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I’m going to begin the day today on the US Dollar versus the Swiss Frank [USDCHF]. Starting on the Daily Chart, we could see that this currency pair has been in a downtrend. Left-hand side of the chart. Started all the way up here, top left-hand side of the chart, into the mid-0.9400s, began a fall that happened for quite some time, pushing all the way back down into the 0.8700-level.
We see a couple of times challenging the 0.8700 level. Once here into March of this year. Then it bounced back up. Came back down. Challenged that same low back into 0.8700 back into May, and then has changed direction basically for this currency pair, pushing above that previous down trend line and above the 100-period moving average.
The green line that you see here on the chart is a 100-day or 100-period simple moving average. You could see, through the life of the downtrend, for the most part, it stayed underneath that 100-period moving average. Getting a little bit above it here, but for the most part staying within the downtrend and below that moving average.
Several weeks ago, back into May, we saw the market push through the blue trend line, through the 100-day moving average. Now using that same average as support. A few days ago, we saw the market come back down here into the 0.8860s, challenge that green line, that moving average once again as support, and now has bounced back up. It’s my expectation that as long as it stays above that green trend line that we’re looking for some more bullish behavior out of this currency pair, similar to what we expected bearish underneath the moving average that you see there.
So, staying above the moving average, we’re looking for bounces into support and continuation of the uptrend behavior. Of course right now we’re seeing it stall out right here into this pink-shaded area. Five days now stalled out right here into this pink-shaded area, right around the 0.8925, 0.8930-level. Hasn’t made any significant moves higher. Hasn’t made any significant moves lower over the past four or five days here for the USDCHF. So, what we’re likely looking for is a breakout. I’d like to see the market continue to hold support here into the pink-shaded area and start to make its move, breaking above the orange zone, which would be above the 0.8960-level, pressuring back towards our last resistance high into this blue-shaded area, and eventually continuing the uptrend and pushing back towards the green-shaded area as we look for the continuation higher for this pair.
Now, of course all of that changes if we see a break of the pink zone. We’ll likely see another challenge of the moving average and the mid-0.8800-level. And of course any time it breaks underneath that, we’ll look for the continuation back lower again. Let’s put a couple of simple arrows here on the Daily Chart. We know that this is support. Easily see that down here in the yellow zone. We can know that the blue-shaded area is resistance. We can see that the last time we challenged here. And of course the pink-shaded area will come into play today also. Staying above the pink zone, we hope for that continuation higher. Getting back below the pink zone, we’ll look for a push back to the yellow zone.
Let’s zoom it in here on the Daily Chart so we could see all that a little bit closer. There’s our blue zone at the very top of the chart as our major resistance. A break above that resistance, we look for higher. In fact, I might even put another arrow there, saying that if it gets above the blue zone, we look for the green zone, and of course the yellow zone back down here. Getting underneath there, we’ll look for the continuation lower.
Interesting here on the Daily Chart, taking Fibonacci from the lowest spike low that you see here. The last low I guess you could say and the last high that we see. Just between the two spike wicks that we see here puts the 50% retracement level also at 0.8868. That’s the top of that yellow zone and where that moving average sits, and that helps us identify that as support. .382 of that same range sits right here at 0.8908. We’re sitting above that right now. May or may not be of consequence since we’ve already been underneath it before. .236 is up here at 0.8956.
Let’s take one more Fibonacci. I’m actually going to go from that same spike high, down to our current spike low that we’re seeing right here. And in doing that, we find the 50% retracement level at 0.8947. That’s where we’re current holding underneath right now. Interesting here is this orange-shaded area also is the .618 fib of that last downtrend leg sitting at 0.8967. So, that sits there as resistance.
Let’s go ahead and take this down to the 4-Hour Chart. And as we get down here to the 4-Hour Chart, we can see all of those same levels – the pink, the yellow, the blue – and we can also now begin to identify that orange-shaded area as some intraday resistance also. I’m just trying to move these arrows over a little bit so they make a little bit more sense here on the 4-Hour Chart. Just trying to get them in place there. And then we can put some new arrows here into the orange-shaded area.
We know that that’s resistance. We’ve already seen it before. We can also know that if it breaks above that resistance, which is also where that .618 fib is at 0.8967, the blue zone becomes our next potential spot to look for. Taking the fibs that we have, we could see a pretty clear zone between the orange and the blue zone. Maybe not as clear. We do have a 50% sitting here at 0.8947, but there is a fairly clear area between the pink and the orange zone, and then of course the pink and the yellow zone. Fairly clear there. So, several fibs on the chart, but still we could see those clear areas between our support and resistance zones.
Yesterday’s bank flow levels confirming support into the pink-shaded area. They tell us that there’s a high probability of an accumulation of buy orders right here into the pink zone. We’ve actually seen that for the past two days now. The bank flow levels sitting here into the pink-shaded area. So, again, for the day today, I don’t think the outlook has changed much at all for the day today. We’re looking for support here in the pink zone, rallies back to the orange zone, breaks of the orange zone back to the blue zone. The risk in all of that of course is that it breaks the pink zone and goes lower. So, I’m expecting today that buys are the main focus here, looking for a continuation higher. The only reason we would expect it to go down would be a break underneath the pink-shaded area.
Now, the Forex Black Book trend bar is red. So, if you’ve taken a sell at any point over the past several days, I would hope that you’re protecting profit on any dips lower. If you’re going to look for a new red arrow, a new sell signal for the Forex Black Book, I believe at this stage of the game, you need it to go up first. You need it to go back to the orange zone, maybe even all the way to the blue-shaded area before you look for your next new sell signal for the Forex Black Book. So, Forex Black Book traders, bank flow traders, everybody right now expecting or hoping for a push higher again before you would even consider a sell or begin to take profit on any buys for the USDCHF today.
