Trade idea background
USD Index — Although the USD index posted a bullish Outside Day on Wednesday the rally failed to be extended and selling from the daily Ichimoku Cloud top resulted in the index posting mild net losses for the week. Our bias remains mildly bullish with last week's base low regarded as the right shoulder in a bullish reverse Head and Shoulders formation. A break of 81.89 would confirm the positive outlook. A break of last week’s low (80.56) and we look for further losses to 80.32, an AB=CD formation and a 50 percent pullback level from 79.06-81.58 (current price 80.68).
USDCHF — Although Wednesday’s price action posted a bullish Outside Day selling from .9190 resulted in USDCHF posting net weekly losses, the second week in succession. The pair broke through the 50 percent pullback level of .9068 late on Friday (from .8888-.9148). A full AB=CD formation would take the pair to .9020 with the 61.8 percent Fibonacci level located at .9026. A look to the daily chart and this area can be seen a previous support and resistance from the first and 21st of October with the 31st October Marabuzo level located at .9030. An intraday 261.8 percent extension level is located at .9011, offering more protection for further selling.
Trade management and risk description
Once the first target is achieved, we look to move the stop to entry on any balances.
Entry: Bullish bias — buy at .9026
Stop: Stop can be placed at .8960
Targets: The profit targets will be .9124 and .9248
Time horizon: Two to three week
USD Index and USDCHF charts:
