I'll be scouring the charts for "actionable masterpieces". These will be signficant chart patterns or set-ups that I feel are not only tradeable, but also have a high probability of making big profits with little risk. Whenever I spot an "actionable masterpiece", I will post an annotated chart (my chart art) along with an explanation. My goal is to help you learn how to spot these low ocurring but highly profitable "actionable masterpieces" yourself.
Short USD/CHF
The weekly chart shows a bunch of bearish signs. What stuck out most for me was the long-legged doji that formed last week. A good sign of a possible reversal. The pair is also trading below a descending trendline and also below its blue 100 SMA and purple 200 SMA. Will price fall back to 1.20?
The daily chart is displaying a boatload of spinning tops. Spinning tops signal indecision. Remember, most of the economic data released least week showed strong US data, yet instead of rallying, all this pair did was crank out more spinning tops.
Why are the dollar bulls hesitant? Is this recent rally on its last legs?
Here's more evidence of indecision. Notice how the pair has been trading in a box on this timeframe.
Based on this recent price action, where new information touting a strong US economy had limited impact, the pair seems to be in a "low energy" state. This week-long period of consolidation suggest that both bulls and bears seem to be content to trade at current levels. Neither side are dominating or stressed. When the market breaks this range one way or the other, a trend could snowball.
In this case, it seems the recent dollar rally is exhausted and the energy level for a bull move is nonexistent. I feel there's a high potential state of energy for a reversal due to the lack of bulls jumping on last week to push to further push this pair upward. If this pair ain't goin' up on good news, it ain't got no where to go but down right? All we need is some slightly weak data to come out in the US and down she goes.
I think this pair will attempt to test resistance at its upper trading range before falling so I'm going to short at 1.2500. My stop loss (SL) will be 1.2570 which is above the most recent swing high. My profit target (PT) will be 1.2380 which is around support at the blue 100 SMA and .382 Fibonacci retracement level on the daily chart.
Short USD/CHF @ 1.2500 | SL: 1.2570 | PT: 1.2380
