Transcript of Video
Hello everyone, this is today’s video analysis for November 26, 2018. Today we’re looking at the US Dollar versus the Canadian Dollar [USDCAD] for today’s trade analysis.
Now, here on the daily timeframe, not too hard to see that over the past several weeks, going all the way really back into September, we have been in an overall uptrend pattern and an uptrend channel really between the red trend lines that you see. Prior to that, under the blue trend lines, we were falling in a downtrend pattern. So, we’ve been in a rising pattern here, where the red trend lines are.
Recently, we’ve seen multiple touches of the bottom of that trend line and a new rise within that trend, and I’ve circled them in blue, where we see the market touched down close to the bottom red trend line and rallied. Touched down close to the bottom of the red trend line, the yellow-shaded area, the 100-period moving average, and rally. Just last week, we saw the market touch back down here into the pink-shaded area right around the 1.3150, 1.3170-level, and make a new rally all the way up to the top of the channel into the 1.3320 or so level at the orange-shaded area at the top of the channel.
So, it’s clearly been a rising pattern and we want to continue to watch for that as long as the pattern is present. As long as it hasn’t broken that pattern, which in this case would be likely the breakdown of the pink-shaded area and probably the bottom red trend line would be our first clue to that. The bottom of the red trend line. Then the pink zone making a new lower low. Well, that’s really the definition of this trend channel, is that we’ve seen higher lows, and that’s what I’m circling here with the blue circles.
I could probably put one down here at the blue one. Blue-shaded area as well. But we’ve seen that rising pattern. Higher lows. Higher highs. That’s defining what this channel is. So, if we’re going to see this trend channel change to an downtrend channel from an uptrend to a downtrend, we would look for the breakdown of that pattern and a new low. We also could look for a new lower high, but the new low will really give us a clue that the trend channel has changed.
So, right now we’re still in an uptrend. We have opportunity to trade in that channel. Of course a lot of what’s been driving this flow higher here for the USDCAD has been crude oil dropping like a rock over the past several weeks. So, crude oil dropping means that the USDCAD will typically rise higher. If crude oil makes any kind of comeback in the next couple of weeks prior to the end of the year, then we may see this take a little bit of a dip lower.
So, crude oil dropping has been sending this soaring over the past couple of weeks and of course a rising USD would do that as well. But that’s what we’ve been seeing happen here for the USDCAD. Now, what do we do with this today? Let’s take a look at the green-shaded area. Look at this. We’re kind of stuck right here between 1.3205, 1.3225, and the current daily candle stuck between there. Now, we’re getting liquidity returning after the long, extended holiday weekend. Liquidity will return today and as it does, we may see increased volatility and increased movement in the market as traders are diving back in after a long holiday weekend.
But right now doesn’t look they’re there yet. Doesn’t look like we’ve jumped back in yet. 1.3205, 1.3225. So, really, if we’re going to trade the trend pattern, we’re looking for the market to get back above the green zone and start working its way back higher within the rising trend channel. The risk here is that the market changes and it starts to move lower. Again, probably will need oil to start to make a comeback if we’re going to see that happen today on the USDCAD.
Let’s take this expectation, either a push above the green zone or below the red trend line, green zone, and take that down to the four-hour timeframe. And you could see what it’s been doing. It got a little bit above it here. We’re trying to get below it here and it’s just no real confidence yet in the market about which direction to take here for the USDCAD. So, we need some confidence. We need it to either get back above, a sudden infusion of buy orders, sending it back above the green-shaded area, sending it back above 1.3225. If we were to see a larger blue candle here and it get back above 1.3225, that may be our opportunity to buy back towards the yellow-shaded area.
Now, on the other side of that, and we’ll speak more about this in the Trade Room today, but if it were to get underneath the green-shaded area and continue to change the trend pattern, then we may look for the market to push a little bit lower back to the pink zone or maybe even the blue zone or lower if the pattern of the trend changes. So, we’re watching for some setups here. Some price action setups that give us confidence whether the market’s going to continue the uptrend pattern or begin to give us reversal clues for the USDCAD this week.
From Forex Traders Daily, this has been your daily analysis with Ross. If you would like to get Ross’ analysis on all the currency pairs he’s watching and all the trades he takes today, join him in his live Trade Room by clicking on the link below. Please leave any comments you have about today’s video in the comment section below.