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Forex: Ideas You Can Trade - USDCHF Bearish Trend Acceleration

Posted by Steven Hatzakis on Oct 23, 2013 4:02:00 PM

USDCHF: Bearish Momentum Accelerates Across Multiple Time Frames

The first chart below shows the daily price history of United States Dollars (USD) against the Swiss Franc (CHF) over the medium term. This currency pair is known as the USDCHF and is currently trading near .8920 (as of publication). The pair has been following down a series of bearish trend lines (point 1 in red on chart), over the short term and medium term, with very brief periods of bullish recoveries as the pair edges lower to levels not seen since February of 2012 in the US Dollar versus the Swiss Currency.

The pair was last covered in late September where the support line of a developing bearish channel (point 9 in white on) was noted as a line that could provide enough support for a reversal. After the reversal on that line (point 9) followed, a short term bullish line which carried the momentum - eventually lost steam, and the pair returned to its pre-existing trend to which it appears to remain obedient towards. Most recently, a sharp drop over the last few sessions along a steep bearish line (point 5 in magenta) has followed, accelerating the dive.

In order for the bearish trend to reverse, first the support line of the developing bearish channel (point 9) would need to be achieved and then the long term bullish support line (point 7 in dark green) would need to also be regained. The latter of the two is currently at least a few hundred pips away. However, while another short term steep bullish reversal could repeat (such as along point 2) and provide a path towards either line (point 9 or point 7), any such momentum again could be short-lived as the pair continues its descent along current bearish resistance and bearish support lines (point 1).

A longer term chart (weekly candles) is also provided further below for a larger perspective of trend angulations in the more distant past which could trajectories into future trends.

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

1.  BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ .8985 with a Limit to take profit @ .9099 and a stop-loss @ .8941 Risk/Reward Summary: Limit risk = +114 pips profit / (-44) Stop-loss risk = Gain to Loss ratio =   2.59

2.  BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ .8899 with a Limit to take profit @ .8840 and a stop-loss @  .8940 Risk/Reward Summary: Limit risk = +59 pips profit / (-41) Stop-loss risk = Gain to Loss Ratio =   1.43

Medium term daily candles:

 usdchfdaily oct 23 2013 note

Longer Term Weekly Candle Chart:

usdchfweekly oct 23 note 2013


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