Possible longs on the Swissy...

4 giu 2017

Weekly gain/loss: - 119 pips
Weekly closing price: 0.9624

Following a brief pause, the USD/CHF resumed its decline south last week and consequently closed below the weekly Quasimodo support line at 0.9639 in the shape of a full-bodied bearish candle. The next downside target beyond this line is seen around a support level drawn from 0.9581.

Friday’s close below the aforementioned weekly Quasimodo line has, as far as we can see, cleared the runway south all the way down to 0.9546: a daily triple-bottom formation. Should price reach this line, however, we’d be wary of taking a long from here since a daily Quasimodo support level is seen lurking just below at 0.9488.

The aftermath of Friday’s disappointing US non-farm payrolls data saw the Swissy aggressively run through the 0.97 handle. The pair continued to selloff during the US segment, and resulted in the market closing just ahead of the 0.96 handle.

Now, 0.96 deserves attention! Not only is it positioned nearby the weekly support mentioned above at 0.9581, it also sits close to a H4 AB=CD (see black arrows) 161.8% bullish completion point at 0.9572. In addition to this, we have correlation confluence here as well. The EUR/USD is considered oversold and will likely selloff from 1.13/1.1279 (see our EUR/USD report).

Our suggestions: Wait for H4 price to attack 0.9572/0.96 and watch to see if the H4 candles can print a reasonably sized H4 bull candle, preferably a full-bodied candle, before pushing the buy button. This, of course, will by no means guarantee a winning trade, but it will help determine buyer interest and help avoid an unnecessary loss! The first take-profit target from this base will be set around the broken daily Quasimodo line at 0.9678.

Data points to consider: US ISM Non-manufacturing PMI at 3pm GMT+1.

Levels to watch/live orders:

• Buys: 0.9572/0.96 (waiting for a reasonably sized H4 bull candle – preferably a full-bodied candle – to form before pulling the trigger is advised, stop loss: ideally beyond the candle’s tail).
• Sells: Flat (stop loss: N/A).