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I’m going to get started today on the US Dollar versus the Swiss Frank [USDCHF]. Before I begin, I’ll have to apologize. I had some computer issues yesterday and it wiped all of my indicators off of my charts. The bank flow and the Forex Black Book indicators have disappeared off my chart. So, I’ll be working on that later today, but I didn’t want to miss getting in the analysis using the support and resistance levels that we could be watching for the day today.
So we’ll start her on the Daily Chart. Of course we have been studying the downtrend for the USDCHF with the red trend line. Lower highs and lower lows have been persistent over the past several months. In the most recent weeks though we’ve seen a little bit of a change where the market broke back above that red trend line, has twice found support on top of that red trend line, and been in a period of congestion and consolidation now for the USDCHF.
Pink-shaded area is our current area of support. You follow it back in time and you could see historical support here, historical resistance here, and even some support on the far left-hand side. That is current acting as our support, and we can see that over the past three or four days. Next resistance higher would be the yellow-shaded area just above the market. We could see that between 0.9085 and 0.9120. That’s the yellow-shaded area. Historically we could see resistance here and resistance here, and even some congestion, resistance, and support along that yellow-shaded area back in time.
So, yellow-shaded area is our next resistance. Current shaded area is the pink-shaded area. That goes between 0.9025 and 0.8990 as our current support. Anything underneath there, we’re likely going back down into the low 0.8900s and the blue-shaded area at the very bottom of the chart. If I recall, even though we don’t have the Forex Black Book indicator here on the chart right now. If I recall from yesterday, the Forex Black Book indicator was green and a bullish bias here for this currency pair. So that also would give us an expectation that we could be looking for a rise out of the USDCHF.
I’ve also taken Fibonacci from the highest high down to the lowest low of the previous downtrend. And in doing so, we could see we’ve been challenging the .236 fib at 0.9024. The next Fibonacci level higher would be the .382. That’s all the way up here near this purple-shaded area at 0.9160. We do see the market did spike there one time. Another challenge of there potentially looks for a breakout and a continuation higher.
Let’s go ahead and take this information down to the 4-Hour Chart. We see all those shaded areas coming into view here on the 4-Hour Chart also. I’m going to put a couple of arrows here on the chart. I’m going to have to change this arrow. Give me just a second to change the arrow back to what we would normally look at. There it is. And here we go. As long as we hold above the pink-shaded area today, I expect support and buying on dips into that support for a rally back towards the yellow-shaded area that sits up here.
Let’s go ahead and put an arrow up here. So, the yellow-shaded area becomes resistance. The pink-shaded area is our support today. Staying within or above the pink zone, we look for rallies back to the yellow-shaded area. If, at any time, it breaks back underneath the pink-shaded area, we’ll likely look for a turn back down towards the blue-shaded area at the very bottom of the chart as our next support.
So, this pink-shaded area is our current decision point today. If we’re going to buy it, this is our likely buy scenario. Then we look for it to turn back to the yellow-shaded area. If we’re looking for a selling opportunity, I don’t think we want to sell it on top of the pink-shaded area, but likely a breakout underneath it looks for a continuation lower for the USDCHF. Above the yellow-shaded area, of course, if we take a turn back higher again, getting above our current resistance into the yellow-shaded area, we’re likely again pushing back towards that .382 fib that sits up here closer towards the purple-shaded area at the top of the chart.
Watching for a breakout today will be your main focus, but I think the directional purpose for this currency pair right now is for the buy side, looking for the turn back towards the yellow zone, the purple zone. All of that changes of course if it breaks underneath the pink zone. We’re likely looking for it back down here towards the pink-shaded area. If I recall correctly from the past several days, the bank flow levels have been following underneath the market, underneath the support lows, and we’ve been looking at a rise in the bank flow levels and no sell levels over the past many days.
So, again, when and if those bank flow levels get published today, I would expect them to be somewhere right around this pink-shaded area as a support for this currency pair, as they have been following in that direction over the past several days. I’ll work on getting that indicator back on my charts later today. But with the bullish bias in the Forex Black Book that I recall from yesterday, with the bank flow levels pushing underneath support and the support we’ve seen here into the pink zone over the past few days, that becomes your trading opportunity.
Buying on dips. Rally back to the yellow-shaded area is your target, or higher, on a breakout. The risk in that scenario is that it breaks back underneath 0.8990 and we look for it to turn back to the blue-shaded area for the USDCHF today.
