by Alex Davies on December 6, 2018

USDCHF Analysis – rectangle formation suggests more decline

Last time we considered USDCHF was about a week ago when the currency pair was in an extremely interesting position for the technical analysis. The price was nearing a horizontal resistance shown on the graph below with a green line. The resistance was also the place where the flag formation started and it had been tested before successfully. Consequently, if the price remained above that level no sell signal could be issued, but a breach of this resistance would definitely signal traders to go short and expect the pair to set new mid-term lows.

USDCHF Analysis - rectangle formation suggests more decline

That, however, didn’t happen as the green resistance held its own successfully as the price reversed and started to gain before dropping again and then reversing one more time. During these movements, the price started to trace a rectangle formation which is shown with orange and green lines on the graph above. The price recently bounced from the upper orange resistance with a shooting star candlestick formation. Technical analysis, in this case, would suggest a strong sell signal. We will follow that practice and expect the price of the currency pair to continue its decline in the nearest future.

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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