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The end of last week brought about a shift in momentum across several pairs. And going into the last few weeks of the year, the threat of reversals certainly can’t be ignored. That said, it’s important to continue to respect trends as long as those trends remain healthy.
USDCHF is one such pair that has been in a strong uptrend since the double bottom pattern was confirmed in May. Since that time the pair has rallied for more than 800 pips.
I mentioned last week that the pair may have formed a short-term top, and sure enough the market lost more than 100 pips going into the weekend. The uptrend still looks healthy as long as we’re above trend line support from August 18th.
In addition to trend line support, we also have horizontal support that comes in at .9550. In fact this was my target for the topping pattern that had formed last week.
One word of caution here – Friday’s price action formed a bearish outside bar that leads me to believe that we may see some continuation to the downside before the next leg higher. All in all though, I still like this pair higher as long as the .9550 level holds up.
Summary: Watch for bullish price action at .9550. Key resistance comes in at .9690 and .9840.
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