Is USDCAD on your watchlist this week?
The price of the forex pair has recently re-tested the key support of 1.3000.
But will the market rally from here?
Watch the video to learn more…
Hi, and welcome to this Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.
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In today’s video, we’re going to take a look at USD/CAD. I like where the price is from a technical point of view. So, I thought we’d breakdown this market and see what we’d get this week.
Now, just going from a technical perspective, the price is at a decent area of support, so around 1.3. If I change this to blue and get that 1.3 in here. Again, if you right-click to go to parameters, you can set those levels like whole numbers.
We can see, looking left, USD/CAD really reacts well down at this 1.3 level and most recently, the price has formed a lower low, but a rejection candlestick after forming that lower low at that 1.3 is closing bullish on the week.
If we actually take a quick look at the RSI indicator as well, we have a potential higher low after forming a lower low on price. This is what we call divergence and this typically leads to a reversal in the market.
Now, what I typically think then is what’s the four-hour trend doing? What’s the daily trend doing?
So if I go to the daily chart first, how is the price reacting? Well, the price is still technically looking more on the bearish point of view, and the reason is just that most recently, the price is actually on the short side of things since it’s broken through these lows, through here.
Now, typically, when the market makes lower lows and lower highs, and if it’s going to continue in that trend information, it will continue to bounce from key areas and continue to move on at that point,
Now, the price is in a bit of a predicament though, because we’ve bounced off 1.3 key level. We can see that divergence on the weekly time frame, and the price is now kind of just making its way back down. So what we could expect here is a double bottom pattern.
One of my favorite trading patterns is a double bottom pattern. If the market comes back down into this 1.3 again, rejects, and even better, we continue to get RSI divergence on this daily time frame. Or at least, you know, if it takes that low out, we’d get some RSI divergence. That would be really good in looking for a reversal at that point.
Another thing we can look at and what I’m quite keen on as well is the four-hour trend, and typically when the four-hour trend changes, we get a nice decent move out of the market.
You can see, up here, when we get that change in trend on the head and shoulders pattern the market breaks through. What does it do? It comes back up, retests that neckline, and drops further. The price now comes into this area. It’s broken into the upside. I’ll be retesting this area of structure here, that 1.380, for further upside. Now again, what I’d look for are those key reversal patterns at this point.
Do we have any kind of double pattern? Do we have any kind of inverse head and shoulders pattern? Do we have anything here that suggests that buyers are re-entering the market? If we do, that’s when we can start looking at our trading strategies because, at the moment, we’re just building that market environment. Is the market environment correct for us to even consider taking a position?
I do quite like this area, just through here. But actually, just put a line where we can see the market has used this as support and resistance and that 1.3080-1.3090 area is looking okay for some further opportunity. So, again, you can be looking for a change in the cycle hourly. If you want to be a little bit more aggressive, we could be looking at this 15-minute timeframe, look for maybe a break above this high in particular, through there. If the price breaks above that high, you could be looking for a short-term long position.
But essentially, USD/CAD has my interest. It’s at a huge supporting point. Can we get some breaks to the upside?
We’re coming towards the middle of November, the start of December. This can be a time where trends are starting to develop in the market. We’re at a huge support point.
Are we going to get that breakout that we’re looking for? Let’s see what happens with USDCAD this week.
It could be an interesting chart to watch. Have a little look at the weekly daily closes, and we’ll see what happens.
Thanks for watching this video update. If you like the video, please give it a thumbs-up, and I’ll speak to you soon.
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