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I’m going to begin the day today on the US Dollar versus the Swiss Frank [USDCHF]. I’m going to start today on the Daily Chart. Taking a look at the longer-term trend, we have seen a downtrend over the past many months. We go all the way back into June and July of 2013, where we’ve began the trend all the way up here into the 0.9700s. We saw lower highs and lower lows continue over a several month period, going through mostly the end of the year 2013, all the way back down here, spiking into the 0.8800-level.
Now, since the end of last year, beginning of this year, we’ve seen a change of the trending pattern. Prior to that lowest low, within the downtrend, we saw lower highs and lower lows. That’s the pattern of the downtrend. And in recent weeks, basically since the beginning of the year, we’ve seen a change of that trend pattern where we’ve seen higher highs. And we could see the change of that trend pattern as the highs continue to get higher, as it pushed all the way back up here into this orange-shaded area and into the mid-0.9100s.
During that time period, we saw higher highs and higher lows develop, and also a breakout of the trend line. We could see the trend line connecting with the highs in the previous downtrend. We saw the breakout, the retest of that trend line, and then the new rally higher back into the orange zone. Now we’ve seen the market come right back down, challenge that trend line once again, and over the past three days the market has held on top of that trend line one more time as support, very similar to what we saw the last time we challenge the top side of that trend line.
We often talk about horizontal planes of support and resistance. The colored shaded areas here I draw on my charts represent those supports and resistance. The green. The yellow. The pink. The blue. Whatever color it is, it’s highlighting historical support and resistance on a horizontal level. We also can do that similar recognition of support and resistance in a diagonal form, and that’s how we use this trend line. The red trend line here representing a diagonal plane of what was resistance within the downtrend, now becoming support. And we could see that the last two times, challenging on top of that trend line.
Not only over the past few days has it challenged on top of that trend line. You look along that green-shaded area. You could see historical support over here on the left. You could see some support here in this timeframe. So, we could see some historical support lined up along the green-shaded area in a horizontal fashion. The red trend line in a diagonal fashion. I’ve also – let me go ahead and zoom in one time here. I’ve also taken Fibonacci retracement measurements from the lowest low where the black X is, down here at the bottom of the chart, to the highest high.
Drawing Fibonacci in that fashion, we could see the .618 Fibonacci retracement level sitting right over here at 0.8935. .618 at 0.8935 helps us identify support also right there into that red trend line and that green-shaded area, and over the past three days we have seen the market hold there. Yesterday we identified the yellow-shaded area as resistance, because the market was holding underneath that yellow-shaded area, which was also the 50% retracement level of this previous trend range. Holding underneath the yellow-shaded area, historically we saw support, resistance, support on the far left-hand side. Many times finding support and resistance into that yellow zone, underneath basically the 0.9000-level.
Today we see the market challenging and trying to push above that resistance. So, if it continues to hold support into the green zone, in the trend line, we see the breakout above the yellow zone, our next expectation is that it would continue to pressure higher to the next resistance. And if you take a look here on this chart, that’s highlighted here into the pink-shaded area. We could see the market challenging here the last time. We could see some congestion back here in the middle of the chart, back in November. We could see some congestion, support and resistance all back here into that pink-shaded area.
So, the pink-shaded area becomes our next potential resistance target on the breakout of the current resistance, which is, again, that yellow-shaded area, capping out right about the 0.9000-level. Current market price is 0.9003. So, if it can continue to hold above 0.9000, we will be looking for the continuation back to the pink-shaded area today.
Let’s go ahead and take that information down to the 4-Hour Chart. And as we get down here to the 4-Hour Chart, we could see the market holding underneath the yellow-shaded area yesterday. Over the past several days, holding above the green-shaded area. Today we are breaking above the yellow-shaded area. Again, follow that back to the left-hand side of the chart. You could see the support over here. Again, back in January 14, we can see support on top of the yellow-shaded area. It’s held as resistance under the yellow-shaded area over the past few days, so this is our breakout point.
If it can stay above the yellow-shaded area today, and what I’m looking for, again, and I’ve outlined this many times, especially in the Trade Room – an open and close. And I could give you the reasoning behind that. Don’t have enough time in the video to do that. If you want to hear my reasoning behind an open and close above the yellow-shaded area, please join in the Trade Room later on today. But an open and close above the yellow-shaded area gives me confidence it’s continuing higher.
0.9020 of course would be a Fibonacci of the previous trend range. That’s that dashed blue line, but beyond that we’re going all the way back up there into the pink-shaded area, into the 0.9050s, even towards the 0.9080s. Beyond that pink-shaded area, we go back up into the orange zone. All that’s invalidated if it finds resistance, starts working its way back down. Gets back underneath the yellow-shaded area, we’re probably looking for a new challenge of the green zone down here where we’ve sat down as support and the red trend line.
Forex Black Book. If you’re a trader using the Forex Black Book, you’re now sitting in a little bit of profit. If you’ve traded on the last green arrow, you could see a green arrow down here in the green-shaded area. Green trend bar. If you took a buy on that green arrow, of course you’re sitting with a little bit of profit. I would expect, first off, your targeting back to the pink zone, but also the U1 target sits all the way up here into 0.9140. It would be my expectation if we can see it hold above 0.9000, we’re buying towards the pink zone or higher as a continuation higher in the direction of the Forex Black Book trend bar and the breakout of the trend line.
Bank flow levels over the past few days also signifying support. You could see the past two days. Yesterday and the day before that. The past two days the bank flow levels sitting down here into the green-shaded area. If you traded the bank flow levels over the past couple of days, then you are also now sitting into profit. You should be protecting that profit. I would expect with this bullish price action we’ve seen over the past several hours, today’s bank flow levels will be very similar or maybe even a little bit higher than they were the past two days, maybe here into the green-shaded area, just into the 0.8930s and 0.8950s.
That’s speculation at this point, but I would expect with the price action that we’ve seen for them to raise up a little bit. Unless, over the next couple of hours, we see a quick dive back down. But if they continue to rise up, then the bank flow levels will be supporting the buyers and we’ll look for a continuation back. The pink-shaded area right now will be our potential target. If you’re looking for buys today, buying on top of the yellow-shaded area is your best opportunities today for a low risk, high reward. If you’re looking for selling, I think you’re looking for one of two things.
If you’re looking to sell the USDCHF, you need it to go all the way back to that pink-shaded area. That’s really what it’s all about. It needs to go up, higher into resistance before you sell it. I don’t think I would sell it now. You’re too close to the yellow-shaded area. The support is here in the yellow zone. Selling right now not really an opportunity. I think it needs to go all the way back up to the pink zone. Even taking Fibonacci of this last down leg here, high down to the low, puts the 50% retracement level of that last down leg right up here into 0.9030. So, again, you’re another 25/30 pips higher before you reach the 50%. .618 sits all the way up here into 0.9058 of that down range there.
So, again, I think the pink-shaded area becomes a more likely opportunity if you’re looking to sell the USDCHF today. Most likely, along with myself, you’re looking to buy on top of the yellow-shaded area, targeting the pink zone and the orange zone as our next targets higher for the USDCHF today.
