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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 here on the Daily Chart, but as I go through each of the currency pairs today, you’ll notice one thing. Some pairs, this week, have been in retracements, where they have moved against the previous trend and some pairs have been in trend continuation, as we see them finally moving in the direction of the trend, and we’ll point that out on each currency pair as I go through the analysis today.
Well, here, on the USDCHF, I would call this a retracement. Now, first off, the previous trend over the past several months has been down. We see the blue trend line representing this down trend from the highest highs on the left-hand side of the chart down to the lowest low. Well, here, in late October, October 24-25, we could see the bottom of that downtrend, and the market started moving back up, changing the pattern of the trend. Instead of seeing lower highs and lower lows, we began to see higher highs and higher lows. Even, over the past couple of weeks, seeing a breakout above this blue trend line of the bearish trend and above this previous high.
Now, over the past week and a half or so, we’ve seen a change or reversion of that upward move. With this upward move here, we see the market coming back down into retracement levels. We could see Fibonacci coming down into this area. The actual 50% retracement level of this uptrend sits right here at the bottom of the yellow-shaded area right about the 0.9068-level. And that’s where we’re coming down to. We’re coming down to challenge that 50% retracement level, the bottom of that yellow-shaded area. We’re coming back once again down to the top side of the blue trend line. So, it’s my expectation that this yellow-shaded area coupled along with the Fibonacci, coupled along with the blue trend line will be support today.
We could see it challenging the top support. We could see it creating a bearish trend channel. We could see it following down along the red trend line and the blue trend line, just following down the top side. And as long as it stays above the blue trend line, I’m looking for a turn back towards the red trend line and potentially a break above the red trend line moving back up in the direction of this previous trend. Now, this yellow-shaded area will be a critical hinge point for that today. And as long as it stays above it, that’s my expectation. Support and a turn back higher. If we see a breakdown of that yellow-shaded area, the upper to mid-0.9000s – 0.9065, 0.9075. If we see a breakdown underneath it, it’s likely continuing back down and we might see a return of the previous bearish trend from the left-hand side of the chart.
So, this yellow-shaded area – critical hinge point today for the USDCHF. Follow it back in time and we could see that hinge point where, as long as it was on top of it, it found support, got underneath it and went lower. Got back on top of it, found support on top of the yellow-shaded area, got underneath it and went lower. So, this is a hinge point even back in time where, as long as it’s on top of it, we could see the market find support on top of it and potentially moves higher. If it breaks underneath it, we likely look for the continuation back down to the pink zone or even lower, all the way back down towards the low-0.8900s and the green-shaded area at the bottom of the chart.
Let’s go ahead and take that information down to the 4-Hour Chart. And of course, we could see the trend channel that I’ve drawn here. The red trend line on top and of course the blue trend line representing the previous downtrend, and we’re coming back down into that yellow-shaded area as support today. Again, we can follow it back in time and see support in that same price level between the 0.9068 and 0.9085-level. That’s where I have it highlighted in yellow. We can see the 50% retracement level of the previous uptrend sitting here at 0.9068. .382 – we’re already underneath that. It sat up here into the low-0.9100s.
So we’re already underneath the .382 of that same trend range, but 50% coming into view right now into the 0.9068-level. It’s not quite there yet. We still have a ways to go before it reaches there, but definitely something that we’ll want to pay attention to because of the blue trend line there sitting there into that level. Again, if a break happens underneath that yellow-shaded area, all that changes and we likely look for a continuation lower. Staying above it, support today.
Over the past several days, we’ve been studying the bank flow levels and how they have continually found support into the bank flow levels. The buyers have stepped in and driven it back higher again and kept it from having a significant dip lower. Yesterday’s bank flow levels – we did a see a short bounce off of those levels. It was a very temporary bounce, and now the market is pushing back down a little bit lower today. I will expect, of course, that the bank flow levels will likely be down here today where the yellow-shaded area is. Of course I don’t know yet, because they haven’t been published, but I would expect today that those bank flow levels will be likely down towards the yellow-shaded area, proving, once again, an indication of support along the trend line, into the blue-shaded area, into the Fibonacci level.
Now, the Forex Black Book is green, showing us a green trend, showing us the longer-term coming back from the left-hand side of the 4-Hour Chart that we’re looking at right now. We could see, overall, the price action has been up. And we can just look at the price to know that it’s been an uptrend. Down here, bottom left-hand side of the chart, the price was down at 0.8930, 0.8935. Currently, the price is 0.9090. So, the price alone tells us that this currency pair has been moving up. So, we could see that with the trend bar. It’s green. The price has been moving up and the trend bar is green. In the most recent weeks, we could see that this has been in retracement. In recent days, it’s been in retracement. It’s falling back down against that previous uptrend, so the trend bar has turned dark green.
So, we see the trend bar being dark green; shows us the trends. The longer-term and shorter-term are in disagreement right now. To have full confidence, we need to see the shorter-term trend, which is this downward retracement come back into agreement with the uptrend. So, what we would like to see would be support, most likely, here into the yellow-shaded area, the top of the blue trend line, the 50% retracement level, and hopefully where the bank flow levels will be today. Support, a turn back up, a challenge of the blue-shaded area, a break of the blue-shaded area, and a break above the 0.9168-level. It’s the top of that blue-shaded area, the red trend line. We see the trend bar turn bright green again and we look for a continuation higher.
Remember, with the Forex Black Book, to see a new bullish or buy signal, we first need to see bearish movement and then a little bit of bullish momentum. So, we’ve seen that now. We’ve seen bearish movement. We’ve seen it coming back down. Now what we need to see is some bullish momentum building back in and the trend bar turn bright green. It gives us a higher degree of expectation that it’s going to go back up. At least, at this point, as long as it stays above the yellow-shaded area, I would not be looking to sell this. Sitting on top of it, buying becomes your lowest risk, highest reward opportunities. Only if it breaks underneath the 0.9065-level and underneath the 50% fib, the blue trend line, the yellow-shaded area would I consider continuation lower for the USDCHF today.
