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Today’s Trading Edge: USD/CHF – Poised for a Modest Retreat from ABCD Pattern

Posted by Edward Moya on Jan 8, 2015 10:25:00 AM

WWM USDCHF JAN 8 2015

USD/CHF started off 2015 by gapping higher and running away from the psychological 1.00 handle.  Not much seems to be in getting in the way of this rally that started from both the December 16th low of .9552 and 50-day SMA, but the rally may be overdone. 

The USD/CHF daily chart above displays a potential bearish ABCD pattern that has formed at 1.0213 level.  This is confirmed both with optimal symmetry with the A to B leg equaling the C to D leg and 261.8% Fibonacci expansion level of the B to C leg.  If valid, we could see a slight retreat towards the 1.0059 level.  A deeper pullback may target the 38.2% Fibonacci retracement level at .9962. 

This pair will continue to carry a significant bullish bias and eventually could be poised to breakout above the 1.03 handle and target major resistance at 1.0732. 

The trade: Sell USD/CHF at 1.0065 with a stop loss at .9952 and a take profit at 1.0365.  The Risk/Reward Ratio is almost 1:3. 

Edward J. Moya

Technical Strategist

WorldWideMarkets Online Trading

Topics: technical anlaysis, USDCHF, $CHF, technical analysis

 

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