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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, we can easily see that this currency pair has been in an uptrend for quite some time. I’ve zoomed it way out so we could see some further history. We go all the way back into August and September of 2012, where this uptrend began, all the way back down here at the bottom left-hand side of the chart, close to the 0.9600-level.
And over the life of this trend, we’ve seen higher highs and higher lows as it made a new high all the way up here into the 1.1200s. Throughout the life of this trend we’ve seen many higher highs and higher lows, but we’ve also seen many times where the sellers tried to take control and drive this back down, and the buyers just retained control and driving it back higher within the uptrend. And I think that’s the time that we’re seeing right now.
We see the sellers trying to take back control, maybe even a little short change of the longer-term trending direction, which we’ve seen many times before, but I don’t want to lose sight of the fact that this currency pair, overall, is still in a longer-term uptrend. Even though we’re seeing some bearish movement right now, we don’t want to lose sight of the fact of that.
Let’s go ahead and zoom it in one time. And as we zoom it in, we can begin to see that bearish movement that the market has been in, basically a retracement of the previous uptrend. It’s retracing into where we could establish some Fibonacci ranges also. First off, I have Fibonacci coming from this little yellow-shaded area. The low within there. It was a period of congestion and consolidation right here, where the yellow and the green-shaded area is. I’ve taken Fibonacci from there to the highest high.
We’ve seen, over the past few days, the .382 being challenged as we found support at the bottom of this purple-shaded area, right around the 1.0970-level. And we could see that .382 Fibonacci level there. 50% of that same range from this low to the highest high sits just underneath there into the 1.0891, but the .618 sits right here in the middle of this blue-shaded area, so very interesting right there. That blue-shaded area coming across as our next major Fibonacci level if the market continues to pressure lower.
Let’s also take another Fibonacci. I’m going to go from this low all the way down here at the bottom of this first leg of the uptrend. When I say first leg, I mean this leg right here from the low to where this orange level is in the middle of the chart. Well, the second leg pushing all the way to the highest high. In doing that, drawing it from the low to the high, we find an overlap of Fibonacci right here. I think it moved a little bit. Let me just see if I can get this moved right at the highest high, and right there. And we could see some overlap of Fibonacci right here, just underneath that purple-shaded area, and then we can see an overlap of Fibonacci into the blue-shaded area.
So, if it continues to be bearish and continues to pressure below the supports, I might expect that we’re looking for some support, next, down here into this blue-shaded area, where we see an overlap of Fibonacci. Otherwise, at any point we could see the turn back in the direction of the uptrend. We’ll be looking for a change of the trending pattern. Right now we see lower highs and lower lows underneath the black trend line. If it starts to create higher highs and higher lows, and breaks above and makes new resistance, we’ll look for a continuation of the uptrend.
For the time being, selling into resistance becomes a possibility as we look for the continuation of retracement of the previous uptrend, or buying into support becomes an opportunity to look for return of the longer-term uptrend. Let’s go ahead and zoom it in one more time here on the Daily Chart. We could see some support right now into the 1.0945, 1.0918-level. That is this orange-shaded area that sits just at the current price. We could see a good bit of support and congestion over here on the left, so we know that this is a price level where the market has had a difficult time here into the mid to low-1.0900s before.
If it breaks down through there, again, easily looking for a turn all the way back down here into the low-1.0800s and this blue-shaded area. So, for the day today, we’re looking at support here into the orange zone. 1.0945 down to 1.0920. If it breaks through there, we’re likely looking for a continuation back down to the blue zone. Now, if you’re looking to sell this currency pair, I don’t think right now into the orange-shaded area is your best opportunity because we’re challenging into support. I would prefer it to come back up towards this purple-shaded area, back underneath the Fibonacci levels that we’ve already established here underneath that purple zone, and that becomes your best possible selling opportunity. Selling into resistance.
So, I would prefer to sell closer to the purple-shaded area if I was looking for this to continue to pressure down. Otherwise, a break back above the black trend line and that purple-shaded area continues our pressure higher. So, orange, purple, and blue are our major areas to focus on over the next couple of days.
Let’s take that information down to the 4-Hour Chart. And as we get down here, we can see some more detailed information about all those levels that we’ve just looked at. I’m going to actually zoom it out here on the 4-Hour. We could see the orange level. Historical support and resistance along that orange-shaded area. Again, that’s our area to watch for the day as support. As long as it holds above it, we could see bounces back higher to the purple-shaded area. If it breaks underneath this orange-shaded area – I’m going to try and move this arrow over here – then we’ll look for continuation back down to the blue zone into the low-1.0800s.
The only other thing that I would watch for would be a challenge of the purple-shaded area. Selling opportunity there underneath the black trend line, underneath our current resistance. If it breaks back above there, we’ll likely look for the continuation higher of the longer-term uptrend. Zoom it in one time here on the 4-Hour Chart. You could see where, over the past few days, we’ve seen the bank flow levels stair-stepping down. They were quite a long distance away from the market yesterday. I would suspect that these bank flow levels will likely be a little bit lower, possibly down here, just underneath the yellow-shaded area, or even eventually pushing all the way back down here towards this purple-shaded area.
If we see the bank flow levels today down here, closer towards the purple-shaded area, it will give me further confidence in potential sell opportunities into this purple-shaded area, and also will signify a breakout above here. We’ll look for the return of the uptrend. So, watching today for the bank flow levels to be just above the purple-shaded area will give us confidence to take into a sell there in the direction of our current downtrend, but being watchful and keeping an eye out for a return of the previous uptrend. Any push above this purple zone, we’ll look for a return of the uptrend.
Here, into the orange-shaded area, I’m not looking to sell it right now. Likely looking for sells into the purple zone. A breakout underneath the orange-shaded area may give us another opportunity to sell the USDCAD today.
