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Forex: Ideas You Can Trade - CHFJPY Nearing Re-entry of Bearish Channel

Posted by Steven Hatzakis on Oct 6, 2014 5:56:00 AM

CHFJPY: Bearish Resistance Line Acting as Support in Downtrend

The medium term daily candle chart below show the price history of the Swiss Franc (CHF) versus the Japanese Yen (JPY). This currency pair is known as CHFJPY, and is trading near 113.21 around time of publication today.

Last time this pair was described in the Ideas You Can Trade series, the medium term bearish channel was again the focal point of the trend, although it since had a significant upside breakout before returning towards current levels in recent weeks. 

While the pair is approaching a potential support area near 113.00 the current price action is testing the upper resistance line of a medium term bearish channel (red channel lines on chart below) which is acting as support and easing the speed of the descent. 

If this bearish line fails then CHFJPY should re-enter the channel with a downward continuation, and target below 112.00 near August and February lows. 

Alternatively if the pair can hold above the bearish channel, and find support near today's low on the upper resistance line (of that channel), then a bounce could follow with a recovery towards 114.00. In the meantime, the pair seems to be at a cross-roads with the overall trend appearing weighted towards the bearish side -especially considering the most recent weeks of trading.  

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

1.  BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 113.55 with a Limit to take profit @ 113.91 and a stop-loss @ 113.22 Risk/Reward Summary: Limit risk = +36 pips profit / (-33) Stop-loss risk = Gain to Loss ratio =  1.09

2.  BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 112.98 with a Limit to take profit @ 112.65 and a stop-loss @ 113.22 Risk/Reward Summary: Limit risk = +33 pips profit / (-24) Stop-loss risk = Gain to Loss Ratio =  1.37

Medium term daily candles:

 CHFJPYDaily October 6th 2014 note

 

 

Topics: YEN, $CHF, forex trading, CHFJPY, technical analysis, $JPY, Swiss, Swiss Yen

 

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