As I predicted beginning of February, the very much talked about USD/CHF pair reach our target of 0.94 after the massive drop on Black Thursday on January 15th 2015.
The Invest Diva followers who took my advice are now back flipping out of joy with all the pips they earned. So What’s next for this sexy couple on the forex dance floor?
Let’s look at this from two points of view because it takes two to tango anyway.
1- The Quote Currency
2- The Base Currency
To analyze the Base Currency (Ms. USA) alone, I like to look at the Dow Jones Dollar Index which shows Ms. USA’s dance moves against a basket of four major currencies (Now THAT’s what I call a cool forex party!)
This reveals that Ms. USA has generally been moving sideways and consolidating since the end of January after Black Thursday.
However, taking a look at the USD/CHF chart, which shows Ms. USA’s dance moves only against Mr. Swiss Franc, we notice that the pair has been on a general uptrend after the big drop, and it reached and surpassed our bullish target and is now settling down at the 61% Fibonnacci level at 0.95; oh yes, JUST as predicted by Mr. Fibonacci who never lets me down 🙂
So what’s next now that the pair has reached the most important retracement level known to the trading crowd?
Since Ms. USA herself has been consolidating, we realize that this uptrend in the pair has majorly been on the shoulders of the Quote Currency (Mr. Swissy) as he lost almost 61% of the value it suddenly gained on January 15th against the Base Currency (Ms. USA).
Adding Mr. Ichimoku to the mix, we realize that the future cloud is in the red zone, indicating that Mr. Fibonacci could hold the pair at this level, and we could see a retracement or pullback in the pair until it settles down at either the 50% or the 30% Fibonacci levels; 0.92 and 0.90 respectively.
However if the pair suddenly decide to go nuts and break above the 61% Fibonacci level, our outlook would alter to bullish with first target set at the 0.97 area.
Who do you think is going to get stronger, Ms. USA or Mr. Swissy?
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