USD CHF Downtrend About to End?

Overview

1D view showing a downtrend.

Pullbacks have created the March, October, and November lower peaks or Lower Highs. And we are watching December develop with interest.

Momentum, specifically downward momentum, hit extremes in July and November. Both interestingly did not result in a new bottom ie support at 0.85639 continue to hold.

So 0.85639 is the active zone.

We saw upward momentum peak after a reversal in between September and October but this did not result in Higher Highs confirming the strength of existing downtrend.

The thesis now is for the active zone to serve as a launch pad for reversal move.

For this thesis to be true, the reversal will be first seen in lower timeframes. The latest extreme downward momentum needs to create a new Lower High to keep the major trend. If not, things are setting up for the reversal.

For our purposes, 0.87804 is the level we’re watching to prove the reversal. This is the most recent peak before the latest extreme oversold level. If price is able to break this level, then all the negative momentum has been absorbed by positive sentiment that came after.

Forecast

Buy trade. Entry 0.87904 SL 0.87704 TP 0.89363

Price Chart

Links

• ForexLive 20th December analysis