CAD/CHF: Bearish Harmonic Pattern at Key Resistance Level
The CAD/CHF currency pair is presenting a compelling shorting opportunity based on a confluence of technical factors. A Bearish Harmonic Pattern is currently unfolding, with Point D, also known as the Potential Reversal Zone (PRZ), situated at a critical resistance level. This strengthens the bearish case as price tends to find rejection at these confluence zones.
Harmonic Pattern and Resistance:
The specific Bearish Harmonic Pattern in development is not explicitly mentioned, but the key takeaway is the presence of Point D at a resistance area. This area has previously acted as a barrier to price advancement, and a retest often leads to a reversal. The confluence of the pattern completion and resistance adds significant weight to the bearish bias.
Bearish RSI Divergence:
Further bolstering the bearish case is the presence of Bearish RSI Divergence on both the 1-hour and 4-hour timeframes. RSI divergence occurs when price makes a new high (or low) but the RSI indicator fails to confirm the move, printing a lower high (or higher low). This divergence suggests a weakening bullish momentum, potentially leading to a price reversal.
Trendline Support Turned Resistance:
Adding another layer of confirmation is the fact that Point D coincides with the 4-hour trendline. This trendline, which was previously acting as support, has likely been broken and is now functioning as resistance. This reinforces the notion of a bearish shift in momentum.
Entry, Stop Loss, and Take Profit Levels:
Based on the confluence of technical indicators, a short trade is recommended with the
following parameters:
Entry: 0.66710
Stop Loss: 0.67025 (placed slightly above the broken trendline resistance)
Take Profit Levels:
TP-1: 0.66395
TP-2: 0.66080
TP-3: 0.65765 (These profit targets are strategically placed at key technical levels or at a predetermined risk/reward ratio)
Risk Management:
It's crucial to employ proper risk management techniques for this trade. The stop loss should be placed above the broken trendline resistance to account for potential retracements. The take profit levels offer a favorable risk-reward ratio, allowing for potential profit even with a conservative approach.
Conclusion:
The CAD/CHF presents a strong shorting opportunity based on a Bearish Harmonic Pattern, Bearish RSI Divergence, and a broken trendline acting as resistance. The confluence of these factors suggests a high probability of a bearish reversal. However, as with all trading strategies, proper risk management is essential.
Harmonic Pattern and Resistance:
The specific Bearish Harmonic Pattern in development is not explicitly mentioned, but the key takeaway is the presence of Point D at a resistance area. This area has previously acted as a barrier to price advancement, and a retest often leads to a reversal. The confluence of the pattern completion and resistance adds significant weight to the bearish bias.
Bearish RSI Divergence:
Further bolstering the bearish case is the presence of Bearish RSI Divergence on both the 1-hour and 4-hour timeframes. RSI divergence occurs when price makes a new high (or low) but the RSI indicator fails to confirm the move, printing a lower high (or higher low). This divergence suggests a weakening bullish momentum, potentially leading to a price reversal.
Trendline Support Turned Resistance:
Adding another layer of confirmation is the fact that Point D coincides with the 4-hour trendline. This trendline, which was previously acting as support, has likely been broken and is now functioning as resistance. This reinforces the notion of a bearish shift in momentum.
Entry, Stop Loss, and Take Profit Levels:
Based on the confluence of technical indicators, a short trade is recommended with the
following parameters:
Entry: 0.66710
Stop Loss: 0.67025 (placed slightly above the broken trendline resistance)
Take Profit Levels:
TP-1: 0.66395
TP-2: 0.66080
TP-3: 0.65765 (These profit targets are strategically placed at key technical levels or at a predetermined risk/reward ratio)
Risk Management:
It's crucial to employ proper risk management techniques for this trade. The stop loss should be placed above the broken trendline resistance to account for potential retracements. The take profit levels offer a favorable risk-reward ratio, allowing for potential profit even with a conservative approach.
Conclusion:
The CAD/CHF presents a strong shorting opportunity based on a Bearish Harmonic Pattern, Bearish RSI Divergence, and a broken trendline acting as resistance. The confluence of these factors suggests a high probability of a bearish reversal. However, as with all trading strategies, proper risk management is essential.