Transcript of Video
Hello everyone, this is today’s video analysis for September 12, 2018. Today we’re taking a look at the US Dollar versus the Canadian Dollar [USDCAD] for today’s trade analysis.
A couple things to point out here on the daily timeframe. First is the black trend line. Take a look at this. We see it tapping into three different resistance highs. One, two, and three. So, the trend line coming down from the top representing the falling trend. What’s important is over the past week or so, we’ve seen the market break above it and now finding support on top of that same trend line.
So, very interesting there. Sort of a diagonal support and resistance level, isn’t it, where we see the market coming down, resistance, resistance, resistance. Above it, becomes support. Horizontally, you would expect that as well, wouldn’t you? Often, resistance horizontally becomes support or support becomes resistance. So, we see that in a diagonal fashion along the black trend line here.
We also see the 100-period simple moving average. Daily simple moving average coming up here into the same convergence right there, where the trend line comes into play. And we find the market yesterday and so far today finding support just above that daily simple moving average. So, very interesting information there.
Let’s go ahead and zoom it in so we could see that a little bit better. There’s the trend line. There’s the moving average. We also take a look at the yellow zone, 1.3060, 1.3080. We see currently finding support into that area. Of course historically we’ve seen resistance here and support here, and resistance on the left-hand side. So, we know that historically, just looking in this vantage point, we see resistance and support all along this same yellow zone into the mid to upper-1.3000s. 1.3060, 1.3080 is that area.
So, very interesting there. Let’s take one last tool. Let’s look at Fibonacci from the lowest low right here at the very bottom to our current resistance high. And what’s interesting about that is the 50 percent retracement level of that previous leg of the upside sits right at 1.3057, which is right here at this same area. So, we have this convergence of the daily moving average, the trend line, 50 percent retracement level, and historical support and resistance right here into this area.
So, we know that this is a significant decision point for the USDCAD today. As long as it’s within and above it, we expect support and the potential at least for a bounce back up to the orange-shaded area. The other side of that is if it eventually breaks down through all of that. Of course that’s a big barrier. Think of all that as bricks in a wall. We have multiple bricks in this wall.
So, at least at this point, that brick wall is holding the market from going lower. But if it’s able to penetrate it, we’ll likely look for it to pressure lower. Significantly lower, if not the pink zone if not further down into the green or the blue zone down at the very bottom of the chart. So, significant decision zone here for the USDCAD today.
What’s it going to take for it to go back up? Well, we’re going to need to see a boost for the USD. USD needs to appreciate or rally for this to go higher. CAD needs to weaken against the USD for this to go back higher. Of course the opposite is true. If the USD falls or sags, we’ll look for that push lower. If the CAD strengthens, we’ll look for this to push lower. We have seen some significant movement on oil.
Crude oil yesterday taking a nice bump higher, which likely led to this fall that we see here on the USDCAD. We’ll talk about that more in the Trade Room today as we have crude oil inventories during our live Trade Room today. But crude oil taking a nice bump higher yesterday likely the contributor to this fall. The question is will crude oil fall back down or will it continue to go up. So, this is a significant decision point today for the USDCAD.
Take it down to the four-hour timeframe. Take a look at our price action into this. We already see a little bit of a bump of buyers from this area. So, again, what we’re looking for is a reason to buy this. We’ve outlined several clues and pieces of evidence that outline this as support. So, what we’re looking for is one of two things. We’re either looking for a buy shot here into the yellow zone, 1.3060, or at least as close as possible.
Risk and stop loss at this point is underneath the low down here underneath today’s low. So, if you decide to go long, that’s where you’re going to look for your stop loss, because at least at this point, you don’t want it to break through that brick wall, right? There’s no real reason to go short at least at the current moment. Unless it breaks that barrier around 1.3060, I don’t think there’s a good reason to go short.
I think mostly we’re likely looking for some reason to take this long. Look for the retracement back to the orange zone. A break of the orange zone, back to the blue zone and higher for the USDCAD today.
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.