Monday, July 27, 2020

Bearish Divergence On CHFJPY

Marco Tosoni

FХ Strategist & Financial Commentator

After a medium term drop towards 108.80 area, during the last three months a rising swing has started with the quotes to comeback around 115.50, with a new yearly top set during last Thursday’s session, right before a first bearish correction with the formation of a shooting star candle.

While during Friday’s session this pair has started a bearish acceleration towards 114.50, followed by a prompt bounce around 115.20 where we can detect the weekly closure.

The Average True Range on his hand is pretty stable on the last weeks, even though it’s still higher than the 2019 average values and this element makes this pair really interesting for a short term trading, as at this moment of time is one of the most active in the Forex market.

Looking at the RSI indicator, we can detect a new bearish signal, with a 4 pivot points bearish divergence and a progressive loss of strength throughout the last 2 months, that should anticipate a technical correction at least with a short term outlook.

The setup would be activated in case of a breakdown of the Friday bottom around 114.40 area. The stop loss must be placed at 115.80 above last week’s top, while the target price can be expected at 113.00 around this month bottom zone.

As always I recommend to trade carefully and to plan at best every move. Don’t forget to subscribe to NBHM YouTube Channel to stay up to date with the financial markets! Have a good trading and see you for the next video.

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