Published On: Mon, Mar 13th, 2017

USD correction presents an opportunity in USDCHF



USD Index 

The index is holding within the expanding wedge formation. Just bouncing off the trend of higher lows. We see any upside rally as an opportunity to get short. 

Source: Saxo Bank

Still holding USDCHF short positions and will look to re-enter (closed one unit this morning at 1.0069) on rallies. 

Monthly – Nothing to take away from the monthly chart. Holding between two trendlines, with January’s bearish outside month offering a mildly negative outlook. 

Source: Saxo Bank

Weekly – Various formations here, most are conflicting: 

1. Bearish ending wedge pattern (break of 0.9768 and the measured move is 0.9071 – important)

2. Bullish channel

3. Possible bullish cup and handle 

Source: Saxo Bank

Daily –The reverse trendline resistance keeps holding back the bulls. Trading has been mixed for 29 days, which is common in corrective formations. The most important long-term factor here is that the 261.8% extension level lines up perfectly with the wedge target at 0.9071 (from 1.0341-0.9856).

Source: Saxo Bank 

Intraday (eight-hour) – Holding within the wedge. Like the USD index, just bouncing off trend support this morning. On a break of 1.0058, this formation has a measured move of 0.9966. 

Source: Saxo Bank

Intraday (one-hour) – Looks to be moving higher to form a right shoulder (bearish head-and-shoulders pattern). Resistance is seen at 1.0135-40. This formation has a measured move of 0.9965.

Source: Saxo Bank

There are two ways to play this USD correction:

1. Sell at the anticipated right shoulder at 1.0135-40.Higher risk but higher return.

2. Sell a break of 1.0058.

Management and risk description


Entry: Selling at 1.0135-40 and/or a break of 1.0058

Stop: 40-pip trailing stop

Target: 0.9970

Time horizon: 1-2 sessions

— Edited by John Acher

Non-independent investment research disclaimer applies. Read more
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