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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 and, truthfully, there’s not a whole lot different than yesterday to look at here on this currency pair. If you follow this blue-shaded area backwards in time, we can see that historically we have seen some resistance here.
Right here, just a few days ago, we saw some resistance last week, into this blue-shaded area, into the low-0.9100s. Here, where this black X is, we see resistance, where the market came up underneath that blue-shaded area; for several days found resistance underneath it. Then, once again, following it backwards in time, we can see historically, along that blue-shaded area, we see support where this black X is here, back in August. Further back in time, we can see back in June, we can see some support on top of that blue-shaded area. And then, once again, going all the way back to the left-hand side of the chart, we can see historical congestion around that blue-shaded area, some support on top of it, and some congestion inside that blue-shaded area.
Follow that back in time again, back to current time, and we could see that currently we are sitting above that blue-shaded area. And we know, of course, that once we get above it that same zone of historical support and resistance now becomes support once again. So, that’s our first thing that we’re going to look at. Now, of course, the blue trend line comes into play, and over the past several weeks and months, we have been in a downtrend. Lower highs and lower lows along that blue trend line. And then, over the past couple of weeks, we’ve seen a change of that pattern, where instead of creating lower highs within the pattern of the downtrend, we could see the market found a low down here into the 0.8900-level, came back up, challenged that last high that we see here where the black X is, and eventually breaking back above there.
We’ve seen a couple of candles now on the Daily Chart open and close above that previous high, giving us a higher expectation that we’re looking for a continuation in the upward direction now that we’ve broken above this high, because remember an uptrend now has higher lows and higher highs, and that’s what we’re seeing in the current moment. That we’ve broken and made a new high. We will now expect to see a continuation of that pattern with a new higher low, which is what we’re creating right now as it dips back into support into this blue-shaded area.
I’ve placed a red trend line there, of course to represent the most current directional movement we’ve seen here, but really that’s just putting a trend line on the most recent retracement. As long as it stays above the red trend line and the blue trend line and that blue-shaded area, my expectation is that we’re looking for buys into support. The only thing that would change and invalidate that entire scenario is that it breaks back underneath that blue-shaded area and starts to create lower highs and lower lows once again and changes the pattern back into a downtrend.
I’ve also taken several different Fibonacci measurements here on this chart. Highest high. The lowest low. Mid-high in the mid-part of the trend to the lowest low, and of course the low to the most recent high. We could see several dashed blue lines, and that’s what those Fibonacci levels look like here on this chart. The dashed blue line. Several of those dashed blue lines overlapping in certain areas, particularly here at the top of the blue-shaded area. We see a couple of those dashed lines overlapping there. The next ones down would be down here closer to or just above the yellow-shaded area, down into the 0.9100-level. So, currently, we see some Fibonacci here. Some retracement levels sitting here into or just above the blue-shaded area.
The blue-shaded area, historical support and resistance. Bearish trend line. We’ve opened and closed above it, now hooking back down to the top side of that. All that giving me a high degree of expectation of support here and a more likelihood of a bounce back up towards the purple-shaded area, which is into the 0.9230s, 0.9240s, 0.9250s, and 0.9260. That’s between the 0.9235 and 0.9265-level, the purple-shaded area as our next resistance, which is where, of course, we have found our most recent resistance. Above that, we go all the way back up here into the 0.9330s, the pink-shaded area, and of course, beyond that, we’ll look for our next resistance higher.
Again, the only thing that will invalidate that outlook is that it breaks underneath the blue-shaded area. Then we look for it to, once again, go down towards the lowest lows. Taking a look at the Forex Black Book, we also see that the trend bar is bright green. Of course, if you have been following that particular indicator, you know that when the trend bar is bright green, that gives us an uptrend bias. It means that the longer and shorter, or faster and slower-term trends are in agreement to go up so that gives us an upward trend bias.
Let’s take that information down to the 4-Hour Chart. And as we get down here, we can of course see that since yesterday, we have found support above that blue-shaded area, as expected, into the Fibonaccis, as expected, above the trend line, as expected. We can also see yesterday, the bank flow levels. Actually, over the past three or four days, we can see the bank flow levels sitting here into this blue-shaded area, giving us, again, a high degree of confidence of support that there’s buyers that are supporting this price from going lower. That’s what the bank flows are telling us here.
So, we see the bank flow, the historical support and resistance highlighted by the blue-shaded area, the trend lines, the Fibonacci – all of that information pointing to support here and, more likely, a price floor that the market is going to have a difficult time getting back through. And we’ve seen that so far over the past day or so. As long as it holds above it, I would continue to concentrate my efforts on the buy side, looking for support, buying with low risk, going back towards the purple zone or higher. Any new green buy arrows – remember the Forex Black Book, the green trend bar at the bottom. If you get a new green arrow within the chart or maybe even a yellow arrow, it could give you a clear entry opportunity here for this currency pair to go in the direction of the trend for the USDCHF today.
