USDCHF   approaches the Weekly R2

USDCHF approaches the Weekly R2

By: Darryl Frankfort | Where To Trade | On:1-10-2014 11:19
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Key Highlights

  • The USDCHF has been on a consistent up trend
  • Major Support and resistance levels
  • RSI and Stochastic signals
  • Assessment of potential overbought conditions

Since breaking it long tern down trend in May, the dollar has been on a consistent upswing against the Swisse; from the exchange rate being at 0.8711 on July 2013 to levels above the 0.9500 last month. Yesterday USDCHF hit fresh year’s highs at 0.9596. Apart from catching the next reversal we are interested in getting the next move and direction of the pair.

Major support and resistance levels

  • The closest major resistance for the pair is the weekly R2 at 0.9638
  • The next resistance is at 0.9706, the  Monthly R2
  • 0.9750  the High of July 07 2013 is the third major resistance
  • Our weekly pivot point at 0.9466 forms the first major support
  • The weekly S1 at 0.9417 is the next significant support
  • The monthly S1 at 0.9292  is the third major Support

Technical analysis

Monthly Charts

On the monthly chart, the 14 period moving average has crossed the candles which are now trading above the line. This is a very bullish signal. It indicates that the pair is likely to begin a long term up trend on the monthly charts. This means that for most trades in this currency maintaining a bullish bias will give a higher probability of success.

USDCHF Monthly

Still on the monthly chart, the RSI at 58.8  is giving a neutral signal. On the other hand, the Stochastic reading is at 95.00. This very bearish signal is indicating that we are likely to be at overbought conditions and likely to have a consolidation or reversal in the near future.

Weekly Charts

On the weekly chart, the 14 period moving average is trailing well below the candles consistent with the MA reading from the monthly charts.  This indicates that the bullish momentum is likely to persist.

USDCHF Weekly

The RSI indicates that we might be in the overbought territory with a 77.51 reading. This is a bearish signal that supposes that there is a likelihood of a bearish consolidation or reversal to happen.

The stochastic reading from the daily weekly charts also indicates that we are at overbought conditions at 95.00.

Daily Charts

From the daily chart the 14 day moving average is trailing well below the candles. It is also acting as a dynamic support for the pair. This indicates that the pair is likely to maintain its bullish momentum in the medium term.

USDCHF Daily

 The RSI is indicating that we are at slightly overbought conditions with a 75.55 reading. This bearish signal also concurs with the stochastic reading of 83.75.

From the daily chart we get that we have a bullish bias with a high likely hood of a reversal or consolidation.

Wrap up

From all the charts we get that the 14 period moving average is below the candles giving a bullish signal. This means that the bullish momentum will likely remain.

On the other hand both the stochastic and the RSI on multiple timeframes indicate that we are likely to be at overbought conditions and therefore should anticipate a reversal or consolidation. The pair therefore likely to get a bearish consolidation at one of the major resistance we  mentioned  above.

Taking these conditions into consideration, a great approach is to wait until the short term consolidation is over and go along with the long term uptrend. 

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