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I’m going to begin the day today on the US Dollar versus the Swiss Frank [USDCHF]. I’m going to start here on the Daily Chart. We haven’t seen a lot of movement since yesterday, so not a whole lot of change out of most currency pairs, but we will go through each of the levels today just to get us an idea of where we might look to make some new trading opportunities.
Here on the USDCHF, of course the previous downtrend. We’ve discussed that many times over the past several days and weeks. Over the past several weeks, we saw the market break above the moving average, using that moving average as support several days ago. Started the climb from the moving average; went into some congestion here in the pink zone. A few days ago, we, once again, saw another rally in the direction of this trend, pushing back here into the mid to upper-0.8900s.
So far, over the past two days, we’ve just sat right here on top of this orange-shaded area and the 0.8970-level. Let’s go ahead and zoom it in a little bit so we could see this a little bit closer. There we are. Yesterday’s candle. Little, red candle here capping out right around the 0.8985-level. 0.8985. Bottoming out again right here, right around 0.8970. So, you’re only seeing yesterday’s candle being about a 15-pip candle. Today, so far, even being smaller than that. So, again, not a lot of movement since yesterday, but as long as it stays on top of this orange-shaded area, which we discussed in the Trade Room yesterday, there’s a higher expectation that we’re looking for a continuation or a rally in the direction of the trend, just like what we saw down here in the pink zone.
Now, it may dip a little bit into the orange zone like it did here in the pink zone, but for the overall movement, we’re still expecting some more bullish movement out of this currency pair, at least until it rallies all the way to the blue-shaded area. That becomes our first resistance and very similar to what we see over here on the left-hand side of the chart, bouncing between the orange and the blue-shaded area for several days. One little dip down here. One little spike up here on some news. But for the most part, for a several-day period, kind of stuck between the orange and blue-shaded area over here on the left-hand side of the chart.
I hope we don’t see that go here on the right-hand side of the chart and the same, similar scenario because that means we have several days to wait for it to break out of this orange and blue zone, but I don’t think that’s going to be the case. I think it’s not likely that we’ll say in it this long. We could today, but not likely this long. Eventually we’ll look for a breakout. And of course a breakout underneath the orange-shaded area, we look for reversal and a turn back down towards the pink zone once again as our next support. A breakout above the blue-shaded area, we look for a continuation of the trending action that we’ve been studying in the Trade Room for the past few weeks.
Forex Black Book trend bar is red. That’s interesting because, over the past several weeks, we’ve seen it go from green during this uptrend, during the move from the lowest low on the chart to the current resistance high. During that timeframe it turned green. During this period of indecision, congestion, ranging channel, whatever you want to call it, it did turn red because it wasn’t continuing the direction of the trend. I would suspect that if we can get the market to break above the blue-shaded area, that trend bar will once again turn green as it starts to go trending one more time.
So, I’m not really focused in on the sell side, even though the trend bar is red because I believe the trend bias is still to the buy side here for the USDCHF. So, my expectation is buying into the orange zone or a break above the blue-shaded area today is the direction I’m focused on. The risk in that scenario of course is that it breaks underneath 0.8955, the bottom of the orange zone, and starts moving back down, so stop loss levels would be underneath the 0.8955-level and underneath the orange-shaded area.
Let’s go ahead and take that information down to the 4-Hour Chart. It’s not really going to change a lot. You can definitely see the lack of movement over the past several hours, and really I think what I’ll take away from this, and this is what I mentioned yesterday in the Trade Room. What i’m going to take away from this is the lack of enthusiasm from the sellers. There’s not a lot of selling pressure. It’s just been kind of drifting down within a 15 to 20-pip area, so there’s a lack of enthusiasm from the sellers, which tells me that if there is no enthusiasm from the sellers, there could be another gain or rally for the buyers one more time before the sellers look to jump back in on this pair.
Yes, we did get a red arrow right here with the Forex Black Book. The trend bar is red, but I would hesitate to sell there simply because it’s sitting on top of support. You think of that orange-shaded area kind of like a price floor, a brick wall in the market, and it’s sitting on top of that brick wall, so I would hesitate to sell it there. Now, if it was under the orange zone or just sitting underneath the blue zone like it was over here on the left-hand side of the chart when we got the red arrow, that would be a different story. You know, if it was underneath here or all the way up here, but it wasn’t. It was sitting on top of the orange zone, so it gives me a pause or hesitation about selling it there, even on the red arrow because we’re sitting on top of support.
So, all in all, the main focus today will be continue looking for buying opportunities, dips into the orange zone, targeting the blue zone or a breakout higher for the USDCHF. The only reason to change that scenario today would be a push underneath the orange-shaded area. Then we look for the fall back down to the pink-shaded area for the USDCHF today.
