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I’m going to get started today on the US Dollar versus the Swiss Frank [USDCHF]. Starting on the Daily Chart, this currency pair has been in a downtrend. If you go back to the top left-hand side of the chart, we started back in July of 2013, into the mid-0.9700s. Over the life of the trend, we’ve seen a continuation down. Lower highs and lower lows have been the pattern of the trend, and it continues to pressure lower as it tests the lowest lows down here, close to the 0.8700-level at the bottom right-hand side of the chart.
Now, for the past four, five, or six days, we have held as support down here into the bottom right-hand side of the chart. I’ve highlighted it in pink. It’s a little hard to see in the zoomed in view. I’ll zoom out a little bit and we could see it a little bit better here in a moment, but we have found historical support here. The last time we were in this price zone, down here into the 0.8700-level, was all the way back in 2011. So, it’s been a multi-year low, over the past few days, and potential of course is if the trend continues, we’ll see it continue to pressure lower
I have two potential support points or two targets lower that we could see the market press to if it continues the downtrend. That would be 0.8650 and then back down towards 0.8600. The two red lines here representing some historical support from back in 2011. But for the past five or six days, we’ve seen the market holding here as support and does always have the potential for some intraday or longer-term or mid-term reversal from these types of support points.
Let’s go ahead and zoom it in one time here on the Daily Chart. There again is that pink-shaded area right between the 0.8710 and 0.8695 zone is highlighted in pink. Earlier this week we took some buys down here, close to the 0.8700-level. We’ve seen some profit on those trades as it pressed back into the 0.8750s. If you are still holding any buys from earlier this week and the test down here into the 0.87-teens, then you should, at minimum, be break even, protecting profit or protecting the trade from going negative. At this point, I would suspect that you’d likely have closed some profit close to the 0.8750-level also.
A breakout above 0.8750, of course we’ll look for further moves higher and some shorter-term reversal as it continues to pressure towards the down trend line. Fibonacci from the highest high to the lowest low of the blue trend line, where the blue trend starts up here at the top left fib. From there to the lowest low puts the .236 Fibonacci retracement level at 0.8806. That’s the top of this little orange-shaded area right here. .382 sits a little bit higher into the top of the green-shaded area, closer to the blue trend line.
Now, let’s take this information down to the 4-Hour Chart. And as we can get down here to the 4-Hour Chart, something else that we’ll notice over the past four or five days is that the bank flow levels have been holding as support down here. Take a look at the pink-shaded area down here. Over yesterday and the previous three days before yesterday, we’ve seen the bank flow levels down here. What that does is gives us an indication of accumulation of buy orders. That tells us that there’s an accumulation of buy orders there, which will support the market from going lower.
It doesn’t mean it can’t go lower. Eventually we do see those buy levels sometimes get breaches because the market pressures lower and we’ve seen that back in the past. But for the time being, as long as we sit above this pink-shaded area, above 0.8700 and above those bank flow levels, there’s a high probability of support and influx of buyers that drives it back up. And we can see that over the past four days, where we’ve seen the market have a very difficult time pressuring lower and pressuring back towards the yellow-shaded area.
So, as we line it out today, I’m going to go ahead and put a couple arrows on here. Of course the yellow-shaded area right around the 0.8750 to 0.8760-level is our current resistance. If it breaks above that yellow-shaded area and that current resistance – 0.8750, 0.8760 -, then we look for the continuation to the orange-shaded area as our next resistance, and that would be up closer towards the 0.8800-level. Currently we’re holding as support down here into the low-0.8700s, the pink-shaded area, and the bank flow levels, implying support here for this currency pair. As long as it holds above there, potential rallies back higher.
So, buying on dips into support, buying on dips into the bank flow levels, as we have been doing all week long, is a possible strategy for the day today as we look for potential reversal for this currency pair. All of that changes if it breaks down through the pink-shaded area, breaks down through 0.8700, 0.8695. Underneath the pink zone, underneath the bank flow levels, our next stop is all the way down into the 0.8650s – the red line that you see down here at the bottom of the chart.
So, yellow zone. Pink zone. Main areas of focus. If you’re looking to sell this currency pair in the direction of the longer-term trend, the yellow, the orange, or possibly even all the way up here into the green-shaded area becomes potential selling opportunities, or a breakdown, like I said, of the pink-shaded area. I would suspect that as long as it stays above the bank flow levels and if our new levels come out later on today during the Trade Room, if the bank flow levels come back out here into the pink-shaded area, I’ll continue to focus my efforts on potential reversal, buying on dips into support and into the bank flow levels for the USDCHF today.
