Hi Traders! CHFJPY forecast update and follow up is here. On July 13th I shared this “Technical Analysis – CHFJPY Forecast” 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
On the H4 chart after the strong bearish move, the price is currently moving inside a range. This range is formed by the highs and lows reaching parallel support and resistance zones. The price which is moving inside this range has currently reached the top of it. Also, while measuring the first wave using the Fibonacci expansion tool we could see that the 100%(121.142) Fibonacci expansion level of the first wave coincides with the top of this range which makes this area a key resistance zone for us. The price which was moving higher reached this key resistance zone, respected it and is currently bouncing lower from this zone. Also, based on the Stochastic Oscillator we could see that the price has reached its extreme and is bouncing lower which we may consider as evidence of bearish pressure. In addition to this, based on the Parabolic Sar we could see that the dot is above the price which we may consider as yet another evidence of bearish pressure. Until this key resistance zone holds my short term view remains bearish here and I expect the price to move lower further.
CHFJPY H4(4 Hours) Chart Current Scenario
In this pair based on the multi-timeframe analysis my view was bearish and I was expecting the price to move lower further until the key resistance zone holds. The price action followed my analysis exactly as I expected it to here. The price which was moving higher reached the key resistance zone, respected it and moved lower from this zone. The price then moved lower further as I expected it to and delivered around 180 pips move until it was blocked a bullish divergence.
On the H1 chart, the market provided us with various facts supporting the bearish view. The price which was moving lower created a correction in the form of an ABCD pattern. The price then created a false break of the high at 120.283, then it moved lower, and broke below the most recent uptrend line, we may consider these as facts provided by the market supporting the bearish view. Also, there were no signs opposing this bearish view. The price then moved lower further and provided an excellent move to the downside as you can see in the image below.
So, traders, this is why I wanted to show this example to help you understand how important it is to follow the facts. The facts were supporting the bearish view here and there were no signs against it. When the facts do happen as we expected you can see how the price perfectly moved as per the plan. Because these are the kind of hints the market provides us at majority of the times and it’s our obligation as traders to be able to listen to these things that the market tells us and we should try to make the right actions accordingly.
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Yordan Kuzmanov
Chief Trader at the Traders Academy Club
