In my opinion, I really think there is a buy opportunity in this pair. While we have been seeing this depreciation of prices over the past couple of days, USD is pumped up and looking to make a comeback. We can draw our reasons for such proposals from the weekly chart.
To begin with, there is a big bullish divergence pattern if we compare stochastics characteristics and price action. If we connect last year’s buy signals and 2018 buy signal and compare it to price movements then you notice that while prices are moving lower, stochastics are increasing.
And, it’s no doubt that increasing stochastics means increasing momentum and in this case we have reason to buy. After all, by week ending February 2, there was an extension after that candlestick closed below the lower BB.
This not only means there was a technical undervaluation of the USD but as history show, this was bound to be corrected. Bull did correct and continues to do so at the moment.
In the 4HR chart, there is a bullish engulfing pattern that is reversing from the 61.8% Fibonacci retracement line. I will hold my position and recommend buying now with stops at 0.94 since there is a stochastic buy signal in place.
My USDCHF trade plan will be as follows:
Stop Loss: 0.9400
Take Profit: 0.98-this year’s highs.
Have a good trading day.