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The price of USDCHF has recently made new lows on the daily timeframe and is back at the resistance. Will the trend continue here or reverse?
We’re going to look at USD/CHF as the market could potentially form a bearish move soon.
Daily timeframe
The price recently formed a new low. The market formed a lower high, broke out, formed a new low, and now, it is currently in the retracement phase of the lower low, lower high pattern.
The price of USD/CHF made a new lower low and it is currently back at the lows and finding some resistance. If the price forms a bearish rejection, then we can look for short opportunities.
We could anticipate another impulse phase into the market. Whether that be into previous structures or down where we had a ranging market. Moreover, the price may want to retest the demand before moving to the upside. I quite like the opportunity here for a move down.
Typically, we look at impulse and retracement phases in this type of market. We also look at the trend on a lower timeframe. If we’re expecting the price to come back up and retest the structure lows and continue, we could anticipate the price to make lower lows and lower highs on a lower timeframe.
Four-hour timeframe
In the four-hour timeframe, the previous pullback phase made higher highs and higher lows. It went back to the previous structure area, dropped, and now, we’re back in the retracement phase. We are making higher highs and higher lows again. So, I want to see a lower low and lower high pattern because that would tell us that the market has begun to move down.
So, if the market rallies to the 0.92 level, rejects it, forms a double top pattern, then breaks the downside, that is when I’ll be going short. At the moment, we are still in a retracement phase and the market is still making higher highs and higher lows.
If the price forms a double top or a change of trend pattern, we can look for a reversal and a trend continuation on the daily timeframe. If the trend continues, then we should see the price form lower lows and lower highs.
We don’t have confirmation if the price will break to the downside. We need to wait for that confirmation before we get involved with short opportunities in this market. However, it could be coming soon because we’re already back at the previous structure level.
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