Here we have AUD/CHF on the 1H chart.
AUD/CHF recently had a impulse leg after a rally to the highs previously. Since then price has a small correction and has since started falling into the lows again. It looks like the downside will continue.
When price had it's correction, price hit the Fibonacci key retracement and once hit, there was a compelling signal, indicating this retracement level was acting as a strong resistance ceiling. Since then, price has continued to fall.
Price already had a outlook. When also coupled with the breakout of the support channel, this confirms the bears are around for the long run.
There is 2 scenarios for how this trade could play out. See below:
-Price breaks to the downside without pausing, and hits one of our support target levels at either: 0.7580, or, the extended at 0.7540.
-Price breaks down a little more, before having an upside move to retest the previous support turned resistance channel at 0.7620 before the down move begins. This is my preferred scenario, as a retest confirms the breakdown is legitimate and still in full force. It also allows us to get a good entry level for this trade.
Bare in mind, that when target #1 is hit, it will likely bounce, and possibly even retest the side-wards channel resistance at 0.7610 before the breakdown to the extension target.
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