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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 weeks, we have been studying the uptrend here for the USDCHF. We started all the way down here into the 0.8700-level. We saw the first leg of the uptrend, pressuring back in towards the 0.9000-level, a little bit of a retracement or dip back down to the moving average, and then the second leg of the trend pressuring all the way back up here towards the 0.9100-level.
Over the past several days, we’ve been in a period of congestion between support found here in the green-shaded area and resistance into the orange-shaded area. Of course as I just mentioned the orange-shaded area as resistance sits right around the 0.9100-level. You follow that back in time. You can see historical evidence of resistance here also. That helps us identify this zone as resistance.
A little bit lower of course is the green-shaded area as support. You follow that back in time. You see some resistance, support, and congestion around that green-shaded area also. And clearly over the past eight, ten days, we have found support here into this green zone. That green-shaded area goes between the 0.9033-level and 0.9053-level. So, there’s about a 20-pip zone highlighted in green there as our support zone. We also see the red trend line coming up from the bottom, helping us identify this as an uptrend. We also see the 100-day moving average coming up from the bottom, helping us identify this as an uptrend. And lastly, we see the Forex Black Book indicator. The trend bar at the bottom of the chart is green, giving us a buy bias for this currency pair.
All that telling us that really what we’re trying to look for is a return of the buyers in the direction of the trend. The trend is up and we’re looking for the buyers to get back interested in this currency pair as they were before and drive it back in the direction of the trend. Now, that doesn’t have to happen. It could be a reversal point, but there’s no real key evidence right now telling us that this is going to be a reversal. It would need to break down through the trend line, maybe push underneath the moving average, maybe the trend bar for the Forex Black Book turns red. All of that would be evidence of a change in the direction of the trend, but we don’t see any of that yet. In fact, we continue to see support into the green zone and the buyers are still active for this currency pair.
Let’s look for a return of those buyers. So, if you’re going to do that, you want to buy into support. So, the main focus here for the USDCHF is just that. We’re looking for buys into support. Could be the green zone, and I think it could even be as deep as the blue-shaded area, which sits down around the 0.9000-level. Blue zone. If you take Fibonacci from several different trend ranges, you see some overlaps of fibs right into the 0.9000, 0.8990s. That’s the blue-shaded area.
Another interesting aspect with Fibonacci that we talked about in the trade room yesterday. You take Fibonacci from that high right there in the middle of the chart, where I placed the black X, down to the lowest low. So, that high down to the low that we see here with the red trend line, measuring that with Fibonacci, the 1.27 Fibonacci extension level is right at the top of the orange-shaded area. So, we know that of course that 1.27 helps us identify a target and resistance here for the USDCHF. A breakout above that and a return of the buyers, we likely look for it to continue all the way back up to the pink-shaded area.
Interesting about that is the 1.618 Fibonacci extension level of that same trend range sits just above the pink-shaded area. So, we have two targets already to shoot for. The 1.27 and 1.618 sit at the orange zone and the pink zone. We know it’s an uptrend. We know we’re finding support. We know we’re in congestion. So, really all it is right now is finding the opportunities to buy on dips into support, take advantage of rallies when they happen, lock in, look to target the orange-shaded area as our first major target, and then of course above there we’ll look for a continuation back to the pink zone.
Let’s go ahead and take all that information down to the 4-Hour Chart, and we get a secondary confirmation of the upside that buyers are still interested in this currency pair with the bank flow levels yesterday. Now, they came out later in the day yesterday, but we did eventually get some bank flow levels and take a look at where they are. They’re sitting right here into the top of the blue-shaded area, into the red trend line. We’re looking between the 0.9024 and the bottom level, 0.9007. Those are yesterday’s bank flow levels. We did get a green arrow yesterday. So, all of that good news for those of us that continue to focus our efforts in the direction of the longer-term trend and buying here for the USDCHF.
So, green zone: first opportunity. If it breaks through there, blue zone. I suspect the green zone is your first opportunity that we’ll look for, for the day today, looking for a rally back to the orange-shaded area at 0.9100. Squeeze it in just a little bit. You could see if I put my cursor right on yesterday’s bank flow levels, you could see that there were no sell levels above the market. These levels here were from the previous day, which would’ve been Friday. So, yesterday, no sell levels, only buy levels, again, giving me confidence in the buy side. Buying on dips into support, green zone or blue zone, targeting the orange zone or higher. If you’re already in a trade, of course you’re going to look to break in profit or lock in profit here for the USDCHF today.
