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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 is in an uptrend. There’s a few different indicators that we can use to help us identify and represent the current uptrend.
First off, the red trend line that starts all the way down here at the bottom of the chart, near the 0.8700-level. We saw the first leg of the trend pushing back into the 0.9000-level, then a little bit of a dip as it pushed back down here into the 0.8860s, and then the second leg of the uptrend pushing now all the way up into the 0.9100-level. So, the red trend line connects with our last two major lows within the current uptrend.
That’s our first indicator that represents the trend. Of course the second indicator that we’ve been studying over the past several weeks is the 100-day or 100-period moving average that we see here on the chart. That’s the green line that we see on the chart, and of course the market is well above that moving average, showing that the prices are averaging higher for the USDCHF. That’s two indicators now that represent the uptrend. Third one that we can use here is the Forex Black Book trend bar we could see at the very bottom of the chart. It is green, so that represents a bullish or buy bias here for this currency pair, and so we see that the momentum represented by the Forex Black Book is also pushing up.
So, three indicators pushing higher. We also know that higher highs and higher lows represents an uptrend. So, all of that pointing to a buy bias or uptrend bias here for the USDCHF. Yesterday we began looking at support here for this currency pair because if we were going to buy it, we want to buy into support because that gives us a lower risk, higher reward scenario. During the Trade Room yesterday, we discussed this green-shaded area between the 0.9060-level and the 0.9035-level. That zone there highlighted in green represented support, and we could see that over the past several days, going back seven or eight days, support seen there into that green-shaded area.
Follow that back in time. You could see historical resistance on the left-hand side of the chart in that same green-shaded area, and we could see some congestion, support, and resistance all throughout that timeframe. And so, we look over here on the right-hand side of the chart and we see support. So, if you were looking for a trade yesterday, more likely that you were looking for a buy scenario rather than a sell scenario.
Now we see that the market did indeed find support there and move back higher, now pushing back into the 0.9100-level. Of course the 0.9100, that double-zero level will be a barrier, and we’ve seen that again over the past seven or eight days. But follow it back in time, not just in the current timeframe, but we go back here to the left-hand side of the chart and we could see support, resistance, and congestion all inside that orange-shaded area, and that’s not too hard to figure right around that even level of 0.9100.
For the day today, what we’re going to look for is a breakout of this congestion in the direction of the trend. Now that’s not a guarantee, but that’s what we’re going to concentrate our efforts in. Especially if you bought it down here into the green zone yesterday, you’re looking for the continuation and further profit as we look for it to continue in the direction of the trend. So, anybody that bought it in the green zone, you’re cheering on the buyers to break through this barrier, this orange-shaded area, 0.9100, and a continuation to the next profit target, which would be back into the 0.9190s, towards the 0.9200-level, and the pink-shaded area that sits up here at the top of the chart.
Follow that back in time and you could see historical resistance right on the left-hand side of the chart, where that pink-shaded area sits. Now only that. We have a few different Fibonacci ranges drawn here on the chart. One of the ranges that goes from where this black X is here in the middle of the trend. From that black X, down to the lowest low. So, the spike high here, down to the spike low puts the 1.27 Fibonacci extension level right here in the orange zone. Of course that is our current resistance, right into the orange zone, but the 1.27 sits right about 0.9124, top of that orange-shaded area. And then the 1.618 Fibonacci extension level of that same little leg of the uptrend sits at 0.9240. That’s well above or just above the pink-shaded area.
So, clearly a break above the orange zone, the 1.27 takes it back to the pink zone, near the 1.618. Also, Fibonacci from the next leg, this high right here, the current high to the last low that we see here in the middle of the trend puts the .236 fib right here at the 0.9054-level. That’s the green-shaded area. So, clearly right now green zone is support, orange zone is resistance. We’re in congestion between those two zones. What we’re looking for today really is a breakout. A breakout above the orange zone, above the 1.27 fib, above the 0.9100-level, we look for the continuation of the uptrend, towards the next resistance, which is identified now as the pink-shaded area into the 0.9200-level.
Doesn’t guarantee it, but that gives us something to focus our efforts in. Buys on dips into support, green zone, or break above resistance, the orange zone, and that’s the direction we’ll focus our efforts. Now, is there a possibility that we could look for intraday sells here into the orange zone? Absolutely. If you’re looking for resistance and reversal, the orange-shaded area would likely be your very best opportunity to look for that. Not the direction I’m focus on because the trend is up, but if you’re looking for intraday short-term bounces back down, you’re probably at your very best opportunity to do that right here, close to the 0.9100-level. Then you’re targeting back to the green-shaded area. And maybe eventually a breakout underneath the green zone and the red trend line, we could look for some reversal here for this currency pair, but I see absolutely no reason for that at this current point.
We take all of that information down to the 4-Hour Chart. As we get down here to the 4-Hour Chart, we also take a look at yesterday’s bank flow levels, sitting here just into the green-shaded area, bottom of the green zone. Yesterday’s bank flow levels sat between 0.9041, 0.9028, and 0.9014. Those are yesterday’s bank flow buy levels. You could see the market was above that, up here into the 0.9060s, when those bank flow levels came out, so just giving us a confirmation of the upward direction.
Squeeze it in a little bit. The other thing we talked about during the Trade Room yesterday is the fact that we did not see any sell levels. No sell levels for the bank flow levels. Only buy levels, so that gave us some confidence in the upside. And a few hours after that, we saw a green arrow here. You see the green arrow on this little candle. So, if you took a buy on that green arrow right here where that candle opened up, right about the 0.9063-level. If you took a buy there, you’re now sitting with about 30 to 35 pips right now on the trade from the green arrow and the green trend bar. That’s what the Forex Black Book does for us. We see trend bias, green, with the trend bar at the bottom. We get a green arrow in the same direction. That gives us an opportunity to buy it in the direction of the trend. Now what we’re looking for is that breakout.
At this point, 0.9100 will be the break to see the trend continue higher for the USDCHF today.
