Today’s post is focused on the EURCAD reversal and the USDCHF pinbar bounce and break out potential.
Over the last 8 months the EURCAD has clearly built a downtrend (1550 pip in 6 months) but the momentum seems to be fading: will the downtrend be able to last or is a reversal on its way?
Reversal is my answer! In my opinion the EURCAD offers an interesting reversal potential due to the following factors:
- The triple bottom (green circle) could be the first signal that a reversal is under way;
- But then the EURCAD had another triple bottom (orange circle), which makes it basically a double triple bottom;
- The back to back triple bottom occurred at the 88.6 Fibonacci retracement level, which is the very last Fibonacci level before reaching a double bottom.
The chart and Fibonacci patterns combined with the mentioned support levels make this pair an ideal candidate to retrace part of the downtrend. Do you agree or do you see it differently?
The confirmation trigger occurs when price is able to break above the resistance trend lines. I am keeping a close eye on the horizontal and trend line resistance. When that occurs I want to see either:
- A strong bullish 4-hour candle above the resistance line(s), which means a majority of the candle above the trend line and a close near the high (light blue arrow);
- A pullback and bounce after the break slows down and retraces (purple arrows).
USDCHF REVERSAL FOR UPTREND?
The USDCHF has potentially completed a corrective bearish retracement on the 4-hour chart. Price fell choppy and slowly and it went from the 61.8 Fibonacci retracement down to its -61.8 target (blue Fibonacci). The subsequent bounce at the target (light blue) and trend line confluence (blue) was strong and caused a big wick (purple) to be printed at the bottom of the 4-hour candle.
Here too, the confirmation trigger occurs when price is able to break (green arrows) above the resistance trend lines (red). But an equally valid confirmation trigger would the break (red arrows) below the support trend line (blue). In both cases a break out or false break out could occur, which is why I am keeping a close on price action when the break does take place.
The direction the USDCHF breaks out could provide vital information on the intermediate direction of the U.S. Dollar:
- A bullish break would confirm the US Dollar bullish uptrend;
- A bearish break could pose dangers for the US Dollar uptrend and a bigger retracement might be under way.
I am keeping a close eye on how price reacts to the trend lines but ultimately expect price not to retrace any deeper than the -61.8 Fibonacci target and to break the resistance to the upside.
What do you think of the USDCHF?
Don’t forget to write down your feedback in the comments down below on either the EURCAD or the USDCHF – or both!
Thank you for sharing this post and wish you Happy Hunting!
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