CAD/CHF has been in a steady uptrend, but we’re seeing signs of a potential pullback from a previous resistance area. Will the resistance hold and give the bulls another shot at better prices?
Pullback ahead on CAD/CHF?
On the one hour chart above of CAD/CHF, we can see the bears have been in steady control of CAD/CHF since the end of December.
It’s likely expectations of continued stimulus and a potential recovery from the pandemic ahead thanks to the vaccines have been the main driver for the slow grind higher, along with rising oil prices–likely benefitting from the recovery narrative.
But in today’s session, we’re seeing the pair form a bearish triple candlestick pattern known as an “evening star,” and given that its forming at the previous swing high as stochastic signals potentially overbought short-term conditions, we may see technical traders put up sell orders in the short-term.
If broad risk sentiment goes negative (a possibility potentially driven by the continued global damage being done by the COVID-19 pandemic) then that bearish signal could be enough to at least push bulls to take some profits and push the pair lower from current levels.
But unless we see a negative turn in the vaccine distribution story and/or bond yields continue to rise to damp broad risk-on sentiment, it’s likely the pullback could bring back the bulls, who may see a buying opportunity if we see bullish patterns at the rising trendline / Fibonacci retracement area.
What do you guys think? Is there a pullback and new buying opportunity ahead in CAD/CHF?
Let me know in the comments below, and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.
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