Hi Traders! USDCHF short term forecast update and follow up is here. On May 18th I shared this “USDCHF Technical Analysis And Short Term 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 H1 chart, the price which was moving higher has created a bearish divergence between the first high that has formed at 1.00490 and the second high that has formed at 1.00641 based on the MACD indicator. The price then moved lower and broke below the last low at 0.99921 thus forming a classical setup of bearish divergence followed by bearish convergence, we may consider these as evidences of bearish pressure. Generally, after a bearish convergence we may look for corrections and then further continuation lower. Currently, it looks like a correction is happening and in addition to this, the price has created a bearish hidden divergence that has formed between the first high that has formed at 1.00641 and the second high that has formed at 0.99844 based on the MACD indicator which we may consider as another evidence of bearish pressure. Also, based on the Stochastic Oscillator we could see that the price has reached its extreme which we may consider as yet another evidence of bearish pressure. Until the strong resistance zone (marked in red) holds my short term view remains bearish here and I expect the price to move lower further.
USDCHF H1(1 Hour) Chart Current Scenario
In this pair, based on the above-mentioned analysis my short term view was bearish and I was expecting the price to move lower further until the strong resistance zone holds. After the bearish convergence the pullback that I was looking for happened but most importantly the price was holding below the strong resistance zone. In addition to this, the price has created a bearish hidden divergence that has formed between the first high that has formed at 1.00641 and the second high that has formed at 0.99844 based on the MACD indicator which we may consider as a fact provided by the market supporting the bearish view. Also, there were no signs opposing this short term bearish view. The price then moved lower further as I expected it to and delivered 430+ pips 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.
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Happy Trading!
Arvinth Akash
Traders Academy Club Team
