The USDCHF has dropped from its latest peak as visible in this H4 chart and broken through support levels posed by its 50 DMA as well as 200 DMA as well as its ascending support line turning them into resistance. This currency pair has corrected too much too fast and its drop was halted by another ascending support level and has now formed a bullish price channel. We believe this pair will attempt to rally from back into its new resistance levels in order to retest and confirm them.
MACD has completed a bearish centerline crossover and momentum has faded together with the decline in prices and therefore confirmed the sell-off. RSI has dropped into extreme oversold territory. A breakout from this level will accelerate the rally.
We recommend a long position at 0.9285 with a potential second entry level at 0.9185. We also advice traders to place a stop sell order at 0.9235 in order to hedge the first position and before adding new positions to this trade.
Traders who wish to exit this trade at a loss are advised to place their stop loss order at 0.9235. We will not use a stop loss order and execute this trade as recommended. Place your take profit level at 0.9375.
Here are the reasons we call the USDCHF currency pair higher
- USDCHF corrected too much to fast as a result of economic reports
- USDCHF has formed a bullish price channel and currently trades at ascending support levels
- RSI has reached extreme oversold territory
- Profit taking
- Anticipation of Friday’s Employment Report out of the U.S. which we predict to disappoint once again
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