USDCHF: A very narrow trading range for today as volatility diminished, yet support hit
The medium term daily candle chart below shows the price history of United States Dollars (USD) against the Swiss Franc (CHF), known as the USDCHF pair and trading around .8806 (around time of publication).
The pair traded in a very narrow range of less than 20 pips as volatility had diminished this week following a number of trading holidays and escalating political tensions over the ongoing situation in Ukraine, as well as the end of the trading week that is just hours away.
Earlier in the session, USDCHF paused near the low of .8800, after reaching a high of .8819, and is currently just a few pips off today's low. A short term bearish resistance line drawn previously appears relevant after extending its prior-trajectory into the future, as it appears to be intersecting current prices and forming a bearish support line (having changed from bearish resistance).
Last time the pair was discussed .8800 was noted as a horizontal support line, and the bullish bounce that had since followed, after support was found on the medium term bearish channel (point 9 in white on the chart below) appears to be loosing momentum with this level being tested again.
If .8800 fails, bearish price action should push USDCHF back towards .8700 where it had found support at the start of March 2014, whereas if .8800 could somehow hold, and support can be build around current prices, the pair could recover back and resume its uptrend. Last time the same was discussed, a since lower highs followed the prior post, lower lows could follow next.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ .8835 with a Limit to take profit @ .8860 and a stop-loss @ .8815 Risk/Reward Summary: Limit risk = +25 pips profit / (-20) Stop-loss risk = Gain to Loss ratio = 1.25
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ .8792 with a Limit to take profit @ .8760 and a stop-loss @ .8821 Risk/Reward Summary: Limit risk = +32 pips profit / (-29) Stop-loss risk = Gain to Loss Ratio = 1.10
Medium term daily candles: