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USDCHF | Perspective for the new week | Follow-up for FX:USDCHF by darcsherry

We had a very good trading opportunity on our last trade on this pair as the price moved over 500pips in our direction since my last publication (see link below for reference purposes). Fr0.92300 has held price “Supported” five good times in the past hereby making this level a very viable Demand zone we can “trust”. However, this same level has been a strong Support/Resistance level on the weekly chart (see below) and considering this character I shall be very careful here as a Breakdown might insinuate a risk of further decline… Let’s take a look at what I think;

Tendency: Neutral
Structure: Breakdown | Supply & Demand | Trendline | Reversal Pattern (H and S)
Observation: i. The Trendline indicated on the chart has been a significant factor in deciding the prevailing bias of participants in the market since December 2020 as price tend to follow in the direction of a Break above/below at any given point in time.

ii. Since the break above of trendline (Fr0.91400) happened in early March 2021, Price has found a niche above Fr0.92200 which has become a strong Demand level .

iii. Demand level is considered strong due to the number of times the price has rejected this level to the upside in the past (five times!).

iv. Even as this level is considered strong, I am in a dilemma as the Breakdown of the Trendline during last week trading session might either be a false Breakdown or an incitation of a further decline in the nearest future should the price decide not to respect the Demand zone and do a Breakdown.

v. To be on the safe side for a rally continuation, I shall be looking to buy above Neckline which will also be a Key level @ Fr0.92750 for Bullish expectations.

vi. How to know if Breakdown is valid or not? When the price does not respect Demand zone and break down the Fr0.92000 area then we look forward to correction of Breakdown to join the decline train.
vii . This been said, we can not ignore the Reversal setup forming on the Daily chart as I see a Head and Shoulder pattern forming should price rally in the coming week (see chart below).
Trading plan: BUY confirmation with a minimum potential profit of 150 pips.

SELL confirmation with a minimum potential profit of 170 pips.
Risk/Reward: 1:5
Potential Duration: 5 to 10days

NB: This speculation might be considered to make individual decisions on the lower timeframe.

Watch this space for updates as price action is been monitored.

Risk Disclaimer:

Margin trading in the foreign exchange market (including foreign exchange trading, CFDs, etc.) has a high risk and is not suitable for all investors. The content of this speculation (including all data) is organized and published by me for the sole purpose of education and assistance in making independent investment decisions. All information herein is for your reference only and I take no responsibility.

You are hereby advised to carefully consider your investment experience, financial situation, investment objective, risk tolerance level, and consult your independent financial adviser as to the suitability of your situation prior to making any investment.

I do not guarantee its accuracy and is not liable for any loss or damage which may result directly or indirectly from such content or the receipt of any instruction or notification therewith.

Past performance is not necessarily indicative of future results.

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