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I’m going to get started today on the US Dollar versus the Swiss Frank [USDCHF]. But before I begin today’s analysis, I want to remind you that in observance of the Good Friday holiday today, before the Easter weekend, many places around the globe are having bank holidays. Now, what this means for us is that there is lower liquidity in the market, which, in turn, could mean choppiness or irregular volatility. So, definitely want to take note of that if you’re going to be trading today.
Let’s start here on the USDCHF, on the Daily Chart. Of course over the past many weeks, we’ve been observing the previous downtrend. The long-term downtrend that we’ve seen here on this currency pair. Now, over the past few weeks though, we’ve seen a little bit of a change in the behavior, where we saw lower highs and lower lows over the long-term trend here. We could see a little bit of a change, where we see a higher low, and we’ve looked at that over the past few days in the Trade Room along this red trend line. A little bit of a higher low.
And as long as it stays above this last low, we’re watching for clues to consolidation, contraction in the market, higher lows, potentially higher highs, a triangle pattern developing, and at some point we might see a breakout of this, but the question is: will we see a breakout in the direction of the previous downtrend, a break below the red trend line and a continuation lower, or are we looking for reversal and looking for a break above the blue trend line and a continuation higher?
We’re not sure yet which direction will win out over the other, but we can look for opportunities within this contraction, within this period of indecision here. So, what I’ve been looking at over the past few days, and I’m just going to go ahead and put a few arrows here on the chart, is every time it dips down to the lows. As long as we see a higher low, every time it dips down to the lows, closer to the red trend line, the yellow-shaded area, which is our last low, that becomes a potential buying opportunity as it dips into the lows. That way, if it does indeed turn higher and we see a reversal of this trend, we’re at the very best opportunities that we could see for buying in the direction of a reversal and, importantly here, in the direction of the green trend bar with the Forex Black Book indicator down here at the bottom.
Now, as it approaches the blue trend line, as it approaches resistance, of course we would be protecting profit if you are holding buys. You want to protect profit the closer it gets to the blue trend line and our resistance, because there’s potential resistance there. If you’re going to continue to hold the buys, you’re looking for the breakout above that blue trend line, that green-shaded area, and the continuation higher. That’s the buy side. If you’re buying, you’re buying dips into support, likely the yellow-shaded area, looking for a challenge of the green zone, blue trend line, and a breakout to go higher.
Now, if you’re on the other side of the fence and you think it’s better suited for the sell side in the direction of the longer-term trend, well, you don’t want to sell it at the bottom of the trend. You don’t want to sell it into support. You’d rather it go up into resistance. So, the same blue trend line, green-shaded area, which is the target for buyers in the market right now also becomes a potential resistance and place for you to enter the market for it to go back down. So, as it approaches the green zone, you’re likely looking to sell it if you’re on the other side, looking to sell this currency pair in the direction of the trend. You’re likely looking to sell it closer towards that green-shaded area. Not down here at the bottom, but closer up here.
And then, if you sell it up into the green zone, mid to upper-0.8800s, then you’re looking and cheering on the sellers to breakdown through the last low, through the red trend line, and a continuation lower. So, these two areas, I think, are going to be our areas of decision over the next few days, even going into early next week. As long as it holds under the green zone and blue trend line, potential to go down. As long as it holds above the yellow-shaded area and the red trend line, potential to go back up.
Well, right now we’re right about in the middle of that area, into the purple-shaded zone. That’s held as some resistance over the past few days. Let’s go ahead and zoom it in one time on the Daily Chart. You could see the resistance. Three days holding within that purple-shaded area. Today is our first time we’ve seen a candle body open above the 0.8820-level. Now, yesterday’s candle closed above it, but today’s candle is the first candle that has opened above it here on the Daily Chart, which, if it closes above 0.8820 and closes above that purple-shaded area by the end of day today, that could mean first part of next week we’re looking for that continuation towards that green-shaded area.
Now let’s go ahead and take that information down here to the 4-Hour Chart. And as we get down here to the 4-Hour Chart, we see a little bit of a different picture. Not entirely different, but a little bit different from what we were just looking at on the Daily Chart. Of course here’s the red trend line and the yellow-shaded area as our current support. We can see that over the past several days, finding support here. We could see the green-shaded area up here that we just observed as our next resistance along the blue trend line, and there’s the purple-shaded area that we’re challenging right now.
A little bit different picture here on the 4-Hour Chart is that we see actual four-hour candles open and close above that 0.8820-level, where on the Daily Chart we haven’t. And if you’re really following back in time, you go back along that 0.8820-level – top of the purple zone. You could see sitting within or above that purple zone gave way to a rise to that green zone. Just take a look back here. You could see it above the purple zone. Rose to the green-shaded area. So, if history repeats itself, even going back over here, you see it back above the purple zone, going back to the green zone. So, if history repeats itself, and above the purple zone we go back to the green zone, it’s more suited today for buying above this purple-shaded area. As long as it holds within or above it, we look for the continuation towards the green zone.
And that only becomes invalidated if it gets back below the purple-shaded area. So, these arrows that you see here on the chart will give you your opportunities for the day today. I think as long as it stays above 0.8820, the purple-shaded area, and these last resistance highs that we see here, it’s more likely that you’re looking to buy, targeting the green zone and the blue trend line. Your stops are just underneath 0.8800 and the bottom of the purple zone. That way, if it breaks out underneath, you’re out of that trade as it looks to push back down towards the yellow-shaded area.
If you’re looking to sell this currency pair, again, I think there’s really only two reasons to sell at this point today. Would be a challenge of the green zone – of course that’s quite a ways up from the current market – or a break back underneath 0.8800, underneath the purple zone. So, sellers are back into the green zone or under the purple-shaded area. Buyers are likely here above the purple-shaded area, looking to target back to the green zone. Especially if you bought it down here in the yellow zone, you’re targeting the green zone as your ultimate end game target for the USDCHF.
Forex Black Book is green, so we’ve been focused in on the buy side. You could see three green arrows. So, if you bought it on any of those green arrows, you should be seeing a little bit of profit right now. You’re cheering on the buyers to continue that pressure back towards the green-shaded area for the USDCHF today and maybe even going into early next week for the USDCHF.
