Back on Tuesday, I told y’all that the pair seems to have difficulty moving past resistance at the 0.7700 major psychological level. As such, I gave y’all a heads up that there’s therefore a chance that the pair may stage a downside breakout from that there ascending channel. Well, as y’all can see, the pair did stage a downside breakout for almost a hundred pips from the breakout point. So if you were able to catch a ride, then make sure to congratulate yo self. Aww, yea!
The pair easily smashed past 0.7620, so we’re still bearish on the pair. However, the pair is currently just above the area of interest at 0.7560. Moreover, stochastic is already indicating oversold conditions and all that. There’s therefore a chance that them bears may stage a counter-attack. And if they do, the pair will likely pull back. As such, today’s play is conveniently a Fibonacci retracement setup. And as y’all can see above, the most conservative retracement levels to watch are at the 50% and 38.2% levels, since the area of interest at 0.7620 lies between them.
We originally had an ascending channel for AUD/CHF, which y’all can still see on that there chart. And back on Monday, our main setup was to look for an opportunity to go long on the pair. However, I also noted that resistance at 0.7760 was really well-defended, so I told y’all to be prepared for a downside channel breakout as well. Obviously, the second scenario played out.
Stochastic is currently at oversold territory, though. Also, if we take the most recent price action into account, we can see that a fresh descending channel has formed. And as it turns out, the pair is currently testing the channel’s support area. As such, there’s a chance that the pair may move higher before going back down again. If the pair does move back up, then them bulls would likely be gunning for the channel’s resistance area, which would be around the 0.7720 handle.
Do note that the pair failed to clear 0.7630, though, so we’re not yet convinced that the breakout is valid and all that. Know what I’m sayin? As such, just be ready to bail should the pair climb sharply higher and break past 0.7760, since that means that them bulls are trying to push the pair back into the original ascending channel. Anyhow, just make sure to practice proper risk management, a’ight?
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