The USDCHF has corrected sharply as visible in this H4 chart. This currency pair has made several attempts to rally higher which all failed and therefore the USDCHF is stuck in a rectangular chart pattern and is currently trading at horizontal support levels while at the same time facing strong descending resistance levels. We believe this currency pair will be able to launch a breakout and rally back to horizontal resistance levels.
MACD has showed improvement over the past few trading weeks and is approaching the centerline where it may attempt a bullish centerline crossover which could further elevate this currency pair. RSI has formed a positive divergence and is currently trading in oversold territory.
We recommend a long position at 0.9400 with a potential second entry level at 0.9200. This trade is an addition to our existing short position which we took on June 13th at 0.9150 and which was a short hedge.
Traders who wish to close this trade at a loss are advised to place their stop loss level at 0.9300. We will not use a stop loss order and execute this trade as recommended. Place your take profit level at 0.9500.
Here are the reasons why we call the USDCHF currency pair higher
- USDCHF is currently trading at horizontal support levels of its rectangular chart formation
- MACD has improved and is approaching the centerline from where it may launch a breakout
- RSI is trading in oversold territory and has formed a positive divergence
- Profit taking which will initiate a short covering rally in order to realize profits
- New institutional long positions by swing traders at strong support levels