by Alex Davies on November 21, 2018

CADCHF Analysis – price in decline but no need to be hasty!

A week ago we took a bearish stance on CADCHF without issuing any specific trading signal. The price of the currency pair was following a symmetric triangle pattern and not nudging in either direction. If the price crossed the purple line shown on the graph below, it would definitely trigger a sell signal and if it bounced back and broke the upper line of the triangle, it would issue a buy signal. We thought the breakout of the support more likely and expected the price to decline sharply.

CADCHF Analysis - price in decline but no need to be hasty!

This is exactly what happened. On Monday, the price broke the purple support and triggered a massive drop in the price. The next milestone for the price will be the lower line of a bigger triangle pattern, which is drawn in black. The risk to reward ratio is worse in the current situation and there is a higher chance of a bullish correction. This means that it is not yet a good time to go short on the pair, although the distance to the lower line of the bigger triangle might suggest otherwise. Instead, we suggest waiting for a correction and shorting the currency pair afterward.

By Alex Davies

Alex Davies is a long-time trader with a background in statistical analysis. Davies has worked as a financial analyst since 2014 and has been writing technical analyses for various publications since 2015. Davies writes on different financial instruments including stocks, cryptocurrencies and currency pairs.

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