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I’m going to begin the day today on the US Dollar versus the Swiss Frank [USDCHF]. Starting all the way out here on the Weekly Chart, getting a longer-term perspective of this support that we’re going to be looking at today. Going all the way back in time, the first black X you see here in the middle of the chart is all the way back into January of this year.
We could see the market coming down, finding support here into this pink-shaded area, into the 0.9000-level, and making a run all the way back up into the 0.9700s, towards the 0.9800-level. Then you go back a little bit further back in time. You go all the way back here into the early part of 2012. We could see back into March and even going all the way back into February of 2012, we could see some support in the same pink-shaded area, this time, taking it all the way back up here, into the 0.9900s.
So, we could see historically this pink-shaded area just where the bottom black horizontal lines are around or just underneath the 0.9000-level has historically held as support and been a reversal point where the market has returned back higher several hundred pips. Then you take it back to current time. And in the current time, we could see that the market has been, once again, holding here as support, so we have the potential, as history has shown us, for reversal and a turn back higher, going all the way back up into the 0.9400, 0.9500, maybe even into the 0.9600 or 0.9700s as a possibility, as we go back up to challenge the most recent highest highs that we see up here towards this top blue trend line.
But we also have a breakpoint. This is a barrier in the market. It’s a brick wall, if you will. And of course, right now, we’re sitting on top of that brick wall. And as we’ve seen back over the past couple of years, it’s sat on top of this brick wall and has been unable to pass through it and turn back higher. If the market is able to break through that brick wall or that barrier that sits there in the market known as support, then we’ll likely look for a continuation of the down trend. But it’s my expectation that as long as we sit on top of it, which has been the case for the past several weeks, then we’ll look for support and the potential for reversal.
Now let’s take that information down to the Daily Chart. And there, again, it may have been a little bit difficult on the Weekly Chart to see that pink-shaded area, but there again is that pink-shaded area just surrounding, a little bit above, a little bit below than 0.9000-level and we could see, several weeks ago, finding multiple days of support into that pink-shaded area, which is, of course, duplicated over the past couple of years. And here we go again. Over the past three days, we’ve seen the market fall once again back down here towards the 0.9000-level and that pink-shaded area.
Now, if you were considering selling in the direction of the trend, which of course, as we could see here on the Daily Chart, has been down, this is probably not your safest, lowest risk opportunity to sell it, because, as we’ve just pointed out from the Weekly Chart, over the past couple of years, this is historic support. So there’s, again, two potential opportunities here for the USDCHF, here into that pink-shaded area. Number one: you look for support and reversal. And I think that as long as it stays above here, that becomes your safest, lowest risk, highest potential reward opportunity. You look for support and potential reversal. That’s what we saw several days ago here, as it found support here and rallied all the way back up in towards the mid-0.9100s.
Here we are again, coming back down here towards 0.9000. So, the closer you can get into or within that pink-shaded area becomes a fairly low-risk opportunity to buy it, look for clues to reversal and for it to go back up towards the bearish blue trend line. Only, at least at this point, until it breaks underneath that pink-shaded area, would I expect we’re looking for a continuation lower. So your two opportunities are you either wait for a bounce here – you look for a bounce and reversal to go back up – or you wait for the market to finally break underneath that pink-shaded area, which has historically, over two years, been support, and then you look for a continuation lower. That’s your two opportunities at the current moment, as we sit there into that pink-shaded area.
The other opportunity is you just wait. You wait for it to go back up into resistance. It could be the yellow. It could be the blue. It could be all the way up there into the green-shaded area or towards the blue trend line before you look for resistance and reversal to go back down again. If that’s the case, then you have some time to wait here. So, there’s your opportunities. You’re either looking for a bounce and reversal from this pink zone to go back up, you wait for a break underneath the pink zone to continue the bearish movement, or you wait for a rally back into resistance before you decide to sell this again.
Now let’s take this information down to the 4-Hour Chart. And of course, over the past several hours, going back into late last week, we’ve been holding here into the low-0.9000s, again, just above the 0.9000-level. We can see that Thursday and Friday, the bank flow levels were also informing us that there was support – buying support – here just within that pink-shaded area. If you took buys into those bank flow levels, over the past couple of days it has been a profitable opportunity as we’ve seen it bounce back up here into the 0.9030s and 0.9040s. If it continues, once again, to pressure higher, your next support comes all the way up here into the 0.9065/0.9085-level – the yellow-shaded area.
That would be your next resistance based on this historical support that we see here and the resistance over here on the left-hand side. So, if it continues to pressure higher, this becomes your first or next opportunity to look for a sell for this currency pair. So let’s bring these arrows into play here on the 4-Hour Chart, and let’s go ahead and narrow this pink-shaded area here like this. So, here we are. These are our opportunities. Once again, you’re either looking for buys with fairly low risk here into the pink-shaded area to go back to the gold-shaded area or yellow-shaded area at the top of the chart.
The other side of the story of course – if you’re not looking to buy this, you want to sell it in the direction of the trend – is you’re either looking for the breakdown of the pink zone and the continuation lower or it rallies back to the yellow-shaded area, back into the 0.9060s, 0.9070s, or 0.9080s before you look for your next selling opportunity, possibly even as high as this blue-shaded area that sits all the way up here into the low to mid-0.9100s, up there in the blue-shaded area at the top of the chart. Those are your opportunities today for the USDCHF.
