FOREX Chart Of The Day: Will USDCAD Break Higher?
Hi, and welcome to this Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.
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In this video, we’re going to be looking at USD/CAD and why we could be looking for long opportunities in this market.
Obviously, the US Dollar is very, very weak. We can see that by looking at this downtrend, that we’ve seen on USD/CAD for a long time now. However, it’s gone into an extreme overbought condition, and when we looked at the strength and weakness chart which I will bring in now – at the start of the week, we saw the fact that the US Dollar was starting to gain a little bit of value.
What I noticed as well is that the CA Dollar is strong. It gained, but it’s at plus five, and plus five is an area where the strength is likely to continue, but you can start considering the fact that there might be some type of reversal.
So if we were to see a decent reversal, we’d put these two pairs together as the extreme example of that. What I like to see then is looking at the price action on the dailies. The fact that we got this double bottom pattern where the price produced a bullish daily close after retesting this structure low, just through here. Now, if that pattern was to complete, then we could look for the continuation to the upside.
So, we were looking for the potential of the price to break that daily high, in here, and continue to rally to the upside. But, we just haven’t had that so far. What we can also wait for is a four-hour change in trend. So we’ll just dive into the four-hour time frame. We can see that price at the moment, again, very much in that downtrend. Nothing is really changing at the moment. However, you can see that on the four-hour timeframe, it’s a little bit more of a consolidation pattern. You can see that box pattern through there, where the market retested yesterday.
So, what I’m really looking for here is some kind of change in the cycle in the four-hour timeframe. I think if the market breaks and closes above these three highs, here, we’ve got a really good chance to see this market rally back to the upside.
So keep an eye on this market. If that US Dollar strength does come into play, then you could go really well here, considering that the CA Dollar was one of the stronger currencies recently.
We could start to see that strength reversing slightly, and if we do, then we have a combination of the US Dollar gaining strength and the CA Dollar losing strength, then we could see this market really pop to the upside. So, we’re expecting the market to rally here if we were to get that situation.
The daily time frame or targets that I’d be looking at this weekly level, just through here, is a really good level. The market has found some resistance and support there before, and you can see clearly on the daily time frame you’ve got multiple support and resistance points at that point.
So, we’re looking for the market to rally. If you don’t want to look at the end of the day position, then look for the market to break on the four-hour trend, then look for that long position in there.
Thanks for watching this video update. If there are any charts that you want me to take a look at, in particular, drop a comment below, and I’ll get around to them at some point.
Thanks for watching it. I’ll speak to you soon.
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