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USDCHF Confirms Buying Opportunity

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Yesterday was perhaps the most important session for USDCHF since the October 26th breakout last year. The close above channel resistance that extends from the current 2016 high could mark the beginning of yet another 500-pip rally.

I mentioned this price structure over the weekend as one to watch as Friday’s session had tested resistance for the third time since late January. Monday’s session also tested the upper boundary of the channel but once again failed to close above it.

With yesterday’s close comes a fresh buying opportunity. However, a pullback to new support is needed to secure a favorable risk to reward ratio. A pullback would also allow for an entry that is closer to the mean, which currently resides just below the 0.9800 handle.

The first target for a move higher would be parity. The popular level has acted as a critical pivot since November of last year. A daily close above it would expose the March 10th ECB high at 1.0091 followed by current 2016 highs near 1.0230.

Taking a look at the broader picture, the wedge resistance that gave way last October was, in fact, respected as new support in April and May of this year. That means the measured objective at 1.1730, which is also the 2010 high, is still intact.

Of course, reaching an 1,800-pip objective would take months if not years rather than days and weeks. But regardless of the exact timeline, the 1.1730 handle does present a clue as to where USDCHF may be heading over the longer-term.

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USDCHF break above channel resistance on the daily chart

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6 comments
Sean Anderson says

Dang you must have read my mind, I was just looking at this chart and spotted the breakout and thought, “best wait for the pull back first”.
Glad to hear I was thinking along the right line. Thanks

Reply
    Justin Bennett says

    Sean, you got it. At almost 100 pips above the 10 EMA and 40 pips above the broken level, waiting for the retest is a wise decision in my opinion. Cheers.

    Reply
Andy Timmango says

Nice post. Follow you every time… Thanks

Reply
    Justin Bennett says

    You’re welcome, Andy.

    Reply
Aldro says

This opportunity looks slightly better than EURAUD short as it appears to have a bit more confluence.

As there is a high degree of correlation between USDCHF long and EURAUD short, It may not be wise to double our risk by taking both positions.

Reply
    Justin Bennett says

    Aldro, this one didn’t quite work out, but then the opportunity wasn’t confirmed with bullish price action, so there was nothing for us to do here.

    Reply
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