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I’m going to begin the day today on the US Dollar versus the Canadian Dollar [USDCAD]. I’m going to start out all the way out here on the Daily Chart. In the Trade Room, we’ve been studying, of course, the longer-term uptrend that this currency has been in for quite some time. We’ve all been studying these two red boxes that you see here on the chart.
Let’s start with the bottom left-hand side. You go down here. You could see the market was ranging between the 1.0200s and 1.0500s, between the purple and the yellow-shaded area down here, bottom left-hand side of the chart for quite some time. We saw one attempt to breakout underneath that red box down here where the blue circle is. And then, after that attempt to breakout, we got right back above that purple-shaded area, finding support, and a return to the direction of the uptrend.
The reason I point out this are the similarities in the current market, where we see this red box up here. Top right-hand side of the chart. I have a purple-shaded area right into the 1.0900s. That’s the bottom of the box. The blue-shaded area at the top is all the way up there in towards the 1.1100 and 1.1200s. Over the past recent weeks, we’ve seen an attempt very similar with the blue circle to breakout underneath the box, was a failed attempt right back above the purple zone, and now finding support on top of that purple-shaded area, 1.0950 for the USDCAD.
So, similarities between this timeframe up here at the top right-hand side of the chart and bottom left-hand side of the chart. As long as it stays above that purple-shaded area, there’s potential for this to continue to go bullish again and return in the direction of the longer-term uptrend. If we see the breakout to the bottom side of this purple-shaded area, of course we see a change of the pattern and a continuation lower for the USDCAD.
Let’s go ahead and zoom it in here a little bit on the Daily Chart. You could see those levels a little bit clearer here on the USDCAD. You could see the purple-shaded area, the support right now. Four days now finding support right around 1.0950. The first resistance that you would come to would be the yellow-shaded area. The first support you would come to would be the orange-shaded area.
Let’s go ahead and put a couple arrows here. So, as long as we stay within or above this purple zone today, we look for the potential to rally back to the yellow zone. And of course above that yellow zone, we would look for it to continue that bullish pressure back towards the green-shaded area for the USDCAD. Let’s go ahead and look underneath that purple-shaded area. If we break through 1.0950 today, we look for the continuation back down towards the orange-shaded area down here at the bottom of the chart. Let’s go ahead and put an arrow there also our potential support here for the USDCAD. So, breakout is really what we’re looking for here for this currency pair.
Let me move this blue circle out of the way and let’s go ahead and take it down to the 4-Hour Chart. And as we get down to the 4-Hour Chart, we could see that the market has been holding inside of that purple-shaded area for a couple days now. Several four-hour candles as it’s been holding above 1.0950, as we saw on the Daily Chart, and primarily below 1.0980. So let’s go ahead and put these arrows a little bit closer to the market. The ones that we put on the Daily Chart. Let’s go ahead and zoom it out a little bit so we could see this a little bit better.
There are the purple-shaded area and the arrows there. A breakout above 1.0980, we can now see a clear breakout there tends to send it back towards the yellow-shaded area, back here into the 1.1017-level. Above the yellow-shaded area, 1.1045 or so, we look for the continuation higher. On the bottom side, underneath 1.0950, we look for it back down towards the 1.0800s. We did not get new, fresh bank flow levels yesterday, but the day before that, on Wednesday, we did get bank flow levels. We see the sell levels all the way up here towards the green zone. The buy levels all the way down here towards the orange-shaded area.
So, the market has pulled away or the buyers and sellers have basically pulled away from the market due to event risk. We do have non-foreign payrolls in just a short while here from the recording of this video. It could definitely dramatically affect this currency pair or all currency pair based with the US dollar, so that’s definitely something that has an influence on the market and I think that’s why the bank flow levels have pulled away or widened out away from the current price of the market.
So, what I would expect today is we’ll look for the breakout. A breakout outside the purple-shaded area. That will give us a direction. If it starts to break above, we look for it to go higher. Below, we look for it to go lower. We know that the yellow and the orange-shaded areas will be our next resistance or support, and a breakout above or below those levels, we’ll look for a continuation of the trend for the USDCAD.
One last thing. Forex Black Book trend bar is red. So, if you took sells into the yellow-shaded area along with all the red arrows that you see here, you’re now sitting with some profit. I would suggest protecting that profit if it breaks to the bottom side of 1.0950. You continue to follow that as it goes back down here towards the orange-shaded area. If it starts to go up, breaks through the yellow-shaded area, it’s possible that over time we see that trend bar turn green again as it starts to go back up. So, definitely some things to watch for over the next few days with the Forex Black book also here on the USDCAD.
