Trade view /
09 June 2016 at 9:54 GMT
The weekly chart shows the pair in a bullish move higher since the substantial January 2015 selloff. More recently however we have seen lower highs be posted and the pair currently trades in a symmetrical triangle pattern; the base of which we are fast approaching.
1.0900 has been a pivotal level over the last year, and with the triangle-base trendline offering support around 1.0910, we remain cautious on extended downside potential.
The consolidation period from mid-March through to early June has seen the pair form a bearish head and shoulders formation. Tuesday saw the formation become completed after a downside breakout and has seen an aggressive selloff since, with the formation’s measured move target of 1.0915 being met this morning.
We could now see the drive stall and a possible correction in the overextended move lower.
However, the downward move is currently showing no signs of slowing, with the pair currently breaking through the Ichimoku Cloud base accompanied by the lagging line also breaking through, alternatively presenting us with a bearish sell signal.
As mentioned earlier, 1.0900 has been a pivotal level over the last year or so. The daily symmetrical triangle base currently comes in at around 1.0894. If prices manage to hold above here, with signs of bullish divergence, a correction is possible. However, a break below this level and we would expect to see extended losses towards the triangle base at 1.0809.
This presents us with two possible options to trade. Either to buy into the dip or to sell a clear break of the triangle base. Each trade offers a 2:1 risk/reward potential
Management and risk description
Entry: Buy EURCHF at 1.0910
Sell EURCHF on a break of 1.0890
Stop: 1.0890 on the buy trade
1.0930 on the sell trade
Target: 1.0950 on the buy trade
1.0810 on the sell trade
Time horizon: 3-10 days
Source: Saxo Bank. Create your own charts with SaxoTrader click here to learn more
Source: Saxo Bank
Source: Saxo Bank
— Edited by Clare MacCarthy
Non-independent investment research disclaimer applies. Read more