The low for this pair in 1995 was 79.95 and it has touched 80.41 so far today. Given past behavior in other pairs related to the Swiss Franc, it wouldn’t surprise me to see it swoon to the 79.95 or possibly 79.60, the bottom daily channel line, and then bounce sharply—or maybe not so sharply if the dollar doesn’t begin to rally. However, the move down is rather intense and overly dramatic and has been going on for five consecutive weeks. There’s positive divergence on the daily chart. Some sort of rally is probable. Depending on one’s risk tolerance, one could try a long around the 80.00/.50 level since the stop can be tight. More conservatively, one could wait for a touch of 79.96/60 and a rally. Resistance will be at 81.92/97 (10/19 and 10/13 highs), 82.88 (9/14 low) and 83.40 (daily downtrend line). At any of those points sellers will probably enter the market.
Here’s a daily chart.
© Dianne Fecteau, 2010. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.
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