Did you buy the recent USDCHF breakout?
If not, don’t worry! The major forex pair is offering another trading opportunity.
Watch the video to find out more…
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 take a look at USD/CHF.
Now, we did take a look at USD/CHF last week. It was featured because of the inverse head and shoulders pattern that was forming in the market and we looked at the potential for a pullback into the neckline area for a long opportunity. We outlined in that video that we may not get that pullback because of how weak the Swiss Franc was, and what happened then was the price rallied and continued to head towards a key resistance level.
What do we need to do next? Typically, an inverse head and shoulders pattern shows us a change of trend. If you are a trend-based trader, you would be looking to trade to the long side on a pullback or retracement into a key support and resistance level.
That support and resistance level would be this neckline area, around 0.8920. That, for you, would be a that long opportunity, there. However, if you want to be a buyer from this position, you can look to trade down into this level. As we know and as we’ve been studying and featuring in the videos recently, when the market is in an impulse and retracement phase, we see the lower timeframes change in trend.
For instance, if I go down to the four-hour timeframe, and we look at the impulse and retracement phase in this little section here, we can see that when the market is in an impulse phase, the four-hour is trending to the upside. It’s making higher highs and higher lows. When the market is in a retracement phase, we either get a range in the market, or the market is more likely making lower lows and lower highs, through here. When that changes, we get an impulse to the upside and the market continues up.
Now, what we’re having here is a potential change around, and it all stems from the daily timeframe. If we look left, we identified a potential area of resistance with these previous structure lows here as it had a high volume level. And what we suggested was – we’ve jumped to the weekly, you can see it’s those weekly lows here – what we suggested was that if you were long in this move, you’d look to take profits in that position.
Because of the recent job numbers from the US, we saw that the US Dollar weakened slightly. We’ve had this almost key reversal pattern being highlighted, and what that suggests to me is that if the price continues to fall, we’re in a retracement phase once again. What we’ll likely see is the four-hour change cycle and come back into a key level.
Suppose, we’re looking at 8920 as a zone where the price could come back. I would be expecting the market to make a new lower low, pullback, and then continue to the downside, this area here or here. For instance, it could be a decent area to start looking for a very short-term swing trading opportunity down into the major support point because this is where a lot of eyes would be on the market. The market could drop down into this level and even go beyond it because if many people are waiting to buy down here, the institutions may look to take out these lows here.
For me, USD/CHF is looking for a potential reversal set up into 8920 because that’s where the trend traders would want to be buyers in the market.
Keep an eye on this one. If you have a similar outlook, drop a comment below. Let me know what you think. If you did like the video, give the video a thumbs up, and I’ll catch you on the next one.
If you’d like to try trading the USD/CHF currency pair, you can start with as little as$100 when you create a live account at Blueberry Markets. Need help setting it up? Our customer support is ready to assist you any time of the day.