The Japanese Yen seems to be the choice of investors for the long term, which will most likely affect all JPY pairs. In particular, CHF/JPY might follow this trend, where downtrend continuation is highly expected.
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:
Key support levels: 110.36, 110.75
Key resistance levels: 109.70, 108.70
Price Action: On the daily chart price remains below the downtrend trendline suggesting a long term bearish trend. Besides, CHF/JPY rejected the 200 Exponential Moving Average for two consecutive times. This should result in the continuation of the downtrend, at the very least for the price to test the previous area of support near 108.70
On the 4-hour chart, we have applied the Fibonacci indicator to the April 29 – May 1 corrective move up. What we can see is a clean bounce off the 50% Fibonacci retracement level at 110.36, which occurred today. Currently, CHF/JPY is still trading near this resistance and it will be important to see either Daily, 4-hour or both closing prices below this level. If this will be the case, the selling opportunity is on. In this scenario, price is expected to drop towards the previous support at the very least, which is at 108.70.
We suggest waiting until the week close in order to confirm hat CHF/JPY closed below the 110.36. This would confirm the validity of the downtrend and selling opportunity will be available early Monday. The ideal entry price is near 110.30 area, but not lower than 110.10. Stop loss and take profits could be placed at 110.80 and 108.70, respectively.