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I’m going to get started today on the US Dollar versus the Swiss Frank [USDCHF]. Starting here on the Daily Chart, we could see overall this long-term trend has been down. We started all the way up here into the mid-0.9700s back in July of 2013 and it has been falling ever since, pushing all the way down to the lowest lows on the chart, the green-shaded area, the very bottom, right around the 0.8700-level.
Now, over the past several weeks, we go back into mid-March. We saw the low made down here, right around 0.8700, a pullback going back towards the 0.8900-level, a dip back down towards the lowest low, into 0.8700 once again, the green-shaded area at the bottom of the chart. And since last week, we’ve seen a rise out of this currency pair that has really changed the pattern of the trend. And when we talk about a pattern of the trend, the downtrend I describe as having lower highs and lower lows. And we could see the lower highs along the downtrend line, the blue trend line that we see here.
If we’re going to see a change in the pattern of the trend, we actually would look for new higher highs and we can see that over the past four or five days, we’ve seen new highs being made. We could see our last high right here in the purple-shaded area, the next high into the blue-shaded area, and that’s being challenged now. So, a new pattern of the trend is being established here for the USDCHF, where, previously, lower highs, now we’re starting to see higher highs.
The question of course is: is this pattern going to continue to pressure higher or are we going to see a reversal and a turn back down in the direction of the previous downtrend? Well, I think we’re still in the buy mode. I think the buyers are still well in control of this currency pair and we’ll continue to see it pressure higher. That does not mean that it can’t take a little bit of a dip lower, a little bit of a breather, or retracement back down into support before continuing to go higher, but I think the buyers are clearly in control of the USDCHF right now.
Let’s go ahead and zoom in a little bit here on the Daily Chart. Get a closer view of the Daily and, again, there is our last high here in the purple zone. We clearly broke above that a few days ago. Here’s our next high in the blue-shaded area. We’re challenging that now. An open and close above this blue-shaded area, which sits between 0.8907 and 0.8927 – that blue-shaded area – is about a 20-pip. That will now become our support, similar to the purple zone. Yesterday we were talking about how the market broke above the purple zone. That became our support. Today we’re talking about the market breaking above the blue zone. This now becomes our support for the day for the USDCHF.
So, let’s go ahead and add an arrow right here. The blue zone will be our intraday support. Anything above that, we look for a continuation to the next resistance. The next resistance is this pink-shaded area. Follow it back in time. That goes between 0.8969 and 0.8984. That’s what I have highlighted in pink. Follow it back. You could see historical support here. You could see resistance here. You see support here on the left-hand side of the chart, and you could see some resistance. So, resistance, support, resistance, support. We know that this zone highlighted in pink is critical and a major decision point for this currency pair, likely finding some resistance there today.
If, of course, we break above there, our next stop would be all the way up here towards this orange-shaded area at the top of the chart, into the mid-0.9000s. One thing I want to do here on the Daily Chart also is take Fibonacci from the highest high that we see up here, right where the blue trend line connects with the highest high. I’m going to measure Fibonacci from there, down to the current low. So, we’re going from the high, down to the low of the last leg of the downtrend that we see over here.
And here’s something very interesting. The 50% retracement level of that previous downtrend sat right at 0.8926-level. That’s the top of the blue-shaded area. That’s where we found resistance the last time. Bounced back down. Found resistance at the 50%. Bounced back down. Now we’re challenging that 50% once again. Staying above there, again, becomes support and a rally back to the next resistance. That happens to be the .618 fib, sitting right up here, right around the 0.8980-level, inside the pink-shaded area. You could see that dashed line inside the pink-shaded area. So, there’s the .618 fib and the 50%.
And interesting enough, just as a side note here, down here into the purple-shaded area is where the .382 was, down here at 0.8872. So, we could see how the market is responding to the Fibonacci levels of the previous downtrend. 50% now. .618 at the pink zone. And the .786 would sit all the way up here in the orange zone. So, those become our barriers, resistance, support for the day today. Anything above the pink-shaded area, we’ll likely look for a continuation of the upward pressure. The buyers taking it all the way back to the orange-shaded area and the .786 fib.
All of that of course would change if we start to see a breakdown underneath the blue-shaded area, we look for the market to pull back down towards the purple-shaded area. So, these are your major decision points. Forex Black Book is green. Gives us a buy bias right now, so we would buy on dips into support. Buy on new green arrows on the 4-Hour Chart for the USDCHF.
Let’s go ahead and take this down to the 4-Hour Chart, and as we get down here to the 4-Hour Chart, we’ll begin looking for clues to continuation or clues to reversal. I’m going to zoom out one time so we could see some more information here. There’s our blue-shaded area acting as our current support. You could even see today’s, the current 4-hour candle finding support above there. Definitely a buying opportunity on a dip to the blue zone. Pink zone is our current resistance. That’s where the .618 fib from the Daily Chart sits. That also becomes our current resistance for the USDCHF.
So, if you’re looking to sell this currency pair today and a reversal to go back down, your very best, lowest risk, highest reward opportunity to do that, I believe, would be back towards the pink-shaded area. If you’re looking for a buy and a continuation of the uptrend, I believe your very best opportunity with the lowest amount of risk and highest potential reward would be back down here to the blue-shaded area for the USDCHF today.
Green trend bar for the Forex Black Book. Of course we would want to see a pull back down. It needs to go back down before we get a new green arrow. We do have a yellow arrow here. I think it would have to go back down. Yesterday’s bank flow levels sat down here in the purple zone. I suspect today’s bank flow levels will be a little bit closer to the current market, maybe just underneath this area of congestion today. We’ll have to wait and see how those shape up later on today.
So, buyers into the blue zone. Sellers into the pink zone. A break above the pink zone continues the uptrend. A break below the blue one continues pressure back down again towards the purple zone. One last Fibonacci I want to take here on the 4-Hour Chart. Let’s take Fibonacci. Now, this could change, by the way. This could change if we see a new high being made, but let’s go ahead and go from the lowest low down here at the bottom in the green zone to the current resistance high, just of this uptrend that we’re seeing right here. And in doing that, the .236 sits at 0.8897. That would be of course potential support. The .382 sits at 0.8860. That’s the purple-shaded area.
So, those provide potential support if we start to see reversal for this current uptrend. Just be careful about that because this, again, could change if we see a new high being made for the USDCHF today.
