This is the updated chart from yesterday’s intraday CAD/CHF descending channel setup on the 1-hour chart. If you can remember, I identified three possible scenarios for yesterday’s chart. And as you can see on the updated chart, price followed two of them: (1) the descending channel continuation scenario and (2) the upside breakout scenario. As shown on the chart, price action respected the channel and moved down for about 40 pips, and then the upside scenario tool place, with price shooting upwards by about 130 pips.
Now, price has reached the 0.7560 handle. For today’s play, I’m looking at a potential bounce from resistance since the 0.7560 handle served as a price area of past interest. Also, the 100 SMA and 200 SMA are still in downtrend mode, with the 200 SMA acting as dynamic resistance. Lastly, stochastic is currently pointing to potentially overbought conditions.
After consolidating for a few days, price finally broke through the 1.0470 handle with sufficient and convincing momentum. unfortunately, it immediately encountered a lot of forex traders who were intent on selling the pair, sending the pair back to the 1.0470 handle. But now the downward push has stalled. And if we apply our Fibonacci tool, we can see that EUR/CHF is currently at the 38.2% retracement level. Also, the trend is still currently up, so our directional bias for this chart is therefore also up.
The upward momentum seems kinda strong, but perhaps forex traders who are bearish on the pair will start to nibble since price is currently at the 1.4400 major psychological level, which is on a price area of very, very significant market interest. Aside from that, the moving averages are in downtrend mode and stochastic is currently in overbought territory, indicating that buyers may potentially be exhausted. Furthermore, the 200 SMA is acting as dynamic resistance. Lots of technical arguments for a down move, I say. Still, make sure to practice proper risk management should you find a trade based on this chart.
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To get the complete picture and avoid getting blindsided by economic data, you also have to do your fundamental analysis.
Lucky for us, Pip Diddy fills us in on what we need to know about fundamentals with his Daily Forex Fundamentals.