[B]Analysis 05/11/2012[/B]
I’m treating the rise from the bottom @0.7566 to 0.95885 as part of the long term down trend and there isn’t any signs of a reversal and could be considered part of a consolidation pattern of the whole long term down trend. The rebound from 0.7566 could extend further to 0.99326 which is a major resistance level. For this to happen I am looking for a strong beak of the 0.95885 resistance level and this will be our entry point.
To the upside I’m looking for a break above the 0.93011 resistance level. This is because a major bullish bias has developed in the medium term as indicated by the ascending triangle formation (blue lines). There are 3 higher lows that make up the ascending support level (red arrows) that give a bullish bias. All momentum is moving to the upside as shown by the moving averages and macd. The breakout will be an extension of the up movement from 0.89316 and should pave the way past 0.95885. There are even 2 higher lows and higher highs in the medium term that I haven’t indicated on the chart. This is a no brainier high quality forex set-up that looks like it could breakout any day now.
To the downside I’m looking for a clean break below 0.85618 which would should extend a test the low of 0.70566. I wouldn’t be looking to make a trade that large but a target of 400 to 500 would suit this trade. Also to the downside if there is a nice break below 0.89316 that would extend the medium term down movement from 0.95885 to 0.85618. This is a small trade I will wait and see what the price action looks like when 0.89316 is broken.
Here is an update.
I took the above trade. Everything is going well.
I needed to update the analysis so here is my new one. It’s 6 days old but still valid.
Analysis 05/31/2012
I am treating the rise from the bottom @0.7566 to 0.95885 as part of the long term down trend and there isn’t any signs of a long term trend reversal and could be considered part of a consolidation pattern of the whole long term down trend. For enough evidence to suggest the long term down trend has finished i’m looking for a break above 1.17301. Only at this level can you be 100% sure that the whole long term down trend has finished. I know at the moment things are looking very bullish in the medium term but there still isn’t enough evidence to say that whole long term down trend has finished since it is a massive long term down trend that started in the year 2000.
The price just broke a major resistance level at 0.95885 but we can’t trade this breakout since we are already in a trade on the USD/CHF.
The next trade to the the upside is at the 1.00522 resistance level (parody). There is an obvious bullish bias developing in the medium term due to the higher highs and higher lows that shows the bulls winning the battle. The price is now trading above all moving averages and the MACD is very bullish on the weekly and daily chart. 1.00522 level has stalled the currency many times in the past so i expect strong resistance at this level and a breakout at this level will indicate that the bulls are winning the battle and able to create a new high. This will pave the way to at least 1.08858 and be an extension of the whole medium term up trend from the low of 0.70566.
There are currently no short trades since this currency is obviously bullish.