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I’m going to begin the day today on the US Dollar versus the Swiss Frank [USDCHF]. Starting here on the Daily Chart, we could see that this pair has been in a downtrend for quite some time. Following this blue trend line to the far left-hand side of the chart, we’re looking all the way back into July. We began the downtrend with lower highs and lower lows, all the way down here into the upper 0.8800s at the very bottom of the chart. Then we saw a little bit of a retracement; as the market started pulling back, it broke above the trend line here, and let’s put a vertical line here. Right here, into November 7, we broke above the blue trend line. And ever since then, we’ve been just floating above that blue trend line, stair-stepping down that blue trend line, creating a bit of a trend channel as we have been floating between the blue trend line as support and the red trend line as resistance.
We’ve just been bouncing around between there in a channel for the past several weeks. What we’re watching for are one of two things. It’s either going to break to the bottom side. It’s going to break underneath the support, underneath the blue trend line, and continue the previous downtrend, down to the lower lows on the chart, into the 0.8800s, or we’re going to see a final rally back higher. It’s going to challenge the red trend line and continue to pressure higher in the direction of a newly forming uptrend.
Those are the two opportunities that we’re looking for. Now, as we’re looking for them, until it breaks out, there are opportunities to trade within the channel. As it approaches the bottom of the channel and into the support, there are potential opportunities with fairly low risk and higher potential reward for buying down here at the bottom. And we’ve seen that over the past few days, where it’s dipped into the blue trend line; made a rally higher. Dipped into the blue trend line, the pink-shaded area, and made a rally higher. And over the past seven days now, we’ve seen support into this pink-shaded area.
I don’t think that any of that has changed today. We still see the market holding inside the pink-shaded area. We still see it holding above the blue trend line, so that remains the same focus as it has for the past several weeks. Buying into support and looking for this pink-shaded area, the blue trend line to hold, and a rally back higher towards the yellow-shaded area, towards the red trend line. And of course, an eventual break above that, we’ll likely look for the continuation higher. In fact, I could even bring these arrows down here. These upper arrows towards the red trend line, closer to the red trend line because we know that that will, of course, be potential resistance into that yellow-shaded area and that red trend line. And a breakout above that red trend line and a breakout above the channel, we look for it to continue to pressure higher.
We do see that the trend bar has turned dark green today. It was bright green yesterday, but it’s turned dark green today, showing that there is some disagreement between the trends. The shorter and longer-term trends have come into disagreement. One of them is pointing up. One of them is pointing down. And that’s the reason why the trend bar has turned dark green. And that’s not too hard to see. We see the previous uptrend. We see the current downtrend. They’re coming into disagreement right now. What we’d like to see for this to turn bright green again and the trends to become in agreement would be for this to start moving back up, the buyers take control, drive this back towards the red trend line and start going back up again.
Let’s go ahead and take this down to the 4-Hour Chart. You can, again, see that trend channel that I’ve been discussing here. The blue trend line. The red trend line. We can also see that over the past week or so, the bank flow levels have been sitting down here into this pink-shaded area. Six days now holding into the pink-shaded area as our bank flow levels. Yesterday we saw the market test into those bank flow levels and the blue trend line. A bounce back up into the yellow zone. We’re now seeing it challenge back down here into the blue trend line again. So, if you’re looking for an opportunity today, it’s my expectation that as long as it holds within or above the blue trend line and the pink-shaded area, you’re lowest risk – not a no-risk opportunity, but your lowest risk opportunity is looking for a buy, charging back up here towards the yellow-shaded area. Target that as resistance. Beyond that, we’re back into the blue-shaded area at the very top of the chart.
The risk in that scenario of course is that it breaks underneath 0.9000, pushes underneath this pink-shaded area and the blue trend line, and begins to go lower. Now, I don’t consider this spike low, this wick that sits down here, as a break. I expect that to be confident in a breakout, we’re looking for an open and close, a clear candle body below the 0.9000-level. This spike underneath it was a false break. I would expect to see a true break. We’re looking for that open and close. One single candle body that opens and closes underneath 0.9000 either on the Daily Chart or here, on the 4-Hour Chart. Until then, I expect there’s still support here. I would expect that today’s bank flow levels will likely come out and publish somewhere around this spike low today, right around the 0.9000-level. And we’ll, again, look for a bias to look for a buy to target back to the yellow or the blue zone and the top of our longer-term trend channel.
The only thing that changes that would be that open and close breakout underneath the 0.9000-level. So, for the day today, your setup is looking for buys at the bottom of the channel, into the pink zone, into the bank flow levels, into the blue trend line, looking to target higher levels, watching for that breakout underneath for a continuation lower of the downtrend for the USDCHF today.
