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I’m going to begin the day today on the US Dollar versus the Swiss Frank [USDCHF]. Starting out here on the Weekly Chart, we can see this red consolidation triangle that’s been developing for the past couple of years. The top red trend line connecting with our last two most recent highs for the USDCHF and the bottom red trend line connecting all the way back here into October of 2011 and our most recent lows that we could see here for the USDCHF.
Now taking that information down to the Daily Chart, you can see where that red trend line connected with the bottom of this fall that began all the way up here into the 0.9830s. It pushed all the way down into the low-9100s and connected with the bottom of that bottom red trend line. Now it’s made a significant retracement higher, over the past few days, from the low-0.9100s back now towards the 0.9400-level just into the upper-0.9300s.
Taking Fibonacci from that most recent high into the 0.9800s down to the most current low, we find the .382 retracement level in this blue-shaded area right at 0.9399 or 0.9400. Also taking a trend line from our most recent uptrend where the market climbed from the lowest low that you see here on the chart to the highest high on the right-hand side, connecting the lows or the support levels within that uptrend with this blue trend line, we could see the market now finding resistance over the past several days underneath that blue trend line. This is the Daily Chart, so for the past three days – trading days -, we’ve seen resistance under that blue trend line.
So, as long as the market holds under the blue trend line and underneath the 0.9400-level where the .382 retracement level is, we’ll expect resistance and the possibility of turning back down towards the red trend line at the bottom of the chart in the direction of this previous trend. However, if we break above 0.9400 and break above that .382 retracement level, likely looking for this to continue to pressure towards the fifty percent into the 0.9480s or close to the 0.9500-level for the USDCHF.
Now taking that information down to the 4-Hour Chart. Down here, on the 4-Hour Chart, looking at the Forex Black Book indicator, of course the trend bar at the bottom of the chart is red, which leads us to look for red or sell arrows for this currency pair. Well, we’ve most recently seen, last Friday, a red arrow show up. The problem with that red arrow is that it showed up at the bottom of this fall, down here into these last resistance highs. So, taking a sell into those last resistance highs was a higher risk scenario than if it gives us a red arrow as it makes this retracement higher.
So, what I would actually like to see now, instead of selling at the bottom of this downward run on top of these last resistance highs and into last Friday’s bank flow levels, I’d like to see this retrace back up here into the .382 retracement level, underneath this blue trend line, in towards the 0.9400-level, give us a new red arrow up here into the resistance level, and then give us an opportunity to sell it in the direction of the previous downtrend.
Of course, last Friday’s bank flow levels puts the sell levels well above that in towards the upper-0.9400s up here towards the fifty percent retracement level of this previous downtrend, so looking at the bank flow levels, there still is some room to go. Of course wherever today’s bank flow levels are could give us our next clue where this market could go. If today’s bank flow levels drop down towards this blue-shaded area, it could give us a higher expectation that the market will turn back down in the direction of the previous downtrend. If they raise up and the buy levels raise up underneath this green zone, it actually will be indicating support and the possibility of continuing the bullish move.
Last Friday, the market was right in between the sell and the buy levels. About halfway between the buy and sell levels, giving us an indication it could possibly go in either direction. So, for the time being, I’m focused in on looking for resistance into the Fibonacci levels underneath this blue trend line, looking for this to turn back down in the direction of the previous trend. However, if it takes a dive back down here to the purple-shaded area, back down into these historical resistance highs, there is a possibility of finding support again closer towards that weekly trend line – that red trend line from the Weekly Chart.
So what I’ll be looking for is support closer towards the purple-shaded area, in towards the mid- to low-0.9200s. I’ll be looking for resistance today here in towards the 0.9400-level, underneath that blue trend line for potential selling opportunities. If we break above the blue zone and the 0.9400-level, the next selling opportunities come up here into the pink-shaded area towards the 0.9480s for the USDCHF today.