NZD/CHF is expected to initiate a long term trend reversal, and we might be witnessing the very beginning of a huge upside move. This can only be true as long as 0.9000 support holds. It is also worth mentioning that it is a counter-trend trade idea, which makes it a risker opportunity. However, this idea was shared to compliment multiple other CHF-related ideas, where all of them suggest the weakness of the Swiss Franc across the board.
Disclaimer: The analysis presented in this article is for educational purposes only and should not be considered as financial advice.
This analysis was done on MetaTrader 4.
Click below to open a Free Demo Account with our trusted brokers:
Trade Idea Details:
NZD/CHF symbol on the MT4 platform
Key support levels: 0.5938, 0.5900
Key resistance levels: 0.6063, 0.6081
NZD/CHF has been moving down consistently since July 22, and the price went down from 0.6224 high to 0.5906 low, which was tested yesterday. Although the pair has found the support earlier, back on August 14, when it rejected 361.8% Fibonacci retracement level at 0.5938. While USD/CHF went lower, there was no clear daily break and close below this level, indicating the validity of the Fibonacci support. Besides, Fibs was applied to the corrective wave up after price broke below the triangle pattern on the top.
We can see that the RSI oscillator has formed a bullish divergence, and prior to that price broke above the downtrend trendline as well as the descending channel. Perhaps the most recent downside move was initiated to kick out all the stop losses, before a potentially strong rally.
As long as price stays above 0.5900 psychological support, USD/CHF can be expected to start correcting up or even begging long-term trend reversal. However, the nearest resistance is not that far away and is located at 0.6063.
This level is confirmed by two Fibs 127.2% and 161.8% retracement levels as per the 4-hour chart. If and when 0.6063 resistance will get broken, price is likely to test the next upside target at 50% Fibonacci retracement level, which is 0.6081. This level is also confirmed by the 127.2% Fibs. And finally, break above the second resistance could be suggesting a long term uptrend for the NZD/CHF currency pair.
Potential Trade Idea:
The local resistance is located at $0.5938, which seems like an attractive price for buying NZD/CHF. The first take profit is at 0.6063 and the second at 0.6081, both of them are confirmed by two Fibonacci retracement levels. In order to achieve the risk to reward ratio of over 1:2 (because it is a counter-trend idea), stop loss could be placed at 0.5878.