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USDCHF Triangle; Follow it for the Next Big USD Trade

USDCHF Triangle; Follow it for the Next Big USD Trade

2015-09-18 18:38:00
Jamie Saettele, CMT, Sr. Technical Strategist
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EUR/USD

Weekly

USDCHF Triangle; Follow it for the Next Big USD Trade

Chart Prepared by Jamie Saettele, CMT

Automate trades with Mirror Trader

-“EURUSD continues to hold up at the line that extends off of the 2000 and 2001 lows. The slope of this line is similar to the slope of the line that connects the 1995 (synthetic rate) and 2008 highs. A parallel extended from the 2000 low creates a channel so don’t dismiss resistance breaks on the daily (from long term support).”

-“EURUSD faces a big test from the top of the range and 200 DMA. A breakout would target 1.1811-1.2086.” The rate broke out but failed to extend higher and the weekly chart is left with a nasty bearish reversal candle at the 52 week average. Is this how the broader decline resumes or is a wider period of range activity in order? The latter seems more likely given the presence of the mentioned long term trendline support.

GBP/USD

Weekly

USDCHF Triangle; Follow it for the Next Big USD Trade

Chart Prepared by Jamie Saettele, CMT

Automate trades with Mirror Trader

-The week that ended 8/28 engulfed the prior 6 weeks and may set the stage for a test of 1.4500 given the false break above the line that extends off of the 2014 and 2015 highs. The false breakout took place at the 52 week average, which is downward sloping and gives credence to a long term bearish view.

-A 3+ month head and shoulders top also completed in late August as well. This rally has resulted in a re-test of the neckline. If the bigger move is lower, then GBPUSD needs to roll over now.

AUD/USD

Weekly

USDCHF Triangle; Follow it for the Next Big USD Trade

Chart Prepared by Jamie Saettele, CMT

Automate trades with Mirror Trader

-“A slope confluence pinpointed the May high, which keeps the broader trend pointed lower. A long term level to be aware of in AUDUSD is the line that connects the 2001 and 2008 lows, which is near .7100.”

-“The immediate picture is bearish. Range expansion objectives yield .7143 and .6902.” The latter level was nearly reached. The next long term area of interest is probably the 1999 high and 2004 low at .6741/72 but COT observations and a tweezer bottom candlestick pattern on the weekly chart indicate reversal risk towards .7440.

NZD/USD

Weekly

USDCHF Triangle; Follow it for the Next Big USD Trade

Chart Prepared by Jamie Saettele, CMT

Automate trades with Mirror Trader

-“One can’t help but notice that an epic double top is possible with a target of .5898. That would trigger on a drop below .7370.”

-“A bearish wedge pattern has formed and yields an objective of .6607.” Look towards the mentioned objectives (.6607 and .5898). The wedge objective has been reached as has the 2010 low at .6560. The next level to be aware of is .60 (long term double top target).” Also be aware of the 2004 and 2006 lows at .5909/27 and the 1999 high at .5673.

-A break above .6707 is needed to turn constructive on NZDUSD but a daily close above .6497 would be a positive development. .6477 is the 8/24 high volume close and .6497 is the July low (former support). Watch these levels for resistance.

USD/JPY

Weekly

USDCHF Triangle; Follow it for the Next Big USD Trade

Chart Prepared by Jamie Saettele, CMT

Automate trades with Mirror Trader

-“June’s trade produced a monthly key reversal in USDJPY.” USDJPY has snapped back but a break above the long term resistance confluence (uptrend resistance and the line from the 1995 and 2005 highs) is still needed in order to minimize downside risk.”

-“Weakness below 123 has triggered a failed short term bullish pattern and consequently a bearish signal. Given where USDJPY is declining from (significant long term resistance), this decline could be precipitous.” Precipitous indeed. USDJPY is holding up at its 55 week average (was also support in 2014). The rate last closed below this average in October 2012, which was over 40 big figures ago! In any case, weakness below the long term lower parallel is needed in order to signal that a MAJOR behavior change has taken place. Until then, embrace a volatile range.

USD/CAD

Weekly

USDCHF Triangle; Follow it for the Next Big USD Trade

Chart Prepared by Jamie Saettele, CMT

Automate trades with Mirror Trader

-“A 10 month trendline has supported USDCAD on recent dips. The development indicates potential for resumption of the broader bull move.”

-USDCAD traded into the 1995 and 1996 lows. The next measured level is the 161.8% extension of the March-May range at 1.3399. The 61.8% retracement of the 2002-2007 decline looms at 1.3462 and is a spot that could influence for a larger countertrend move.

USD/CHF

Weekly

USDCHF Triangle; Follow it for the Next Big USD Trade

Chart Prepared by Jamie Saettele, CMT

Automate trades with Mirror Trader

-“USDCHF traded to its best level since March this week and formed a weekly key reversal. This action serves as a warning to bulls that the rally from May is nearing completion. Major resistance is seen slightly higher from the 14 year trendline and 2012 high of .9971 over the next few weeks but the USDCHF top this week was right at the 78.6% retracement of the March-May decline.”

-Alternating and contracting moves since March may compose a triangle. The implication is that USDCHF tightens a bit more before attempting a directional move. Which way? I don’t know but if it’s higher then the 2006-2008 trendline comes into play and a break above there would be significant (as in going to 1.20+).

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