CADCHF has just confirmed a on the .
The potential reversal zone (PRZ) is comprised of the 0.786 XC retracement, or in price terms, 0.75878.
Stop loss is set a minimum of the X point, or 0.76436.
Take profit is set at two levels, management and final.
The management level is the 0.382 CD retracement, or 0.75098.
The final level is the 0.618 CD retracement, or 0.74618.
The overall risk to reward ratio for this trade is 2.25.
The terminal price bar has already formed, confirming the PRZ. Also, has reached overbought territory on the 4H timeframe, which is an indication of a possible reversal downwards. Another important piece of information is that there is a visibly strong level of resistance at around 0.76150. There is also a strong resistance trendline formed since the 3rd of October, 2018, that is currently being tested in the PRZ. Should no breakout occur, it would only be logical that a reversal could take place.
Another indicator I am considering right now is . Since around the 31st of January, we have seen an extended period of trading with weak and lower for the pair. This could be an indication that the current uptrend from the C to D point may not have strong enough momentum to push through our PRZ.
Some thoughts right now are that if there is a breakout through the resistance trendline (blue on the chart), we should definitely watch for any type of reaction when it hits the 0.76150 key level of resistance (pale yellow on the chart). If there is a breakout even beyond this level, I would consider closing out the trade early as this would prove to be strong upward momentum, but given the strength of both the resistance trendline and key level, this is unlikely.
As always, watch price action first to confirm a move before entering! The 1D timeframe is currently showing a possible formation of a , which would indicate uncertainty and a possible reversal to take place.
Thanks for reading,
Interest rate decisions are also coming out soon. Likely result of this is that if the rate is below expected, CAD will fall against the CHF, but we still have to observe price following.