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I’m going to get started today on the US Dollar versus the Swiss Frank [USDCHF]. Starting here on the Daily Chart, over the past several days, we’ve been studying the change of the trend pattern, where previous we were in a downtrend, and you could see that with the blue trend line. It was coming from the top left-hand side of the chart. Lower highs and lower lows.
Over the past several days though, like I said, we’ve seen a change of that trend pattern, where we’ve seen the break above that blue trend line, but that’s not specifically the change of the trend pattern. What we’re seeing is a pattern of price changing, where we see instead of lower highs, we’re now starting to see higher highs and higher lows, which is a change of the trend pattern.
The clue – first clue – was the breakout above the trend line, but then the higher highs and higher lows confirmed the change of the pattern. Then, several days later, we saw the break above the 100-day or 100-period moving average. That’s the green line coming down through the chart here. That’s a 100-day moving average. So, we got above there. Have, so far, sustained a hold above that moving average.
Then we go back along this blue-shaded area. You follow the blue-shaded area back in time. You can see the historical resistance here and the resistance here. Once we got above those resistance, again, that’s the change of the price pattern, where we see higher highs and a new uptrend being developed here for the USDCHF. So, the trend line, the moving average, higher highs – all of that telling us that we have an uptrend or buy bias right now for the USDCHF.
Not only that. We follow it down to the bottom of the chart. The Forex Black Book trend bar is green, which gives us a bullish or buy bias also. So, several clues, several indicators pointing to the upside here for the USDCHF. Now, if that’s the direction we want to focus in on, there’s really two opportunities to trade in that direction. As it goes up, we want to either buy into support or a break of resistance. So, we’re looking for support to buy it or a resistance that we’ll look for a breakout and a continuation of the uptrend.
First off, the blue-shaded area. We know that historical resistance, which we identified in this blue-shaded area, helps us identify support. And we can see that over the past several days that this blue-shaded area has held as support. So, if we’re going to potentially buy this today, it wouldn’t be too bad for it to drop a little bit, come back down here towards the 0.8935, 0.8930-level, and give us an opportunity to buy it at a lower price. Remember that old saying. Buy low, sell high. So, that would be a lower price.
I’ve also taken Fibonacci retracement measurements from the lowest low on the chart, down here at the bottom, into the 0.8703-level or so, and taken it up to the current resistance high. So, just this uptrend leg. Measuring that with Fibonacci puts the .236 fib right here in the middle of the blue-shaded area, or maybe towards the top it, but right there inside the blue-shaded area is the .236 fib.
Now, there’s another fib inside there. Another retracement level inside there. If you take Fibonacci from the highest high, top left-hand side of the chart, down to the lowest low on the chart – That’s that last leg of the downtrend – we find the 50% retracement level of that last leg sitting right there, exactly where the .236 fib of the current uptrend leg sits. So, they’re overlapping on top of each other. 50% of the downtrend and the .236 of the uptrend sitting right there, right around the 0.8926-level. So, again, 0.8926, 0.8930, 0.8935, right into this top of this blue-shaded area becomes an ideal opportunity to buy it.
And we know that if it ever breaks down underneath there, of course we probably look for a change of the trend pattern again and for it to start working its way back down, purple zone or lower. The other side of that is the pink zone. That is our current resistance. Interesting enough, taking that same fib from the high down to the low on the previous downtrend puts the .618 Fibonacci retracement level right here at the top of our pink-shaded area.
Guess what. That’s where we’re finding resistance over the past six days. Actually, if you include today, it’s seven days now finding resistance into that .618 fib, right around the 0.8980-level. So, right now that is our resistance. Let’s put an arrow there. We could see that’s resistance. So,what’s it going to take? Remember I said, for buying in the uptrend, we want to buy into support, which is the blue zone, or a break of resistance, which, at this point, is that pink zone and that .618 fib, so we’d want to see a breakout above there.
Now, when I talk about a breakout in my Trade Room, I talk about what classifies a breakout. And for me, a breakout would be an open and close, clear single candle body above that price level. Above 0.8980. Above 0.8985. A single candle body above there gives me confidence it’s going to go up. Until I see that, it simply is false breaks. We could see the previous two daily candles. The price actually pushed above 0.8985 and got right back underneath it. That’ll actually be easier to see once we get down to the 4-Hour Chart.
You can see the market challenge. We even had a four-hour candle that opened. A couple of them that opened above 0.8985, couldn’t sustain that hold, and got right back underneath that .618 fib and underneath that pink-shaded area. So, if I’m going to see further movement higher, I need to see an open and close, clear single candle body above 0.8985.
Forex Black Book trend bar. We’re on the 4-Hour Chart now. Again, is green. So, if you’re looking for a buy signal, you actually would prefer it to go down a little bit. Like I said, probably back down here to the blue-shaded area to give you a better buying opportunity, and then a potential to see a new bullish arrow, like a yellow arrow or a green arrow.
Interesting enough, over the past several days, yesterday included, the bank flow levels sit here into this blue-shaded area. You could see the bank flow buy level. The top is 0.8935, mid is 0.8923, and the lower level at 0.8909. So, there’s our bank flow levels from yesterday. I suspect that there is buying support into this blue-shaded area. That’s what all those bank flow levels are helping us identify. Buying support here for the USDCHF.
So, all of those uptrend indicators that I talk about on the Daily Chart, the moving average, the trend line, the break above the high, higher highs, higher lows, the green trend bar, Forex Black Book, and now we see the bank flow buy levels sitting underneath the market, supporting the market. So, for the day today, pretty simple. Buying on dips into support, which would be back down to the blue-shaded area and the bank flow levels and the Fibonacci, or a break of resistance, which is a break above 0.8985. Those are your two buying opportunities.
For me, today, no selling opportunities. I don’t see any reason to sell this right now. Now, if you’ve already sold it into the pink zone, then you’re targeting back down to the blue zone, protecting profit as it goes down, because keep in mind: you’re trading against the overall trend that we’re studying right now here for the USDCHF. So, if you’re selling, target the blue zone. Protect profit. If you’re buying, you want to buy into the blue zone or a break of the pink zone today for the USDCHF.
