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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 scooted it all the way over where current price is all the way to the right-hand side of the chart so we could see further back into history. We go all the way back into September of 2012, where we began this uptrend. We could see the bottom red trend line, as it’s continued to rise over the past year, creating higher highs and higher lows.
In the most recent weeks though, we’ve seen a new challenge of that red trend line, as several weeks ago, we saw the dip all the way back down here into the 1.0180-level and a balance as it came right back up into the 1.0300s. Now let me scoot this back over so we can see that right-hand side in more detail. Now, over the past few weeks, again, since challenging back to that bottom red trend line, we’ve since a rebound above 1.0300; and since, we see back here, since September 20th, we have been in a range between that 1.0300-level and this green-shaded area into the 1.0340s, 1.0350s, and 1.0360s.
So, that’s the green zone; is the top of the range, or our resistance. The pink-shaded area that I’ve highlighted on this chart, right into the 1.0300 or a few dips down into the 1.0200s has held as the bottom of the range, or our support. So, what we really need to see for this currency pair is a breakout of the range. Either it breaks above the green-shaded area to continue the up trend and pushing back into the 1.0400s, or it changes the trend and breaks out to the bottom side of the range to the bottom of the pink-shaded area and begins to challenge the red trend line down here at the bottom of the chart once again.
So we need to see a breakout of the currency pair. Let’s go ahead and zoom it down to the 4-Hour Chart. And again, since September 20th, we have been bouncing around between the pink-shaded area and the green-shaded area. We can easily see that here on the 4-Hour Chart. The bottom of the chart being dark red with the Forex Black Book trend bar indicator tells us that the longer-term and shorter-term trends are in disagreement. The longer-term down trend is in disagreement with the shorter-term upward price movement that we’ve seen over the past two weeks.
So we have some disagreement down here, so we don’t really have an opportunity to trade with a new signal with the Forex Black Book because we would prefer that the trend bar be a right red or a bright green, and right now it’s the dark red color. So, if it starts to be bearish again, pushes back under the pink and the yellow-shaded area and starts to move down, we might expect, over time, we’ll see that trend bar turn bright red again. If it turns back higher again and turns back above this green-shaded area, it’s possible, over time, we could see this trend bar turn green. So, definitely would like to HGH see a breakout of this range before we have a positive trading signal with the Forex Black Book.
With the bank flow levels, really don’t have an opportunity over the past several days to trade on the bank flow levels either. You could see the buy levels down here closer towards the bullish red trend line. The sell levels up here above the green-shaded area. So, easily see that over the past five, six, or maybe even ten days, we have not challenged into the bank flow levels either. So we haven’t had an opportunity to trade the bank flow or the Forex Black Book over the past couple of weeks. So, what we really need to see here is a breakout.
So, what you’re going to do is focus on the outer rims of the range. The pink and the green-shaded area. If you’re looking for intraday trading opportunities on this currency pair, buying towards the pink-shaded area and targeting back to the green zone will be your main focus. If you bought it yesterday, as it dipped down here into the 1.0300-level or even into the 1.0290s, then you were able to capture a little profit as it rallied back towards the 1.0320s, here into the 1.0327-level over the past several hours.
Now, the closer it gets to the green zone, of course, you’ll protect that profit, because over the past few weeks, we’ve found resistance there. It becomes a similar scenario where you’ll look for selling opportunities with your stop just above the green zone in case it breaks out of this range and continues to pressure higher. Until we see a breakout above the green zone or below the pink zone, that’s really going to be the main focus; is trading within this range between those two resistance and support levels. Then, once we see the breakout, an open and close, a clear candle body underneath the pink zone or maybe even the yellow zone, we might expect it can continue to challenge lower into the trend line or even a change of the trend to go back down again.
If it opens and closes, clear candle body, on the 4-Hour Chart above the 1.0360-level, which is the top of that green-shaded area, then we may look for the continuation back higher again in the direction of the longer-term trend that we looked at all the way out there on the Daily Chart. That’s the direction that I’m focused on. Yesterday, in the Trade Room, I mentioned the fact that I was in buys from down there into the pink-shaded area; was able to capture a little profit as it came back up there into the 1.0320s. I’ve locked in. I can’t do any worse than zero on the remaining portion of the trade. If it can turn back north again, I’ll look for the breakout above the green zone and continuation of profit. If it comes right back down into the green-shaded area, I’ll watch for a new opportunity for support and a new chance to get into a buy for this currency pair.
That’s the direction I’m focus on right now for this currency pair; is the buy side on dips into support, looking for the breakout of the green zone and a continuation of the upward price action that we’ve seen over the past two weeks. All that will change, of course, if it breaks down through the bottom trend line at the bottom of the chart and we see a change of the daily trend for the USDCAD.
