If you’re lookin’ for some trend plays, then today’s intraday update is just for you ‘coz I’ve got a couple of short-term channels on USD/CHF and CAD/JPY.
USD/CHF has been grudgingly tilting lower while trapped in that there descending channel. And as y’all probably already know, the more conservative way to play a descending channel is to look for a chance to go short when the pair is at the channel’s resistance area. And lucky us, since that’s where the pair is currently at.
Y’all therefore better start lookin’ for an opportunity to short. And all the more so since stochastic is already signaling overbought conditions and all that. Moreover, the channel’s resistance area happens to line up nicely with the area of interest at 0.9680.
For confirmation that bears are indeed in control, the pair needs to break past the rising trend and then hustle past 0.9630.
If the pair fails to do both, then there’s a chance that bulls may counter-attack by attempting an upside channel breakout. And in the unlikely scenario that bulls do take control, then y’all may wanna start thinkin’ about bailing yo shorts or switching to a bullish bias if the pair climbs past 0.9740 on strong momentum.
Okay, gonna keep it real with ya, dawg. That there ascending channel on CAD/JPY’s 1-hour chart ain’t really all that fresh since we first played it way back on July 6.
Back then, we were waiting for the pair to test the channel’s support area so that we can go long. However, I also noted back then the pair appeared to be trading sideways with resistance at 87.70 and support at 87.00.
As such, I concluded that there was a chance that the pair may move back up again if or when tests 87.00, even if the pair fails to test the channel’s support.
And, well, that’s exactly how it played out, so congratulations on bagging between 100 to 160 pips, depending on when you were able to jump in (if you were able to jump in).
Anyhow, the channel is still intact and it looks like the pair has found resistance at 88.70. As such, we’re waiting for the pair to pull back to the channel’s support area, which should be at or just above 87.70.
Do note that stochastic is already signaling oversold conditions and all that, though, so there’s currently a chance for an upside channel breakout past 88.70. And if such a scenario plays out, then bulls will likely be gunning for 90.70 next.
Also note that there’s always the risk that the pair may stage a downside breakout instead, although the pair needs to smash past 87.00 and then 87.00 in order to do that. In any case and as always, just remember to practice proper risk management, a’ight?