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I’m going to begin the day today on the US Dollar versus the Swiss Frank [USDCHF]. Starting on the Daily Chart, we have some previous indicators we want to take a look at first. First off, the previous downtrend line. The blue trend line you see here on the chart, representing the previous downtrend. Lower highs and lower lows within that trend.
Several weeks ago, we saw a breakout above that blue trend line. Right here, about May 14, May 13, we broke above that blue trend line and started a change of the trending pattern. At that same time, we also can see a previous moving average. This green line coming down through the chart is the 100-day moving average. And as it came down through the downtrend, we saw the market stayed underneath it. A little bit of a challenge above it here, but for the most part, throughout the life of the downtrend, stayed underneath that 100-day moving average.
And ever since the mid-part of May, when it broke above that blue trend line, it also broke above that 100-day moving average. At the same time, it broke above both of those indicators. We also started to see a challenge of our last resistance high and a breakout above this pink-shaded area, which represents that last resistance high, historical resistance, and historical support all the way on the left-hand side of that pink zone.
So, for the past several weeks, we have found the USDCHF sitting on top of the trend line, the moving average, and historical resistance, basically this pink-shaded area as the bottom of a period of congestion or ranging, if you will. The bottom of support, as we’ve seen it hold within this pink-shaded area, which basically is just above the 0.8900-level. We’ve also, during this timeframe, seen the market finding resistance, and I’ve had that highlighted in blue at the very top of the range at the top of that red box. So, for the past several weeks, again, going back to the end of May, we’ve been bouncing around inside this red box that I have drawn here on the chart. Support at the bottom. Resistance at the top.
And that’s no different today. We see the same stuff happening today. For the past three days, we have seen support here into the pink-shaded area. Four. As long as it stays inside that red box, that’s the mode of focus that we have. That’s the purpose for our trading. We’re looking for opportunities to buy at the bottom or potentially sell at the top, and eventually we’ll look for a breakout of this red box or above resistance or below support.
So, let’s put a couple of black arrows here that represent my expectations for the day today. First off, the first expectation I have for the day would be for support, here into the pink-shaded area and into the bottom of the red box. As long as it stays within there, above 0.8900, above the bottom of that red box, we’re looking for support. The potential for it to bounce back higher and challenge the blue-shaded area. Of course resistance and our first profit target would be back to the blue-shaded area. All of that changes. All of that outlook changes if we see a breakdown underneath 0.8908, 0.8900, underneath the red box, underneath the pink-shaded area. Then we likely look for it to turn right back down to the next support, which would be, of course, the yellow-shaded area and closer towards where the 100-day moving average sits, down towards that yellow-shaded area.
One other thing here on the Daily Chart is if you take Fibonacci from the lowest low to the current resistance high. The low here at the bottom to the most recent spike high. Taking Fibonacci retracement measurements of that range puts the .382 Fibonacci retracement level sitting at 0.8908. 0.8908 is the Fibonacci retracement level. That’s also helping us identify support there. The next retracement level beyond that, lower, again, would be the 50% retracement level, and that sits down at the top of the yellow-shaded area. So, clearly Fibonacci helping us identify the pink zone here. Historical resistance helping us identify the pink zone as support. The bottom of our range. All of that telling us that we’re finding support here into the pink zone.
Green trend bar. Forex Black Book. The green bar at the very bottom of the chart also implying that we do have some bullish expectation, so buying on dips into support become our main focus for the USDCHF. Let’s take all of that information down to the 4-Hour Chart. And as we get down here to the 4-Hour Chart, I’m actually going to zoom out a little bit so we could see some further history here for this currency pair on the 4-Hour Chart.
We could see the bottom of the trend. That’s where that Fibonacci starts. The bottom left-hand side of the chart, going to the top of the chart. We could see the red box here. I could probably extend that red box a little bit further back here if I wanted to. Take it all the way back here like this and say, since going all the way back to the left of that box, which is back, again, into May 14, we have been holding inside that red box. Support into the pink-shaded area.
Yesterday we saw our bank flows pop up, during the Trade Room by the way. We saw our bank flow levels pop up there into the pink zone, confirming that as support. So, we continue to see support with bank flow levels here into the pink-shaded area. All of that confirming that. We actually, on our previous 4-Hour Candle, got a new green arrow, and I often talk about where’s the best place to look for a buy. And a new green arrow with the Forex Black Book. That would be on a dip into support, and we actually see that. It challenged here into the pink-shaded area and we see a new green arrow.
So, we have a green arrow with the Forex Black Book indicator. Green trend bar. We have the pink zone. The bank flow levels. The bottom of our range. The .382 fib. All of that pointing to or giving us an indication or evidence or a clue to support here, and most likely you’re looking for buys into here, looking to target back higher. The only reason you would change that outlook is if it broke underneath that pink-shaded area. Your evidence is mounting for a buy bias today for the USDCHF. So, if you’re looking for a new trade right now, buying here into the pink zone carries fairly minimal risk because your stop loss orders would go just underneath the pink zone, because you really just don’t want to see it breakout underneath that pink zone if you’re going to be buying here. If it does, then it’s likely going back down to the yellow zone.
So, buys have your risk just underneath the pink zone. If you’re using the ALR indicator, then you’re likely putting your ALR zone size just underneath that pink-shaded area also. Maybe around 0.8900, maybe just a hair underneath it, into the 0.8890s, but either way you’re looking at it, your risk is under the pink zone. You’re targeting back to the blue zone or higher. If we can break above the blue zone and 0.9000 at any point, we’ll look for a continuation of the uptrend for the USDCHF.
