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I’m going to begin the day today on the US Dollar versus the Swiss Frank [USDCHF]. Starting here on the Daily Chart, for the past several days, we’re going back a couple of weeks now, where we’ve been studying resistance into this blue-shaded area. The blue-shaded area goes between 0.8985 and 0.9000. That’s basically the zone. About 15 to 20 pips that we’ve been studying as resistance.
We’re going all the way back here into May 28th. So, several days, a couple of weeks, we’ve been holding resistance into this area. A couple of times we’ve seen a fall back down here into the pink zone as support, getting closer towards the 0.8900-level. 0.8900 to 0.8935 being our zone of support right now, but for the most part, we’ve seen several days just holding up here into this blue-shaded area as resistance.
There’s really two outcomes that we can look for here. Well, actually three. It could go sideways, as it has been for the past four or five days. It could just continue to go sideways, but that’s not going to last forever. The other two outcomes that are potential is that it breaks to the top side of 0.9000 and goes up. If it goes up, our next potential resistance is up there into the green-shaded area, closer towards the 0.9100-level. We’re looking up here into the 0.9160 to 0.9100, or 0.9060 up to 0.9100 level, the green-shaded area as our next resistance.
That’s our first potential outcome. A break of resistance and a continuation of the uptrend. The other potential outcome is that it breaks to the bottom side of the 0.8980, 0.8985-level and starts to go back down and changes the trend back to a downtrend. We start to look for it to go back to the pink zone or a break of the pink zone, back to the yellow zone. Those are your two major outcomes. It either breaks up or it breaks down here for the USDCHF, and I think that’s what we’re waiting on here for this currency pair.
Again, just taking the most recent days, we see five day, including today, it’s just been kind of stuck inside this blue-shaded area. So, we really need a breakout if we’re going to see a continuation. A couple of things to point out about the trend. Of course, over the past several weeks, we go all the way back down here into the low, into May 8th, we’ve been in an uptrend. We started moving higher. A couple of things we’ve been looking at. Higher highs and higher lows. First clue to the change of the trend pattern. Second two clues were of course the break of the blue trend line. It broke above that blue trend line several weeks ago, and now has just found resistance and support above the trend line.
We also broke above this green line. Coming down here into the chart is the 100-day or 100-period moving average here on the Daily Chart. And we’ve been above that for several weeks now. We see the Forex Black Book trend bar is green. So, that’s been green for several weeks now. So, all of that pointing us to a bullish bias or a buy bias here for the USDCHF. The main focus is buying on dips into support or breaks of resistance. That’s what we’ve just been looking at here on the Daily Chart. A dip to the pink zone was support. Holding here into the blue zone is resistance. So, we’re either going to look for a dip to support or a break of resistance for opportunities to buy in the direction of all of the bias that we see here for this currency pair.
Unless or until we see a change of the trend pattern. It starts to create lower highs and lower lows. We see it breakdown through the pink-shaded area. Starts to create lower lows, then we potentially change back to a bearish pattern. Even if the Forex Black Book, over the next couple of weeks, turns red, that maybe give us an opportunity to start looking for a change into the bearish direction once again for the USDCHF. So, again, this week, we will be focused in on buying, looking for buys on dips into support or breaks of resistance.
Let’s go ahead and take all of that down to the 4-Hour Chart. And as we get down here to the 4-Hour Chart, not only have we been looking at all that buy bias that we just discussed on the Daily Chart, but even here on the 4-Hour Chart, we could see that the bank flow levels over the past couple of weeks were going even as far back as the mid-part of May. The bank flow levels have been supporting the market from going any lower. A few times the sellers have tried to drive it down. You could see this major time right here, where the sellers tried to drive it down. It found support into the pink-shaded area, around the bank flow levels, and then it started to drift right back up into the blue zone.
Last week we saw our bank flow levels right here, just underneath the blue-shaded area. So, the bank flow levels, the buy levels are sitting just underneath the market, giving the market some support and giving us a bias, again, to the buy side. If we have sell levels above the market, above the blue zone or even towards the green zone, if we had bank flow sell levels up there, that would shift our bias back to the sell side. But for the time being, we don’t have any sell levels. Only buy levels here for the USDCHF. So, there’s our next clue in our potential bias here for this currency pair continues to be for the buy side here.
So, sitting here, over the past four days or so, inside this blue-shaded area, we’re looking for a breakout. An open and close underneath, we’ll call it 0.8980. I think that would give us a good, round price to look for. 0.8980. Getting underneath there, we’ll likely look for it to turn back down to the pink zone. So let’s put a couple of black arrows. The black arrows I use to show us our expectations for the day today. Getting underneath 0.8980, we’ll look for the turn back down to the pink zone. If you’re looking for a buy into support, the pink zone becomes that buying opportunity.
I don’t think. With all of those clues pointing to the upside and the bullish bias, I don’t think right now is the time to be focused in on the sells. I think we’re looking for the breakout and the continuation of the trend pattern. So, I’m not looking to sell it under here, but more likely would look to begin buying if it takes a dip lower for the USDCHF. The other opportunity, again, as we mentioned, is the breakout. A push above 0.9000. And at this point, we can see absolutely no candle bodies here on the 4-Hour Chart that have opened and closed. One single candle body opened and closed above 0.9000, 0.9005.
So, if I see that, that will give me confidence that it’s going to continue to pressure higher. That’s what I’m looking for. A confident move telling me that the breakout is occurring. I don’t want to see just a quick spike above it. That’s a false breakout. I want to see an open and close above 0.9000. That gives me a confident expectation that we’re going to take a move back towards the 0.9060-level, and that would be all the way back up here towards the green-shaded area or higher, maybe even towards 0.9100.
Now, as you could see here, I do have the Advanced Loss Recovery (ALR) tool that Dustin’s been emailing about for the past couple of weeks applied to this chart. We have take profit levels. We have buy and sell stop orders that are sitting here on the chart. We entered this last week in the Trade Room, and we’ll discuss that again here in the Trade Room later on today, so please join me today for the Trade Room and I’ll be happy to discuss that a little bit further for the USDCHF today.
