Sunday, August 19, 2018

EUR/CHF : chart framework.

From a bullish trend, the currency cross began a bearish trend (May 2018). The parallel channel was broken and then also the bullish TL (long and short-term). We can notice a volatility exhaust (see the BB) highlighted  by the overbought and by the oversold of the RSI (see the yellow ellipses). 
The current bearish trend is still valid : however, if we look at the following chart, there is a rebound from the low at 1.127. As I said, it represents just an exhaust of the excess market. To consider it a change of trend, it needs other confirmations in the following trading sessions and it needs a test of area 1.145 (the previous support). 

Chart from

Let's look at the FIBO retracements : the main references are 1.06 (100%), 1.13 (50%) and the previous low, 1.14 (38.20%), 1.16 (23.60%), 1.20 (0%). The mentioned references are important to set a trading strategy, bearish or bullish. See the following chart.

Chart from

If we look closely, we have two options :

  1. We can anticipate the market moves (there is a higher risk but with a higher expected return due to our prior involvement to the price rebound) ; in other words, we right away consider the overcoming of the MOMENTUM above the zero line, the intersection of the MACD and of the signal line and the test of the support at 1.145 ;
  2. We don't anticipate the market moves (the risk is lower as the expected return) ; in other words, we wait for the mentioned technical signals and we wait for other confirmations in the following trading sessions (see the red arrows). 

Chart from

Finally, at a glance, with a weekly timeframe, we can notice that : the EMA bundle (20, 30, 50) shows the direction (lateral trend, uptrend, bearish trend), see also the intersection of the light blue line, of the red line and of the yellow line (red ellipses) ; the structure of the Parabolic SAR shows the market direction, too. 

Chart from

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