. Anything underneath the purple-shaded area, we look for a change of the trend into a downtrend. So that’s the wider support and resistance.
Let’s go ahead and zoom in one time here on the Daily Chart. And doing so, we could see that same area between the pink and the yellow. I’ve actually highlighted it with the orange box just so we can see that range a little bit easier, and those are giving us, of course, some closer support and resistance. We could see support into the yellow-shaded area and resistance into the pink-shaded area over the past several days. Anything breaking out of that, we look for a continuation.
One thing that we might be looking at to give us a clue of potential trend direction is the Forex Black Book trend bar. That’s the red trend bar at the very bottom of the chart. You could see the red bar down here pointing to a more bearish price action right now. So, if we see the breakout of the yellow-shaded area or challenges of the pink-shaded area, that gives us opportunities to sell in the direction of the Forex Black Book trend bar that sits down here and the current bias that that indicator is telling us about, which is a bearish bias.
A breakout under the yellow zone, underneath the 1.1050-level, pushes all the way back down into the mid-1.0900s, down at least to 1.1000, down to the purple-shaded area. And then of course below that, down into the blue zone, into the 1.0800s. All that changes and this red trend bar is likely invalidated if it breaks above 1.1200.
Let’s go ahead and take all of that information down to the 4-Hour Chart and let’s get it a little bit closer to the current market. Let’s observe what’s been going on here. Of course the pink-shaded area is our resistance. The yellow-shaded area is our current support. Anything above the pink-shaded area, we look for a return of the uptrend. Anything underneath the yellow-shaded area, we look for the return of the downtrend.
Over the past several days, we have seen the market challenging into the bank flow levels. So, if, yesterday, you decided to take a sell into the bank flow levels, let me list them out here. The bottom bank flow levels. The orange line into 1.1093. 1.1093 was yesterday’s first sell level. The second sell level was 1.1119. That’s the yellow line. And you could see we came very close to that yellow line, very close to the top of the green zone. So, no matter where you sold this, with the bank flow levels yesterday, let’s just take the bottom line – the orange line -, you’ve now seen about 25 pips or so down to the yellow-shaded area. If you’re going to continue to hold those sells, watch for the breakout underneath 1.1050 and the continuation of the downtrend.
Now, if I wasn’t already in a trade, if you’re not already in a trade, I don’t think I would sell it right now. Obviously this yellow-shaded area. The mid to upper-1.1000s has held as support for several days now. We, again, go back into February 20, where this has held as support. So, I don’t think I would sell it right now, but the sell opportunity comes on the breakout underneath the 1.1050-level.
So, if we see an open and close, breakout underneath 1.1050 today, look to target back down into the 1.0900s, into the purple-shaded area that’s at the bottom of the chart. So, not selling now, but a breakout under the yellow zone becomes a sell. If you’re on the opposite side of the fence and you’re thinking you want to buy it in the direction of the previous longer-term trend, then this actually becomes your opportunity. Between 1.1050 and 1.1067, you’re looking for a buy.
I would just show some caution there because of course two things. The red trend bar. We’ve seen that already with the Forex Black Book and the fact that we’ve been capping out into the bank flow levels over the past several days. So, bank flow levels giving us a clear clue of where resistance is and potential sellers in the market area, so just be aware of that. If you were to buy it right now, you’re selling against a lot or buying against a lot of sell pressure, so just be careful about buying it right now.
In fact, I think I would lean a little bit closer to the selling on the USDCAD. Selling under the green zone, break under the yellow zone, targeting back down towards the purple-shaded area. But of course news could change all that today. Keeping an eye out for that over the next couple of days for the USDCAD and all Canadian pairs today.
