July 18th Long-Term Charts

FX Strategy Video > Currency Pairs Analysis

Longer term charts July 18

Taking a look at the weekly longer-term charts lets start with the USD/CHF. As you can see the consolidation area between 0.83 and 0.85 has been broken in the previous week.  Not only that, the chart closed towards the bottom of the weekly bar which is also a bearish sign. As we zoom into the chart, we can see exactly how bearish this has been. Although, not a massive rectangle was formed, we can still see it was clearly broken last week. We expect further weakness in this pair. This cross currency has been in a downtrend for decades really as a result of the U.S economy being in a slump and the Swiss economy being relatively strong. For this cross currency we like selling the rallies.

Looking at the EUR/USD it is an interesting chart pattern that can be interpreted in different ways.  Some traders are wondering if the recent price action represents a bullish flag for the pair.  Some traders are saying that a bearish signal could develop if the price broke below resistance. With the headline trouble surrounding the EUR, fundamentals would suggest this pair is bullish. However, the U.S has its own problems with debt talk in Washington.  This pair is very tricky to trade, so we are leaving it along.

Looking at the EUR/CHF pair, you can see that the EUR has absolutely fallen apart breaking the 1.15 level, which were hardly imaginable just a couple of months ago. At this point of time we think that continuing to sell this short would be chasing the trade and we look to short-sell rallies perhaps back to the last support level which would be around the 1.18 level. That would be about a 300 PIP bounce and we may not get that in the upcoming week as it may take some time. But watch for a rally in this currency to present a short selling opportunity. We are definitely not looking to go long on this pair.

Wrapping up our session on the EURO it is the EUR/GBP that we are looking at. It appears that we are bouncing around between 0.86 and 0.9 for a while with 0.88 being the price magnate. With the headline risk coming out of Europe it is very hard to hold EURO right now as you have to worry about someone saying something random from a peripheral country and the next thing you know you are down 100 PIPS. The GPB is also difficult as well as questions surround their banking structure. For this reason we are leaving this pair alone.

The lesson in this is by the CHF on rallies. Currency markets tend to rally for a long period of time so look to short sell the EUR/CHF on bounce backs against the prevailing downtrend.

Published on 17th of July 2011
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