Free Profitable Forex Newsletter
Hey! This is Philip with this week's trade idea of the Free Profitable Forex Newsletter!
It's another quiet trading week with most major Fx pairs having moved by around 100 pips or less so far this week. And, when we are speaking of ranges, it's worth saying that the USDCHF pair has traded in a 350 pips range for the past five months. With that said, the pair is today reaching interesting support levels toward the 0.9850 - 0.9870 area.
The pair seems to have formed a nearly horizontal trading range between 0.9850 and 0.9970 on the daily chart. Furthermore, on the short-term timeframes, there is a potential bullish harmonic bat pattern that could help to kick-start a bullish move from current levels.
Let's take a look at two charts and the potential trade below.
Daily Chart: Approaching support area
USDCHF bounced today after reaching the lower bound of the trading range. However, the price has started to decline again, now going for another test of the lows. To find the potential reason read the part about the harmonic bat pattern below (it may be an excellent buying opportunity).
The close of today's candle will be important, but also tomorrow's close and candle. If a bullish signal is created on the daily timeframe, it will open the way for a bullish move higher with a target toward the top of the range - 0.9970 area and maybe even to parity (1.0000).
With a stop below the previous low at 0.9850, the reward-risk ratio is 2:1 from current levels.
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Hourly Chart: Bullish bat harmonic pattern
On the intraday timeframes, we can find additional reasons why USDCHF may climb in the coming trading days.
Switching to the hourly chart, we can see a nice-looking bullish harmonic bat pattern. For the moment, another test of the lows is still possible as the harmonic bat pattern is not fully completed.
Namely, the harmonic support area stretches between 0.9864 and 0.9872, as highlighted in the chart below. But, for the moment, USDCHF has only reached the top of this area without testing the 88.6% Fibonacci retracement (0.9865 level), which is the most important for this pattern. That's why another bearish attempt is still possible.
On the other hand, if the falling channel here is broken to the bullish side, then that will give a solid confirmation that USDCHF has bottomed here.
The first 2 targets of the harmonic bat pattern to keep in mind are the 0.9906 level (38.2% Fib retracement), and 0.9928 level (61.8% Fib retracement) as some resistance may exist here. However, the bat pattern usually comes before sharp reversals. Given the favorable daily chart picture, we can target the 0.9970 - 1.0000 area directly, in this case, as we described in the analysis of the daily chart.
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- Look to enter either on this second test of the harmonic support area around 0.9865, as described above
- If 0.9865 is not reached, but the falling channel on the hourly chart is reached, then that would be a valid entry also
Stop loss:
- Look to place a tight stop below the harmonic support area; below 0.9864
- Below the 0.9850 lows would allow a greater breathing room for the trade
Target:
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Target the 0.9970 - 1.0000 are as described above
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But, mind the 1st and 2nd targets of the harmonic bat pattern and be ready to protect potential profits in case things change
USDCHF is less sensitive to risk-on and risk-off movements than most pairs
There is not much to be said about the fundamentals of this pair at the moment since both currencies are safe-havens. So, USDCHF is not directly affected by risk-on and risk-off movements as most of the other Fx pairs are.
Also, it seems that the Dollar has started to climb again broadly after the Fed turned neutral-hawkish. A broad rally in the Dollar can help to lift USDCHF as well.
Trade signals from the past weeks
- October 25, 2019 - Short EURJPY from 120.75, first target reached at 119.80 = +95 pips profit
- November 05, 2019 - Long USDCAD from 1.3160 (still in progress), currently 100+ pips in profit
- November 08, 2019 - Long NZDCAD from 0.8385 (still in progress)
TOTAL: +95 pips in the past week
TOTAL: +2090 pips profit since October 1, 2018
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Thank you!
High Risk Warning: Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.
Any opinions, news, research, predictions, analyses, prices or other information contained in this newsletter is provided as general market commentary and does not constitute investment advice. FX Trading Revolution will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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