Today on USDCHF – Daily and H4 charts support Short trades, but…

On the Daily chart above, yesterday, the Swissy (as well as the Euro and Cable) rallied against the Dollar. As a result, some charts’ formations were altered. Studying the USDCHF Daily chart, we would observe that price dashed downward to break a critical support level – the most recent Daily low @ 1.0551 (which we’ve highlighted using the blue broken line) downward. Price-break below this level gives a good sign that the bears might currently be in control. However, as discussed on last week Thursday, the 1.0600 level is a major support area that has remained very critical since May 2008 (please refer to your Weekly and Monthly charts); hence, we should be very careful as the bears might be contending with some fierce bulls around this level. Although, price is currently below 1.0600, personally, I believe price has to close decisively below the entire 1.0600 area to ascertain the strength of the Swissy. In all, the Daily chart – from a day trade perspective – currently leans toward downward price movement.

On the H4 chart above, price has broken the most recent swing low @ 1.0579 (which we’ve highlighted using the blue broken line) downward. This automatically shifts our bias in favor of a downward price move. The bulls’ strength – as discussed on the Daily chart – could also be observed on the H4 chart as price sharply pierced below the most recent swing low, but was forced to close above it. However, based on this method’s parameters, once a most recent H4 swing low is broken, our bias shifts in favor of the bears. The white horizontal line @ 1.0702 highlights the most recent swing high, and as long as price stays below it – in the absence of any new and lower swing high – our bearish or downward bias remains intact.

However, we still need our Hourly charts – using Fibonacci retracement levels and important resistance levels – to seek promising areas to take our Short positions. Price pattern on the Hourly must also be forming lower highs and lower lows. Please note that our aim is to sell a rally in today’s down-trend.

Also, PATIENCE is the key here: we need to patiently wait for the Hourly retracement. It might happen, and it might not.