Transcript of Video
Hello everyone, this is today’s video analysis for October 9, 2018. Today we’re looking at the US Dollar versus the Canadian Dollar [USDCAD] for today’s trade analysis.
Interesting chart we have going on here for the USDCAD. A couple of different trends that we’re going to take a look at. I’m actually going to zoom out a little bit. And first off, we look at the black trend line. The long black trend line going all the way back into about a year ago. August and September of 2017, we bottomed out down here at the bottom of the trend and the chart and started moving higher.
I know it’s a zoomed out version of it, but you could see that rising trend for the past year or so. Came down a couple of times, challenging towards that trend line, and the third time of course over here on the right-hand side, coming down, challenging that black trend line, bouncing off and going back up. So, that’s the first trend we want to observe. The longer-term rising trend along the black trend line.
And then we begin to zoom it in a little bit here. We’re still on the daily timeframe, but we begin to zoom it in here a little bit, and there’s the black trend line, where it came down a few days ago and touched into that trend line, orange-shaded area, and bounced back up. We have the two blue trend lines showing in the past few months. We’re going back to June of this year, where we’ve been falling.
It’s been a falling trend. So, we have the downtrend. The blue trend lines. The rising trend. The black trend line. Now, we take it even shorter. Zoom it in one more time and we look at the current sentiment, movement for the pair. Has been bullish along the short red trend line. So, basically between the black trend line at the bottom and the blue trend lines at the top.
So, several different trends that are playing out here on the USDCAD, and so it can be somewhat difficult to decide which direction to trade. Should we sell it, because over the past several months since June, we’ve been going down along the blue trend lines? Should we buy it in the direction of the longer-term black trend line and the short red trend line? That can be very difficult for us to discern that.
USD in the past couple of days has been having a decent time. It’s been rising, and I think that’s partway giving way to this rising CAD. We’ve seen oil in the past couple of days fall down into support as well, which is giving some rise to the USDCAD. So, again, there’s a couple of factors there. If the USD were to suddenly tank or oil were to suddenly go back up without hesitation, then we would see probably the opposite, where this would go back down.
So, there’s a number of factors that affect the USDCAD. We are also underneath the 100-period moving average, so that’s something interesting to consider as well. Underneath it, we may see the market turn back down above it. And once it gets above it, we would start to look for it to go back up again. So, that’s coming into play in a little while as it approaches inside, between those two blue trend lines. So, again, trying to discern the direction to trade this currency pair can be somewhat difficult.
Now, to make it a little bit easier, as it approaches the blue trend lines, as it gets into resistance, the pink zone and maybe the yellow zone with the 100-period moving average, I’m not encouraged at all to buy it into the trend lines and the 100-period moving average and into resistance. Buying into resistance just never feels like a good idea. So, if I’m going to go long and buy, I’d actually want it to go back down.
At minimum, even today, I would prefer to buy it closer to the green zone, 1.2955, 1.2975. If I had any inclination to buy this currency pair, I’d want to do it into support, which is the green zone or even as deep as the blue zone becomes a better opportunity to buy. As it approaches resistance, we don’t buy it. We wait for better opportunity into the pink zone or even into the yellow zone, not really a good idea to buy it.
Now, the other side of that story of course is if it breaks through all of that. Gets above the moving average, above the two blue trend lines, above resistance, yellow zone, then maybe we have an opportunity to buy and go a little bit higher here for the USDCAD. So, again, a confusing time. Buying happens on breaks of resistance. Buying happens on dips into support.
Now, what about selling? Now, that would be our next adventure here for the USDCAD, is if it finds resistance here as it has four and let’s just call the top five times along these blue trend lines. Now the sixth time approaching the blue trend lines. That could give us an opportunity for resistance and reversal just like it has the previous four times. So, let’s go ahead and zoom it in.
Now we begin to thinking about the pink zone, the yellow zone, the moving average as resistance and the possibility of it turning around and going back down. As it approaches 1.3010, 1.3025, the pink zone or even as high as 1.3055, 1.3070, the yellow zone, we now start looking for clues and evidence of resistance and reversal.
Take it down to the four-hour timeframe. It doesn’t really change any of that. Just kind of gives us a little bit tighter view of all of that. You could see we’ve already come up to the pink zone. Dip to the green zone. Found support and went back up or on our way back up to the pink zone right now as support at the green zone, doing exactly what we said. As it approaches the pink zone again, as it approaches the yellow zone, I think it’s time to begin looking for resistance and the possibility of this turning back down.
We need a falloff of the USD and we need rising oil. Those will give us some evidence that this will start to turn around and go down. Lower highs and lower lows. Those are things we’ll look for, for reversal to go back down. Look for the dips into support to become opportunities to buy, but keeping an eye on the trends. Very difficult sometimes here for the USDCAD.
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.