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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, if you remember to last week, we started looking at this falling wedge pattern here on the Daily Chart. Previous trend was up, obviously coming from the bottom left-hand side of the chart, all the way down there into September of 2013, down closer towards the 102.00-level. We’ve been rising ever since, climbing all the way to the peak highs, into the 1.1200s.
Over the past several weeks, we go all the way back up here to the top of the chart. This was back in March 20th. We have been falling since March 20th within this wedge pattern. You could see the red trend line connecting the highs within the downtrend and you could see the black trend line connecting with three lows here. So, we have a falling wedge. And I actually posted this picture over on Twitter last week, giving you kind of a heads up of what we might be looking for over the next several days.
Well, since posting that picture, we haven’t really actually seen anything happen. It’s kind of just been waffling around inside this orange-shaded area, but what the difference is we have now seen the market push above that red trend line and above the actual falling wedge. So, let’s zoom it in here on the Daily Chart and we can see this a little bit better over the past two days. Not yesterday, but the day before yesterday, we saw the blue candle open and close above the red trend line, but still unable to break through the 1.0910-level, top of the orange zone. Yesterday’s candle opened at 1.019 and then fell right back down towards the 1.0890 or so, into the 1.0880s, but sitting on top of that red trend line. Very interesting there, and now we’re just seeing today’s candle waffle around here.
We do of course, just in about 50 minutes from the recording of this video, have Canadian data, which could of course dramatically affect this currency pair. If so, then we could be looking for that breakout above 1.0910 and the turn back towards the purple-shaded area. If all that changes, we see a breakdown of the 1.0880s. Underneath the red trend line again, we’re targeting back down towards the blue-shaded area. But for the day today and for the meantime, until that news hits and we see how that affects the current market, I’m looking for the breakout. Breakout of this orange-shaded area.
If it gets below it, we’ll look for it to go lower. If it gets above it, we’ll look for the continuation higher. As I mentioned yesterday, in the Trade Room, I’m already in buys and protecting buys, looking for this to continue to pressure higher. As long as it stays above this red trend line and above the falling wedge, which is actually a bullish pattern, because you’re expecting a breakout of the wedge and a continuation of the previous trend, I’m looking for this to go back up. So, for the day today, within or above the 1.0910-level, within the orange zone, above the 1.0910, I’m looking for the continuation higher.
Higher of course we’ll likely find some resistance here at the purple zone, which is into the 1.0950s to the 1.0980s, the purple-shaded area. And of course above that purple-shaded area, if we get some price action above the 1.0980-level, we’re likely back here towards the 1.1000s. 1.1200 to 1.1400 becomes this yellow-shaded area as our next resistance. All of these assume that we’re going to breakout above the 1.0910-level.
If we go in the other direction, if we see the sellers jump in and take this back in the other direction, of course underneath 1.0880, back underneath the orange zone, we’re going to potentially target all the way back down to the bottom of the wedge, which would be into the blue-shaded area. And of course if, at any time, we see a break underneath the blue zone, we’re back to the green zone at the bottom of the chart. So, really, this orange-shaded area would be highly critical today for the USDCAD. Staying above the wedge, which is what I’m expecting, we look for it to go higher in the opposite direction of the falling wedge, so we look for the continuation higher.
Forex Black Book trend bar is red. It is dark red, showing shorter and longer-term trends are in disagreement, but we can see that here because we’ve broken above the red trend line. So, again, if it continues to go up, over the next several days we could see that trend bar turn green again. If it goes down, it’ll stay red and we’ll look for the continuation of the previous downtrend and potentially a breakout of the wedge to the bottom side.
Let’s go ahead and take that information down the 4-Hour Chart. And as we get down to the 4-Hour Chart, we’ll be able to see some more detail about this orange-shaded area. Over the past several hours, just kind of waffling around. Take a look at the past five candles. The past five 4-hour candles. Well, even if we just count the previous four and not the current candle, the previous four candles have waffled around in about ten pips over the past 20 hours or so, so we really haven’t seen a lot out of this pair.
So I will still say that we need a breakout on this pair. We need a breakout either to the bottom side or to the topside here for this currency pair. Zoom out just a little bit here on the 4-Hour Chart and we could see that the market is just kind of holding inside this orange-shaded area as we speak. So, what we need to see is a breakout. A breakout of 1.0910, we look for it to go back up to the purple zone. A breakout below 1.0880, we look for the continuation lower for the USDCAD. And as we see the chart refresh here, we could see where our bank flow levels were.
Yesterday, we could see the bank flow levels sitting just underneath – really over the past week or so, just underneath the current market, showing us that there has been buying pressure. There’s no sell levels up here above the chart. Above the current market, there are only buy levels. So, the bank flow levels also confirming the breakout of the falling wedge, the open and close above retest back down to the topside of the wedge. Now we’re looking for the breakout pattern and a continuation.
Remember what a trend is. Higher highs and higher lows. So, we can see higher lows here. One, two, and now a third higher low. If we’re going to see higher highs, what do we need to see? A breakout above this last high here, which of course would be all the way back up towards the purple-shaded area.
One last thing here on the 4-Hour Chart. Let’s take Fibonacci from the high that we can see here down to the current low. Fibonacci from high down to low. We see the market waffling around the .382, right around 1.0905. That’s very interesting. That’s where we’re currently finding resistance. A breakout of that, we go back to the 50%. 1.0933. That’s where the other day we saw the market challenge there. Above that, .618 sits right smack here in the middle of the purple-shaded area. 1.0960.
So, for the day today, given the bank flow levels, given the breakout to the topside of the falling wedge that we’d studied from the Daily Chart, a breakout to the topside of the orange zone becomes a buying opportunity to target the purple zone. If you’re already in a buy like I am, then all you’re looking for now is the break and the continuation for profit. Your risk at this point is likely just underneath the orange-shaded area, maybe close to the bank flow levels today for the USDCAD.
