Buying Opportunity if USD/CHF Drops to 1.0726

Last updated 6/30/2009 2:24 PM EST (GMT -5) 0 Comments - Add your comment

FX360 Technical Analyst Staff

Technical Analyst, GFT

The 61.8% retracement level of support near 1.0780 (based on last Wednesday's ~400 pip spike) served as a floor for this morning's ~100 pip bounce leading to a current intraday high of 1.0888. This high may define a possible point C of an emerging bullish butterfly pattern (see 2hr chart) projected to complete near the following Fib convergence...

The key will be for prices to drop to our projected entry at 1.0726 without first moving above point C (1.0888) which would negate pattern structure and invalidate this particular setup. As always, we'll keep and out for any gaps and/or wide-ranging candles (2-3x's average) on the way down to point D as these oftentimes suggest a continuation move may be in progress and tend to increase the odds of pattern failure.

The initial profit target of 1.0773 (T1) represents 38.2% of the projected CD leg at which point stops will be moved to break even, and the final target of 1.0835 (T2) sits just below 61.8% of AD. Remember, this analysis does not mean that prices will in fact go down to point D by any means. Rather, if prices move down and the pattern completes near point D barring any warning signs, then the odds/probabilities are higher for a bullish reversal. 

Potential strategy: Buy if prices drop to 1.0726 with stop-loss at 1.0664 targeting 1.0773 (T1), 1.0835 (T2).

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  • 4hr Chart - Potential buy near 78.6% support of last Wednesday's ~400 pip spike
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  • 2hr Chart - Emerging bullish butterfly pattern with potential buy iif pattern completes near point D

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