It’s all about the franc on today’s canvas, as we play around with forex trade opportunities on AUD/CHF and CHF/JPY. Check it, yo!
After finding resistance at the 112.00 handle, CHF/JPY is back to trading just above the 111.00 major psychological level.
What makes the drop interesting is that it stopped near the 100 and 200 SMAs, which are just above a rising trend line that hasn’t been broken since late January.
Will CHF/JPY turn back up from its current levels? Will the bears drag it closer to the trend line before they hand over the reigns to the bulls? Or will the bears remain in control and force a downside breakout?
If CHF/JPY falls back to 110.85 and sees bullish momentum, then you’ll know that the pair could see another trip back to the 112.00 triangle resistance.
But if CHF/JPY drops to the trend line AND keeps its bearish momentum, then we might be looking at a downside breakout for the franc.
Buying at current levels is a good idea if you believe that the Aussie is seeing an upside breakout against the franc. If you’re one of them Aussie bears, however, then you could also wait for the pair to drop below the SMAs and trade another possible downside move.
But if you’re not sure whether we’re seeing a breakout or fakeout, then you could also wait for a legit breakout and enter on a resistance-turned-support or retracement opportunities.
Whichever strategy you’re playing with this setup, make sure you practice good risk management habits when you execute! Gotta stay alive for another trading day, namsayin’?