Hi Traders! CHFJPY technical analysis and forecast post is here. The way I would like to analyze the chart for setups is based on multi-timeframe confirmations because in my POV if we get more evidences on different timeframes for the same direction then it makes the setup much more reliable. 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!. Now, let’s start our analysis from the highest timeframe which will be the daily chart here.
You can watch the video explanation of this idea here
On the daily chart, we have a bearish divergence that has formed between the first high that has formed at 122.522 and the second high that has formed at 122.762 based on the MACD indicator. The price then moved lower and broke below the last low at 121.464 thus forming a classical setup of bearish divergence followed by bearish convergence, we may consider this as evidence of bearish pressure. As per the book scenario after a bearish convergence we may expect corrections and then further continuation lower. Currently it looks like a correction is happening. Also based on the Stochastic Oscillator we could see that the price has reached its extreme which we may consider this as another evidence of bearish pressure. We may now move down to one timeframe lower and look for evidences supporting this bearish view.
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 D1(Daily) Chart Analysis
CHFJPY H4(4 Hours) Chart Analysis
It is always recommended to look for confirmations before you jump into any trade. If you are not sure about how to trade this sell setup then you can use any setup and strategy that you have in your arsenal to look for bearish moves and join this sell trade.
Also, don’t forget to protect your sell trade using a stop loss and make sure to set a target and keep a proper risk/reward ratio.
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Happy Trading!
Yordan Kuzmanov
Chief Trader at the Traders Academy Club
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