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Forex: Ideas You Can Trade - USDCHF Resistance Under .8950 Holding

Posted by Steven Hatzakis on May 21, 2014 2:39:00 AM

USDCHF: Two lower highs Confirms upper resistance of Bearish Channel 

The medium term daily candle chart below shows the price history of United States Dollars (USD) against the Swiss Franc (CHF). This currency pair is known as USDCHF, and is trading just around .8902 around time of publication today - and off fresh session lows.

On May 15th the pair briefly touched .8958, only to abruptly retreat lower, and then tried again yesterday reaching only .8938, before moving towards today's levels. This appears to confirm that the upper resistance line of a medium term bearish channel exists (see point 9 in white color on chart), which would be putting selling pressure on the USDCHF as it tried to breakout to the upside of this channel on the above mentioned dates. 

Last time the pair was covered in the Ideas You Can Trade series, in April, a lower-low was expected after support was briefly found on .8800, and shortly thereafter that low followed when .8702 was hit on may 8th - and support for a reversal enabling the pair to push back higher along a very steep bullish trend line. That trend line has just failed after resistance was reached on .8958 on May 15th, and USDCHF is now pointing downwards and just breached the level .8900 just minutes ago.

If the bearish resistance line (point 9 in white) above current prices can be regained, then the bullish momentum can resume, whereas if support on .8900 fails to provide a hold - then a sharp drop should follow putting USDCHF on a trajectory back towards .8800. 

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

1.  BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ .8951 with a Limit to take profit @ .8989 and a stop-loss @ .8932 Risk/Reward Summary: Limit risk = +38 pips profit / (-19) Stop-loss risk = Gain to Loss ratio =  2.00

2.  BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ .8887 with a Limit to take profit @ .8849 and a stop-loss @ .8911 Risk/Reward Summary: Limit risk = +38 pips profit / (-24) Stop-loss risk = Gain to Loss Ratio =  1.58

Medium term daily candles:

usdchfdaily may 21 2014 note

 

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