Weekend Forex – Lines On Charts, Ideas, Setups

The Swiss  Franc is looking strong again.  After a decent move on Thursday it made another big move during Friday’s Asian session without any accompanying news. I don’t know why so I can only guess. But I won’t guess because what’s the point of guessing. You won’t make it in trading if you guess.

So on to the charts starting with USD/CHF 1hr. Until recently I’ve been treating this pair as a proxy to EUR/USD but recent action across all CHF pairs suggests money moving into the Franc again.

The main feature is the downtrending channel (blue). From a trading perspective the lower channel line will act as support to buy at 0.8885. (There was support at the dashed orange but that is now broken.)  The one and only uptrending support line broke down on Thursday complete with a backtest. There are no other uptrending support lines. They don’t exist. So if the blue channel fails to contain price then 0.8650 is the nearest horizontal support. I’d imagine a ton of stops helping price get there in no time.

USD/CHF

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EUR/CHF had the bottom of its uptrending channel seriously tested early Friday, even twice penetrating through. The steep uptrending lines originate from the August low, the pink dashed one is new and unproven. This pair shed 200pips in two days down to low 1.22’s which if broken will shed another 100pips. 1.2280 first level of resistance overhead. Questions can be raised about the determination of the SNB but I’ll leave that to others. Like the chart above it’s very close to break down point.

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AUD/CHF – A wider view that includes August low, some horizontal levels, two downtrending channels to trade, and broken uptrend line. Although it’s double topped, not quite as bearish as the above two charts but then again Australia doesn’t need to print trillions of its currency.

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I would have like to have kept this post simple and wrapped it up by now but analysis wouldn’t be complete without looking at USD/JPY. On Friday it fell about 90pips in under an hour to make a new all-time low, breaking out of a very tight range (was good for scalping). Sure to get the attention of the Bank of Japan. There are solid lines there to trade if you’re game or it you anticipate BoJ intervention.

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EUR/USD – Fortunately there is some easier structure to be found on our favourite majors. A break of 1.39 would open the way to 1.40 within the uptrend channel and a break of the channel would really give it legs. Could just as easily range down 200pips early in the week. Keep your thoughts on sovereign debt to yourself as this chart will do its own thing regardless.

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AUD/USD closed the week at a strong resistance level (just like EUR). Next move slightly up or the best part of 200pips down (just like EUR).

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GBP/USD almost in free territory but still confined to the green channel. Take this pair 100pips at a time. 1.60 is obviously psychological resistance, a break of 1.61 would really open it up. Below is previous resistance at 1.5850 followed by the lower end of channel. Nearest downtrending trendline is the blue line at top of chart starting from high of July 2009.

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Trade the charts and take regular profits.

10c

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