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USDCHF: Bullish Continuation or Not?

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The USDCHF is testing a significant level today. The 0.9850/60 area served as support between January and May of this year. It then attracted a bid during the November 15 retest.

But last Wednesday’s selloff put the pair back below the 0.9850/60 area. It attracted an influx of selling pressure during yesterday’s session and is doing so again today.

On the 4-hour chart, there appears to be a descending channel forming.

USDCHF 4-hour channel

Whether or not this is a bullish continuation of the September/October rally is yet to be seen. It’s going to take a close above channel resistance near 0.9880 to make that happen.

That said, a daily close back above the 0.9850/60 horizontal area would be the first bullish sign. We don’t have it yet, but buyers are giving it their best effort as I type this.

If this turns out to be a bullish continuation pattern, a conservative target would be the 1.0100 handle. The area served as resistance between April and May of this year.

Keep in mind, however, that the pair would also likely encounter offers at 0.9940 and certainly 1.0030/40. These regions are easy to spot on both the daily and 4-hour time frames.

Key support comes in at 0.9770. The area kept the USDCHF range bound from late May to early October. As long as the 0.9770 area holds as support on a daily closing basis, the bullish scenario must be respected.

I’m going to remain on the sideline until bulls secure a close above channel resistance near 0.9880. If they fail to do so, I’ll look elsewhere. I’m in no hurry to trade, especially during the holiday season. 

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USDCHF descending channel on daily chart

Leave a Comment:

14 comments
sam says

thanks

Reply
    Justin Bennett says

    You’re welcome.

    Reply
Ade says

Maybe this website is not for you on higher time frames analysis.

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TripTrap says

You get what you want out of Justin’s commentary. Why hang around if you don’t like it….?
I like it and glad you pointed this pair out to me Justin. For me (and not necessary for anyone else it’s a nice short set up with 2-1 reward to risk). Not only is it bouncing off the channel Justin pointed out, it is also bouncing off the H4 200 sma and the H4 1500 sma. It is also bouncing off the 50% fib drawn from yesterday’s high to today’s low. Nice confluence here. Stploss is today’s (Wed) high and TP is today’s opening low or lower. If I am wrong I am wrong 1R. If I am right I take a 2R profit or more on it. EZ PZ lemon squeezy…

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    TripTrap says

    Meant to say TP is this week’s- Monday’s low (not today’s low).

    Reply
TripTrap says

Thanks Marc….however I may not have seen the trade setup if Justin had not brought it to my attention. He definitely knows his stuff. I am not a member but I do take notice when he sends out email setup alerts. He points out important support / resistance areas that I may not see and helps to add an edge to my own analysis.

Reply
    Justin Bennett says

    Thanks for commenting, TripTrap. Cheers.

    Reply
Chuck says

Looks like we might be getting a decent bearish pinbar rejection off of the 20 day EMA. Not a bad 2-1 risk ratio short to TP at 97.50/60 with SL at 99.00. Just hard to Short USD now with pending tax reform might blow the USD up. Good luck.

Reply
    Justin Bennett says

    Hi Chuck, I’d call it more of an indecision candlestick than anything else. Thanks for commenting.

    Reply
Nadzuah says

Thanks

Reply
    Justin Bennett says

    You’re welcome, Nadzuah.

    Reply
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