Trade idea background
USD Index: For the fourth week in succession, levels close to 80.00 found buyers with follow-through bullish momentum resulting in net gains for the USD index. More importantly, we have now posted higher highs and lows on the daily chart. The bias is bullish but we do have bespoke resistance at 81.13 that could cause a mild correction (lower). Current price is 81.03.
USDCHF: Levels under the 38.2 percent monthly pullback level of 0.8861 (from 0.7064-0.9972) continue to find buying interest. Bullish momentum from the December 27 low trade (0.8798) has resulted in the trend of lower daily highs and lows being broken. Our medium-term bias is to the upside but with the pair assessed to be in the fifth wave (of the first bullish sequence) and close to the trend of lower daily highs at 0.9060 (from 0.9453-0.9248) we would prefer to wait for a mild correction to get long. It should be that the trend resistance (0.9060) is regarded at the top of a bullish-wedge formation with Fibonacci target levels at 0.9215 and 0.9473 lining up with a previous high and the wedge top.
Trade management and risk description
A move through the first target and we look to move stop to entry on balances.
Trade idea parameters
Entry: bullish bias so buy a dip at 0.9000.
Stop: stop can be placed at 0.8880.
Target: 0 .9215 and 0.9450.
Time horizon: 2-3 weeks.
USDCHF charts
