Last week, or more precisely 19.04, the exchange rate of the pair of Swiss franc to Japanese yen reached the level of 136.20 setting the maximum of this year. The last time such a rate was seen in January 2015, when there was a flash crash on EURCHF, and the rate fell by 3500 pips. The declines were caused by the SNB abandoning its efforts to keep the pair’s exchange rate above EURCHF 1.20. Such a sharp strengthening of the CHF also affected other major world currencies, including the CHFJPN pair.
The aforementioned daily candle from 19.04 formed together with the following inside bar pattern. Today we observe a bottom breakout from this formation. The MACD oscillator is in a downward phase and a bearish divergence has also appeared.
This candlestick pattern and the aforementioned divergence indicate a high probability of further declines. A good confirmation of such a scenario would be a falling MACD on the weekly chart. For this to happen the price would have to fall to 132.40.
On the H4 chart we can see that the price has reached the demand zone and here the correction towards the defeated inside bar formation may appear. The minimum of this formation (134.36) may be a good level for taking a sell position, if the price reaches there. The nearest sellers’ target may be the level of 132.80, where another demand zone is located.
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The above analysis is based on the PA+MACD strategy, a detailed description of which you can read HERE . I will talk more about the PA+MACD strategy applied to these currency pairs during the live trading sessions which you can attend from Monday to Friday.
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