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I’m going to begin the day today on the US Dollar versus the Swiss Frank [USDCHF]. Starting on the Daily Chart, we could see that this currency pair, over the long-term, has been in a downtrend. We go all the way back to June and July of 2013. The top left-hand side of the chart, where the blue trend line begins, falling all the way back down to the bottom right-hand side of the chart, testing down towards the 0.8700-level.
We see two different trend lines here on the chart. The longer-term blue trend line, but a shorter red trend line representing a shorter leg of the downtrend. It starts right here into the mid-0.9100s and falling back down to the current market price. Again, we could see that the market has been in an overall downtrend.
Let’s go ahead and zoom it in here on the Daily Chart, and we could see over the past few days we’ve seen the push above that red trend line. That red trend line, again, connects at the very top high of the red trend line and this high right here. We could see. If I double-click on the trend line, you could see where the connection dots are. Interesting that the previous four days found resistance under the trend line. Then, over the last two days, we saw the break above the trend line and a challenge back into resistance.
So, a break above the shorter-term trend line could lead us to believe that we could be challenging closer towards the longer-term trend line – the blue trend line. But for the past four days, we have found resistance into this green-shaded area. Take a look here. Four days, including today. The past three days, including today, finding resistance here into the green-shaded area. 0.8865 to 0.8880 holding resistance into the green zone.
Taking Fibonacci retracement measurements from the high of the red trend line down to the lowest low on the chart put the .382 Fibonacci retracement level at 0.8872, right there in the middle of that green-shaded area. Follow the green-shaded area back in time. We could see resistance back here. We could see support back here. Even far left-hand side of that green-shaded area, we could see historical support. So we know now that historical support back here in the past, congestion and resistance helping us identify this as resistance. We can see the Fibonacci levels identifying this area as resistance. And so far, over the past four days, we’ve continued to persist with resistance here in between 0.8865 and 0.8880.
Now, here’s the way we’re going to look at this currency pair today. As long as we hold underneath this green-shaded area, there’s potential resistance and reversal to go back down to the last support. The last support we see here for this currency pair is down where this purple-shaded area is, down closer towards the 0.8800-level. Let’s go ahead and put an arrow here into our support. So, here’s our support down into the purple zone, and of course we’ve already identified the green-shaded area as resistance.
Now, if, at any point, we see a breakout, which we haven’t seen for four days. If, at any point, we see a breakout above the 0.8880-level, then we’re likely to look for that push into the next retracement level. The 50% retracement level of that previous downtrend sits at the top of the blue-shaded area at 0.8926. We can also see, of course, the longer-term blue trend line coming into play there into the low-0.8900s. And follow that blue-shaded area back in time; we could see historical resistance and support once again lining up along that shaded area.
So, if, at any point, we see a break above 0.8880 or so, we look for the continuation towards the blue-shaded area as our next resistance. Let’s go ahead and put an arrow there also. But again, so far, over the past four days, we have not seen that.
Let’s go ahead and take this down to the 4-Hour Chart. And as we get down here to the 4-Hour Chart, we, again, can see that resistance into the green-shaded area. We also now see that the bank flow levels have been supporting this currency pair. A couple of days ago, we took buys into the bank flow levels and were able to capture profit as it pushed from the 0.8820-level all the way back into the 0.8860-level.
If you continue to hold buys from those buys down into the purple-shaded area, then you should be protecting your profit, because it’s had a very difficult time breaking above this green-shaded area. However, we could see those resistance there. We could see that there’s the potential for a breakout. So, if, today, we see an open and close above this green zone, and that’s really what I’m going to look for to give me confidence that it’s a breakout right now.
Just take a look at the past four or five days. We could see the market just holding right here into the green-shaded area as a brick wall. Think of that green-shaded area as a brick wall. Unless it breaks through that wall, gets on the opposite side of that wall, there continues to be resistance. If we see a clear body open and close above that brick wall, above that green-shaded area, that’s when we have confidence – increases our confidence – that we’re going to see a push back into the low-0.8900s.
So, that’s what I’m going to be looking for today to give me confidence in the breakout. Open and close above the green zone, we likely look for the push to the blue zone. Otherwise, holding here in the green-shaded area still has the potential for reversal. Buys on dips into support into the purple-shaded area still could be a possibility, as long as we hold between these two areas. We could see where the bank flow levels have been for the past four or five days. Still looking for some more upward pressure, but we need to see that breakout above the green-shaded area before we’ll be confident in that continuation for the USDCHF today.
