Overall, the Swiss Franc is starting to look weak across the board, and the very first pair to reflect this, could be CHF/JPY. While the trade opportunity is relatively short term, the downtrend could actually last quite long.
Disclaimer: The analysis presented in this article is for educational purposes only and should not be considered as financial advice.
This analysis was done on MetaTrader 4.
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Trade Idea Details:
CHF/JPY symbol
Type: Bearish
Key support levels: 113.12, 112.92
Key resistance levels: 113.72, 114.00
Price Action: On the 1-hour timeframe CHF/JPY continues to reject the resistance trendline while RSI has formed a bearish divergence. At the same time, CHF/JPY is trading near very important resistance zone, which is between 113.50 -113.60. The resistance zone is based on two Fibonacci indicators, the first applied to the 03.06 -05.06 uptrend, while the second is applied to the 05.06 – 09.06 downtrend. And we can see that there are two 50% retracement levels, which are forming the supply area.
As long as 1h and/or 4h closing price remains below the most recent high at 113.72, the corrective move to the downside can be expected. The downside target is seen at 112.92 price area, which is confirmed by two Fibs. First is the 78.6% retracement level of the 03.06 -05.06 uptrend and second is the 127.2% retracement level of the corrective wave up occurred on June 10.
Potential Trade Idea: Ideal entry would be to wait for a potential breakout above the 113.72 and if the hourly closing price will remain below, this is it. Entry price is likely to be between the 113.50 and 113.60, while the stop loss at 114.00 in order to meed 1:2 risk/reward ratio. The downside target is 112.92, confirmed by two Fibonacci retracement levels.
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