Hi Traders! CHFJPY forecast follow up and update is here. On February 1st I shared this “CHFJPY Forecast And Technical Analysis” post in our blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club. Spoiler alert – free memberships are available!
My Idea
Looking at the H1 chart, we could see that the price which was moving lower created a bullish divergence that has formed between the first low that has formed at 123.655 and the second low that has formed at 123.546 based on the MACD indicator. The price then moved higher and broke above the last high at 124.101 creating higher highs, thus forming a classical setup of bullish divergence followed by bullish convergence. Hence as per the book scenario, after a bullish convergence, we may look for corrections to happen and then further continuation to the upside. Currently it looks like a correction is happening. In addition to this, based on the Stochastic Oscillator, we could see that the price is nearing the extreme, if it reaches the extreme we may then consider it as evidence of bullish pressure. Also, currently there are no signs opposing this bullish view. Until the key support zone holds my view remains bullish here and I expect the price to continue higher further after pullbacks.
On the H1 chart, based on the above-mentioned analysis my short-term view was bullish here and I was expecting the price to move higher further after pullbacks. After the bullish convergence, the pullback that I was looking for happened, we also had a bullish hidden divergence that has formed between the first low that has formed at 123.456 and the second low that has formed at 124.190 based on the MACD indicator. We may consider this as a fact provided by the market supporting the bullish view and also, there were no signs opposing this short term bullish view. The price then moved higher further as I expected it to and delivered around 100 pips move to the upside so far!
As traders we always have two choices, the first one is to fall in love with our analysis and try to convince the market and expect the price to move in the direction as per our wish. The second one is to follow the facts that the market provides us and make the right actions according to that. As you know the first option won’t help us and as you can see in the example above what happened when we followed the facts that the market hinted us and took the right action according to that.
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If you have any further questions, don’t hesitate to drop a comment below!
Happy Trading!
Arvinth Akash
Traders Academy Club Team.
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