forexTrdr USDCHF - HEADS SHOULDERS DOLLARS & FRANCS
Updated
Good Morning traders,
Taking a look at US dollar and the Swiss franc and looking on a year to date basis we can see a head and shoulders pattern starting to form, which if confirmed opens up significant downside for this pair.
Not only do we have a naked trading pattern forming but we have technicals backing up the trade with multiple indicators pointing to a turn lower being on the imminent timeline. Firstly on the chart we have the left hand shoulder formed around mid February where the pair reached just short of 1.01 before pulling back to mid 0.99. This area formed a low before the pair reached a year to date high in low 1.01's before again turning lower towards 0.99 and bottoming out in early April. The final part of this pattern formation is the right shoulder which the market is currently peaking at around 1.0080.
Why do we think this will be the peak of the right hand shoulder and allow the market to retreat to 0.99? We can look to traditional technical indicators such as RSI, bollinger bands, stochastics or Ichimoku clouds. The first three all showing the pair are overbought and suggesting a correction lower is on the cards whilst on Ichimoku clouds the pair is significantly above the cloud and likely to retreat back towards top of the cloud around 1.0030 very near term.
As always this is not a trade recommendation and simply technical observation.
Good luck trading
from the Team at forexTrdr
find us on instagram, twitter and Alexa flash briefings
Taking a look at US dollar and the Swiss franc and looking on a year to date basis we can see a head and shoulders pattern starting to form, which if confirmed opens up significant downside for this pair.
Not only do we have a naked trading pattern forming but we have technicals backing up the trade with multiple indicators pointing to a turn lower being on the imminent timeline. Firstly on the chart we have the left hand shoulder formed around mid February where the pair reached just short of 1.01 before pulling back to mid 0.99. This area formed a low before the pair reached a year to date high in low 1.01's before again turning lower towards 0.99 and bottoming out in early April. The final part of this pattern formation is the right shoulder which the market is currently peaking at around 1.0080.
Why do we think this will be the peak of the right hand shoulder and allow the market to retreat to 0.99? We can look to traditional technical indicators such as RSI, bollinger bands, stochastics or Ichimoku clouds. The first three all showing the pair are overbought and suggesting a correction lower is on the cards whilst on Ichimoku clouds the pair is significantly above the cloud and likely to retreat back towards top of the cloud around 1.0030 very near term.
As always this is not a trade recommendation and simply technical observation.
Good luck trading
from the Team at forexTrdr
find us on instagram, twitter and Alexa flash briefings
Trade active
Stop hit. Looking to re enter. Pair still look extremely overbought.Traded with tight stop to avoid any spike but looking like we should of had the stop loss another +5pips higher.
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