CHFJPY - A Generational Currency Trade

I've had this area alarmed from a quite a while which triggered as this hit the 2 pivot 1.618 extension.

Now having let it develop; it does look bearish on all time frames

Firstly on the 3 week chart, there is bearish divergence between the 2022 peak and impulsive end; BC Buying Climax that completed summer 2023.

As so often is the case with Wyckoff and Fibonacci; the Buying Climax completed shy of the 1.618 extension.

From there, moving into a corrective continuation; the 1.618 Fibonacci extension has been hit.

And this can potentially be the corrective part of a topping pattern that in Wyckoff is called "UT UpThrust."

UpThrust is an ascending area that may or may not have an exhaustion shakeout at the top...

But the key detail is that it is corrective and ascending.

Ascending channels are bearish and that is our clue that a reversal could be on.

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We have seen something very similar with Bitcoin through 2020 - 2021.

Notice how there is bearish divergence between the impulsive peaks and then the BC Buying Climax tops out just shy of the 1.618 extension.

Then there is a corrective ascending phase that does hit the 1.618 and that completes UT UpThrust which is the market cycle top (although it did go on to print a shakeout double top late in 2021).

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Now down on the week time frame, notice that we have a corrective ascending channel that hits the 1.618 extension and there is bearish RSI divergence:

Price makes slightly higher highs whist RSI is making lower highs.

All of this is bearish and this is a typical topping setup.

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Now if we take a look at the Yen, it did slightly exceed the 0.786 overshoot ratio of the 1:0.618 extension but not for long and not too deep so it can still reverse in this area I think.

Notice the green arrow and how the RSI has popped up back into range.

That I think is a big clue that a reversal is on.

Remember that the 1:0.618 extension is a weak ratio and so it can be signalling downside weakness.

Due to this we may see a really big bounce that would be reflected with significant bearish action is CHFJPY so long as CHF doesn't pump.

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Now looking at the Swiss, this is the least conclusive chart but price has made a higher high whereas the RSI has not and so at the very least; thats not bullish and it may see further downside.

All in all this CHFJPY short looks a great trade and may be one to hold for years 🙂.

Trade active

Comment:

Bear with me 🐻

Comment:

Swiss has had quite a slump but now looks like it is in a re-accumulation while Yen continues to meander down.

So I think this will be an excellent long term play in the end but right here it looks like the pair will push higher and I dont have time to give it the care that it needs and tbf there is plenty of great tasty food on the menu elsewhere.

So I have exited here at breakeven.

Trade active:

I re-entered this short just after the previous week closed with the Shooting Star candle (red arrow) because this made it much less likely that the high of that candle could be exceeded with all the bearish divergences and previous shallow uptrends.

Now momentum is increasing to the downside this could get very impulsive once the trendline breaks.

Currently this is all on Swiss continuing to collapse and may have some legs yet, but my real interest in this trade was Yen bouncing.

If/when that happens there can be real fireworks 🤨.