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I’m going to begin the day today on the US Dollar versus the Swiss Frank [USDCHF]. Starting out here on the Weekly Chart, the first thing I’ve done is taken Fibonacci of the previous uptrend, starting at the bottom left-hand side of the chart all the way down here into the mid-0.7000s; and taking that Fibonacci measurement to the highest high, up here into the mid-0.9900s.
In doing so, we find the .382 Fibonacci retracement level at 0.8861. Now, I’ve highlighted that with a horizontal red line here in the middle portion of the chart. Now, in the most recent days, of course, we could see that the market has come back down. We’ve been in a downtrend for the past several months and has pushed all the way back down here into the 0.8900s. So, that .382 does still sit a little bit lower than those last spikes low that we’ve seen here for the USDCHF. So, what that tells me is there is still potential room for this to continue to pressure lower.
Now, it doesn’t have to reach down there, but there is potential for it to breakout and move a little bit lower into the mid-0.8800s. But we are currently finding support in this little green-shaded area. It’s a little bit difficult to see on this zoomed out view of the Weekly Chart, but here, into this area, just above the 0.8900-level, we could see a green, highlighted, shaded area as support. Follow that back to the left-hand side of the chart, going all the way back into February of 2012; we saw some historical support in that same green-shaded area.
Now that’s going to be easier to see. As we begin going down to smaller compressions, we can see that same green-shaded area here on the Daily Chart, sitting just above the 0.8900-level. and what’s important about this green-shaded area is the current market action around this area. We could see five days now finding support into this green-shaded area. Now, we’re finding support there now, but if we get a breakout underneath it, we already know that the .382 Fibonacci retracement level of the previous uptrend on the Weekly Chart sits at 0.8860s.
So, we already have an idea where we could look for this to go if we breakout underneath the 0.8900-level. Now, of course, as I mentioned, it doesn’t have to do that. If we see a breakout to the top side of this green-shaded area, which the top right now sits around the 0.8940-level, getting above that, all the way back up towards the 0.9000-level will be our next resistance; and you could see the historical supports here sitting around that 0.9000-level, which would act as those resistance.
Let’s go ahead and take that information down to the 4-Hour Chart also. And once it gets down here to the 4-Hour Chart, we’ll squeeze it back out again, and there is that same green-shaded area that we were just looking at on the Daily Chart. We could see the resistance that we’re currently finding just around the 0.8940/0.8950-level. Those resistance being backed up with historical support here. The next area of resistance would be back up here to this pink-shaded area into the upper-0.8900s, towards the 0.9000-level.
So, a breakout above this green zone today and above the 0.8940 to 0.8950-level, we’ll likely look for a turn all the way back up towards 0.9000 and this pink-shaded area. On the bottom side, of course, is the bottom of this green-shaded area, which we just mentioned, starting out on Daily and the Weekly Chart. If we see a breakout to the bottom side of this, which, for me, would be an open and close underneath the 0.8900/0.8910-level, which we have not seen over the past several days. No open and close underneath that green-shaded area.
If it does that, we’ll likely look for the push back down to the .382 fib. We discovered from the Weekly Chart, all the way back down here into the 0.8860s. So, again, today we’re finding support into historical support. The green-shaded area. We see a little bit more support all the way back down into the the 0.8860-level with Fibonacci, but we’ve been holding within a little bit of consolidation or range inside this green-shaded area. What we need to see today is a breakout. If we’re going to see it go higher, it needs to break above 0.8940, continue that pressure all the way back up towards 0.9000, the pink-shaded area becomes our next point of resistance and potential break above that goes higher.
Staying underneath it, we could see a turn back down in the direction of the trend. One other indicator to point out here – well, actually two to point out. First off is the Forex Black Book Indication. The trend bar is still indicating red or bearish trend, so that could give us opportunities to sell on new red arrows in the direction of the bearish trend. The other indicator I want to mention are the bank flow levels. And over the past three days, we could see that the bank flow levels – Friday, Thursday, and Wednesday of last week, the bank flow levels sitting just here into the bottom of this green-shaded area, indicating support of buyers down here into the 0.8900-level, which, so far, they’ve been able to repel the sellers and we’ve been able to see some support in this area.
If it continues to be that way, if we see today’s bank flow levels coming back out into the 0.8900-level, bottom of the green-shaded area, it gives us, again, increased confidence that we’re looking for that retracement back higher. More likely looking for a breakout above 0.8940/0.8950 – the top of the green-shaded area – for a continuation back to that pink-shaded area into the 0.9000-level. Now, once it reaches back up here, if we see resistance and new red or sell arrows coming into the play with the red trend bar, that could give us opportunities to sell once again in the direction of the current trend.
One last thing I want to do here on the 4-Hour Chart is take Fibonacci from our most recent high to the most recent low of this current downtrend. We find the .236 fib sitting at .8956. Of course that’s just above our green-shaded area and the potential breakout that we’ve been discussing, and the .382 sits all the way up here into the pink-shaded area, where we would expect our next resistance. So, Fibonacci kind of giving us a little bit of a backup to those area of support and resistance that we discussed and the potential breakout for the USDCHF today.
