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Forex: Ideas You Can Trade - EURCHF momentum in bearish channel

Posted by Steven Hatzakis on Jul 23, 2013 10:23:00 AM

EURCHF: Short term bearish momentum within current channel

The medium term daily candle chart  shows EURCHF descending the support line of a medium term bearish channel (point 1 on chart) after failing to hold  at two bullish support lines: short term (point 2) and long term (point 6) in early July.

The medium term trend is bullish (point 3) although mixed with ascending and descending channels and intersecting long term trend lines.

The very short term behavior looks to be bearish with the EURCHF likely to re-test the support line of its current the bearish channel (point 1)  – although it is closer to the support line of the bullish channel (point 2) - in the current trading session - which it may first test (currently trading near 1.2377 as of publication).

If the EURCHF pair can break out of this bearish channel (point 1) in the very short term, it may follow a bullish line similar in slope to previous bullish momentum (point 2) and could target the long term bullish support line again (point 6).

However, if the EURCHF continues down its current bearish channel (point 1) it may re-test the support line of the medium term bullish channel (point 3) - which if breached - could propel the pair on a steeper bearish line (such as point 5) to retest the long term bearish resistance line (point 4) to support its descent with several static support lines near 1.2000 (point 7).  

 Below are examples of how to trade a bearish continuation or a bullish reversal:

1.  BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.2409 with a Limit to take profit @ 1.2455 and a stop-loss @ 1.2379 Risk/Reward Summary: Limit risk = +46   pips profit / (-30) Stop-loss risk = Gain to Loss ratio =    1.53

2.  BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.2354 with a Limit to take profit @ 1.2312 and a stop-loss @ 1.2389  Risk/Reward Summary:   Limit risk = +42 pips profit / (-35) Stop-loss risk = Gain to Loss Ratio =  1.20

eurchfdaily july 23 2013 note
 

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